Financial Section
Independent Auditor’s Report

17

Balance Sheet

18

Statement of Income and Retained Earnings

20

Statement of Changes in Net Assets

20

Statement of Cash Flows21

Notes to the Financial Statements

22

Financial Summary (Unaudited)
Historical Operating Trends
For the 23rd–27th Fiscal Periods

PeriodOperating revenues(Rental revenues)
Operating expenses(Property-related expenses)
Operating income
Ordinary income
Net income (a)Total assets (b)(Period-on-period change)
Interest-bearing debt (c)(Period-on-period change)
Unitholders’ equity (d)(Period-on-period change)
Unitholders’ capital(Period-on-period change)
Number of investment units issued and outstanding (e)Unitholders’ equity per unit (d)/(e)Total distribution (f)Distribution per unit (f)/(e)(Earnings distributed per unit)(Distribution in excess of earnings per unit)
Return on assets (annualized) (Notes 1 and 2)
Return on net assets (annualized) (Notes 2 and 3)
Net assets ratio at end of period (d)/(b)(Period-on-period change)
Interest-bearing debt ratio at end of period (c)/(b)(Period-on-period change)
Payout ratio (Note 4) (f)/(a)Other references
Number of properties
Total leasable floor area
Occupancy ratio at end of period
Depreciation expenses for the period
Capital expenditures for the period
Leasing NOI (Net Operating Income) (Note 5)
FFO (Funds From Operation) (Note 6)
FFO per unit (Note 7)

Unit

millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen%
millions of yen%
millions of yen%
millions of yen
%
unit
yen
millions of yen
yen
yen
yen
%
%
%
%
%

properties
m2%
millions of yen
millions of yen
millions of yen
millions of yen
yen

27th Period
26th Period
25th Period
24th Period
23rd Period(as of(as of(as of(as of(as ofOct. 31, 2016) Apr. 30, 2017) Oct. 31, 2017) Apr. 30, 2018) Oct. 31, 2018)13,491
13,429
7,703
6,754
5,788
4,603
4,601
413,031(+1.0)
178,100(+1.7)
212,825(+0.1)
206,199(0.0)
404,885525,6444,601
11,365
11,365—
1.1 (2.2)
2.2 (4.3)
51.5(–0.5)
43.1(+0.3)
99.9

15,03913,327
9,137
6,527
5,901
4,751
4,750
410,166(–0.7)
174,600(–2.0)
212,986(+0.1)
206,199(0.0)
404,885
526,041
4,750
11,733
11,733—
1.2 (2.3)
2.2 (4.5)
51.9(+0.4)
42.6(–0.6)
99.9

13,901
13,840
8,244
6,720
5,657
4,590
4,588
414,933(+1.2)
179,600(+2.9)
212,851(–0.1)
206,199(0.0)
404,885525,708
5,061
12,50012,500—1.1 (2.2)
2.2 (4.3)
51.3(–0.6)
43.3(+0.7)
110.2

14,823
14,222
7,974
6,977
6,848
5,829
5,828
422,993(+1.9)
185,850(+3.5)
213,642(+0.4)
206,199(0.0)
404,885
527,661
5,247
12,96012,960—1.4 (2.8)
2.7 (5.5)
50.5(–0.8)
43.9(+0.7)
90.0

15,42014,802
8,271
7,105
7,148
6,109
6,107
437,221(+3.4)
183,050(–1.5)
229,313(+7.3)
220,970(+7.2)
428,510535,141
5,766
13,45813,458—1.4 (2.8)
2.8 (5.5)
52.4(+1.9)
41.9(–2.1)
94.4

99
462,533.92
96.9
2,274
1,165
8,949
6,877
16,985

97459,567.57
97.9
2,288
1,018
9,088
7,034
17,37398
456,932.16
99.1
2,293
953
9,413
7,451
18,404

97
466,031.33
99.0
2,295
886
9,539
7,574
18,70897471,041.45
99.1
2,358
925
10,055
7,934
18,516

Notes: 1. Return on assets = Ordinary income / {(Total assets at beginning of period + Total assets at end of period) / 2} × 100
2. Annualized values for the 23rd Fiscal Period are calculated based on a period of 184 days, 181 days for the 24th Fiscal Period, 184 days for the 25th Fiscal
Period, 181 days for the 26th Fiscal Period and 184 days for the 27th Fiscal Period.
3. Return on net assets = Net income / {(Total net assets at beginning of period + Total net assets at end of period) / 2} × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Property-related expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate properties + Loss on sale of real estate properties
7. FFO per unit = FFO / Number of investment units issued and outstanding (figures below ¥1 rounded down)

16

Kenedix Office Investment Corporation

Kenedix Office Investment Corporation17

Balance Sheet
Kenedix Office Investment Corporation
As of October 31, 2018

In thousands of yen

AssetsCurrent assets:
Cash and deposits (Notes 3 and 14)
Cash and deposits in trust (Notes 3 and 14)
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets:
Property, plant and equipment (Notes 4 and 16)
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust (Note 7)
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 4)
Leasehold right (Note 16)
Leasehold right in trust (Note 16)
Other
Total intangible assets
Investments and other assets
Investment securities (Note 14)
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Other (Notes 9, 14, and 15)
Total investments and other assets
Total non-current assets
Deferred assets:
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets
See accompanying notes to the financial statements.

18

Kenedix Office Investment Corporation

As of October 31, 2018

As of April 30, 2018

¥ 14,050,532
10,973,654
360,261
111,536—
14,60625,510,591¥ 13,033,326
10,444,809
308,21776,768
166,118
17,35024,046,590

17,693,312(5,316,656)
12,376,655
32,618(13,848)
18,770421,857(235,745)
186,11186,586(54,482)
32,10327,520,902
122,006,776(27,897,343)
94,109,432
353,520(159,867)
193,653
1,623,898(708,259)
915,639
476,862(293,197)
183,665
272,828,051
2,933
408,367,919

17,943,798(5,111,557)
12,832,241
32,618(12,973)
19,645
411,649(223,927)
187,722
83,593(51,767)
31,82529,504,025
118,523,178(26,581,425)
91,941,753
345,717(162,368)
183,349
1,592,359(719,408)
872,951
466,546(278,421)
188,125
259,908,839
83395,670,563

285,257
351,524
2,889
639,671285,257
352,298
3,501
641,057

1,114,806
10,000122,889
1,256,374
113,1112,617,181
411,624,771

1,090,336
10,000122,889
1,306,980
61,1302,591,336
398,902,957

39,86045,85585,715¥437,221,079

44,019—44,019¥422,993,568

In thousands of yen

Liabilities
Current liabilities:
Operating accounts payable
Short-term loans payable (Notes 6 and 14)
Current portion of investment corporation bonds (Notes 6 and 14)
Current portion of long-term loans payable (Notes 6, 14 and 15)
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Non-current liabilities:
Investment corporation bonds (Notes 6 and 14)
Long-term loans payable (Notes 6, 14 and 15)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Other (Notes 14 and 15)
Total non-current liabilities
Total liabilities
Net Assets
Unitholders’ equity:
Unitholders’ capital
Surplus:
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Valuation and translation adjustments:
Deferred gains or losses on hedges (Notes 14 and 15)
Total valuation and translation adjustments
Total net assets (Note 10)
Total liabilities and net assets

As of October 31, 2018¥

1,341,577
6,000,000—
13,750,000
775,971
62,766795
193,775
2,364,110
2,311
24,491,309

As of April 30, 2018¥

1,453,036
6,000,000
1,800,000
17,050,000
291,560
79,639682
118,583
2,340,180
2,568
29,136,251

6,000,000
157,300,000
1,953,387
18,150,520
12,281
183,416,189
207,907,498

6,000,000
155,000,000
2,050,835
17,164,250—
180,215,086
209,351,337

220,970,508

206,199,945

2,134,387
2,134,387
6,107,886
8,242,273
229,212,781

1,552,849
1,552,849
5,828,847
7,381,696
213,581,642

100,798
100,798
229,313,580¥437,221,079

60,58760,587
213,642,230¥422,993,568

Kenedix Office Investment Corporation

19

Statement of Income and Retained Earnings
Kenedix Office Investment Corporation
For the period from May 1, 2018 to October 31, 2018

In thousands of yen

Operating revenues
Rent revenue - real estate (Note 12)
Other lease business revenue (Note 12)
Gain on sale of real estate properties (Note 12)
Dividends income
Total operating revenues
Operating expenses
Expenses related to rent business (Note 12)
Asset management fees
Directors’ compensation
Asset custody fees
Administrative service fees
Audit fees
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Dividends and redemption-prescription
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Financing-related expenses
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Other non-operating expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes (Note 9)
Current
Deferred
Total income taxes
Net income
Unappropriated retained earnings

From May 1, 2018
to October 31, 2018

From November 1, 2017
to April 30, 2018¥12,730,773
2,071,972
532,490
85,21915,420,456¥12,351,730
1,870,367
550,142
50,882
14,823,123

7,105,951
978,238
8,400
22,68956,337
11,80088,304
8,271,721
7,148,734

6,977,998
802,855
8,400
22,44855,69911,80095,5497,974,751
6,848,372

66
788
330
1,185

38
481
232
752

833,92130,783
133,349
4,159
9,171
29,411
1,040,795
6,109,124
6,109,124

818,187
32,780132,774
4,506—
30,9301,019,178
5,829,946
5,829,946

1,240
(2)
1,238
6,107,886¥ 6,107,886

1,101
(3)
1,098
5,828,847¥ 5,828,847

See accompanying notes to the financial statements.

Statement of Changes in Net Assets
Kenedix Office Investment Corporation
For the period from May 1, 2018 to October 31, 2018

In thousands of yen

Valuationandtranslation
adjustments

Unitholders’ equity

Balance as of October 31, 2017
Changes during the fiscal period
Reversal of reserve for reduction entry
Dividends of surplus
Net income
Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as of April 30, 2018 (Note 5)
Changes during the fiscal period
Issuance of new investment units
Provision of reserve for reduction entry
Dividends of surplus
Net income
Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as of October 31, 2018 (Note 5)

Surplus
Voluntary
retainedearnings
UnappropriatedReserve forretained
Unitholders’reduction entry
earnings
capital¥206,199,945¥2,024,673¥ 4,589,238

Kenedix Office Investment Corporation

Deferred
gains orlosses onhedges¥ 37,549

Total
net assets¥212,851,406———(471,824)——

471,824(5,061,062)
5,828,847—(5,061,062)
5,828,847—(5,061,062)
5,828,847————(5,061,062)
5,828,847

—

—

—

—

—

23,03823,038—¥206,199,945(471,824)¥1,552,849

1,239,609¥ 5,828,847

767,785¥ 7,381,696

767,785¥213,581,642

23,038¥ 60,587

790,823¥213,642,230

14,770,562————
581,538———(581,538)(5,247,309)
6,107,886——(5,247,309)
6,107,886

14,770,562—(5,247,309)
6,107,886————

14,770,562—(5,247,309)
6,107,886

—

—

—

—

—

40,211

40,211

14,770,562¥220,970,508

581,538¥2,134,387

279,038¥ 6,107,886

860,576¥ 8,242,273

15,631,139¥229,212,781

40,211¥100,798

15,671,350¥229,313,580

See accompanying notes to the financial statements.

20

Total
surplus¥ 6,613,911

Totalunitholders’equity¥212,813,857

Statement of Cash Flows
Kenedix Office Investment Corporation
For the period from May 1, 2018 to October 31, 2018

In thousands of yen

Cash flows from operating activities:
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Interest income
Interest expenses
Amortization of investment unit issuance costs
Amortization of investment corporation bond issuance costs
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease in property, plant and equipment due to sale
Decrease in property, plant and equipment in trust due to sale
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Purchases of property, plant and equipment in trust
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Payments of restricted deposits in trust
Proceeds from restricted deposits in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of investment corporation bonds
Proceeds of investment unit issuance
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 3)

From May 1, 2018
to October 31, 2018

From November 1, 2017
to April 30, 2018

¥ 6,109,124
2,358,994
133,099(66)
864,704
9,171
4,159(52,044)
166,118(34,767)(34,206)
322,777
75,19223,930(257)
2,230,835
4,483,951(82,492)(61,519)
16,516,704
66(881,064)(692)
15,635,014¥ 5,829,946
2,295,920
132,517(38)
850,967
—
4,506
6,548
(75,223)
33,815
136,298
4,491(34,684)
99,644(29,078)—
9,056,075(165,883)
3,823
18,149,649
38(837,734)(766)
17,311,186(150,523)(21,870,082)(140,072)
55,327(213,521)
1,561,793(13,149)
2,829(20,767,399)(101,142)(25,402,604)(14,666)
29,581(553,418)
1,295,016(686,767)
45,721(25,388,281)

2,000,000(2,000,000)
8,500,000(9,500,000)(1,800,000)
14,715,536(5,247,420)
6,668,115
1,535,730
21,746,685¥ 23,282,416

4,000,000(4,000,000)
15,000,000(8,750,000)——(5,061,692)
1,188,307(6,888,787)
28,635,473¥ 21,746,685

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation

21

Notes to the Financial Statements
Kenedix Office Investment Corporation
For the period from May 1, 2018 to October 31, 2018 and the period from November 1, 2017 to April 30, 2018

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Office Investment Corporation (“the Investment
Corporation”) is a real estate investment corporation whose units
are listed on the Tokyo Stock Exchange. The Investment
Corporation is engaged in the ownership and operation of selected
office buildings and retail properties in Japan, with a focus on­mid-sized office buildings in the Tokyo metropolitan area. The
Investment Corporation was incorporated on May 6, 2005 as aninvestment corporation under the Law Concerning Investment
Trusts and Investment Corporations of Japan, or the Investment
Trust Law. On July 21, 2005, the Investment Corporation was
listed on the Real Estate Investment Trust Market of the Tokyo
Stock Exchange with a total of 75,400 investment units issued andoutstanding (Securities Code: 8972). Subsequently, the Investment
Corporation raised funds through eight public offerings. Pursuant
to the Investment Trust Law, the Investment Corporation is externally managed by a registered asset management company,
Kenedix Real Estate Fund Management, Inc. (“the AssetManagement Company”), a subsidiary of Kenedix, Inc. (“Kenedix”).
In concert with the Asset Management Company, the Investment
Corporation strives to maximize cash distribution to investors bysecuring stable earnings and sustainable investment growth. To
this end, the Investment Corporation adopts a dynamic and flexible investment stance that accurately reflects its environment andmarket trends, and endeavors to ensure a timely response to eachand every opportunity.
During the period ended April 30, 2018, the Investment
Corporation acquired two office buildings (Mitsubishijuko
Yokohama Building: acquisition price of ¥14,720 million, and JN
Building: acquisition price of ¥9,500 million) and sold one residential property (Residence Charmante Tsukishima: initial acquisition
price of ¥5,353 million) and two office buildings (KDX IkejiriOohashi Building: initial acquisition price of ¥2,400 million, andKDX Shin-Yokohama 214 Building: initial acquisition price of¥2,200 million) with a disposition price of ¥9,730 million.
During the period ended October 31, 2018, the Investment
Corporation acquired one office building (CROSS PLACE
Hamamatsucho: acquisition price of ¥20,700 million) and sold one
office building (KDX Hamamatsucho Dai-2 Building: initial acquisition price of ¥2,200 million) and one central urban retail property(Frame Jinnan-zaka (49.0% of quasi co-ownership interest): initialacquisition price of ¥4,851 million (Note)) with a disposition price of¥7,297 million.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Non-marketable securities classified as other securities are carriedat cost. Cost of securities sold is determined by the moving
average method. Concerning silent partnership (tokumei kumiai,

At the end of the twenty-sixth fiscal period (fiscal period endedApril 30, 2018), the Investment Corporation had total unitholders’capital of ¥206,199 million with 404,885 investment units outstanding. At the end of the twenty-­seventh fiscal period (fiscal
period ended October 31, 2018), the Investment Corporation had
total unitholders’ capital of ¥220,970 million with 428,510 investment units outstanding. The Investment Corporation owned aportfolio of 97 properties (consisting of 95 office buildings, one
central urban retail property and one other property) and 97 properties (consisting of 95 office buildings, one central urban retailproperty and one other property) with total acquisition prices of¥407,235 million and ¥420,884 million at the end of the twenty-­
sixth and twenty-seventh fiscal periods, respectively. The occupancy ratios were approximately 99.0% and 99.1% at the end of
the twenty-­sixth and twenty-seventh fiscal periods, respectively.
(Note) The acquisition price is an amount equivalent to 49.0% of
quasi co-ownership interest in ¥9,900 million, which is the acquisition price of the entire building initially acquired.
Basis of Presentation
The accompanying financial statements have been prepared inaccordance with the provisions set forth in the Investment Trust
Act of Japan, the Financial Instruments and Exchange Law ofJapan and related regulations, and in conformity with accounting
principles and practices generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application and disclosure requirements of the International Financial
Reporting Standards or accounting principles generally acceptedin the United States of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared forJapanese domestic purposes from the accounts and records
maintained by the Investment Corporation and filed with the Kanto
Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes have been added andcertain reclassifications have been made to the financial statements issued domestically in order to present them in a form thatis more familiar to readers outside Japan. The Investment
Corporation’s fiscal period is a six-month period that ends at theend of April and the end of October each year. The Investment
Corporation does not prepare consolidated financial statements
because it has no subsidiaries.

“TK”) interests, the method of incorporating the amount of equity
equivalent to the portion that corresponds to the net gain or lossof the TK is adopted.

(B) Property, Plant and Equipment (including trust assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated on a straight-line basis overthe estimated useful lives of the assets ranging as stated below:
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures

22

Kenedix Office Investment Corporation

From May 1, 2018 to October 31, 2018

2– 49 years
2– 45 years
3– 17 years
3– 20 years

From November 1, 2017 to April 30, 2018

2– 49 years
2– 45 years
3– 17 years
3– 20 years

(C) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
Leasehold right: Fixed-term land leasehold is amortized over acontractual period of 48 years and 9 months under the straightline method.
(D) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line
method.
(E) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of
three years under the straight-line method.
(F) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over amaturity period under the straight-line method.
(G)	Accounting Treatment of Trust Beneficiary Interests inReal Estate
For trust beneficiary interests in real estate, which are commonly
utilized in the ownership of commercial properties in Japan, allassets and liabilities in trust are recorded in the relevant balance
sheets and statements of income and retained earnings.
(H) Revenue Recognition
Operating revenues consist of rental revenues including baserents, common area charges and other operating revenues,
which include utility charge reimbursement, parking space rental­revenues and other miscellaneous revenues. Rental revenues are
generally recognized on an accrual basis over the life of eachlease. Utility charge reimbursements are recognized when earned
and their amounts can be reasonably estimated. Reimbursementsfrom tenants including utility charge reimbursements are recorded
on a gross basis and such amounts are recorded both as­revenues and expenses during the fiscal period.
(I) Taxes on Property, Plant and Equipment
Property-related taxes including property taxes, city planning taxes
and depreciable property taxes are imposed on properties on acalendar year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to the said period. Under Japanese tax rules, the sellerof property at the time of disposal is liable for these taxes on theproperty from the date of disposal to the end of the calendar year
in which the property is disposed. The seller, however, is generally
reimbursed by the purchaser for these accrued property-related
tax liabilities.
When the Investment Corporation purchases properties, it­typically allocates the portion of the property-related taxes related
to the period following the purchase date of each property throughthe end of the calendar year. The amounts of those allocatedportions of the property-related taxes are capitalized as part of theacquisition costs of the related properties. Capitalized property-­
related taxes amounted to ¥28,631 thousand and ¥53,876 thousand as of October 31, 2018 and April 30, 2018, respectively. In
subsequent calendar years, such property-related taxes arecharged as operating expenses in the fiscal period to which the
installments of such taxes correspond.

(J) Income Taxes
Deferred tax assets and liabilities are computed based on the
difference between the financial statements and income tax basesof assets and liabilities using the statutory tax rates.
(K) Consumption Taxes
Transactions subject to consumption taxes are recorded at
amounts exclusive of consumption taxes. Non-deductible consumption taxes applicable to the acquisition of assets are includedin the cost of acquisition for each asset.
(L) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap and­interest-rate cap contracts as derivative financial instruments only
for the purpose of hedging its exposure to changes in interest
rates. The Investment Corporation deferred recognition of gains
or losses resulting from changes in fair value of interest-rate swap
and interest-rate cap contracts because these contracts met thecriteria for deferral hedging accounting. However, the Investment
Corporation adopted special treatment for interest-swap andinterest-rate cap contracts if they met the criteria for hedging
accounting under this treatment. The hedge effectiveness forthe interest-rate swap and interest-rate cap contract is assessed
each fiscal period except for those that meet the criteria of­special treatment.
(M) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits
placed with banks and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk ofmarket value fluctuation, with maturities of three months or lessfrom the date of purchase.
(N) Presentation of Amounts
Amounts of less than one thousand yen have been truncated in
the Japanese financial statements prepared in accordance withJapanese GAAP and filed with regulatory authorities in Japan.
Unless otherwise noted, amounts of the twenty-seventh and­twenty-sixth fiscal periods are rounded down, respectively, andratios are rounded off in the accompanying financial statements.
Totals shown in the accompanying financial statements do notnecessarily agree with the sums of the individual amounts.
(O) Notes on Changes in Presentation or Classification
As the Investment Corporation started application of “Partial
Amendments to Accounting Standard for Tax Effect Accounting”(ASBJ Statement No. 28, February 16, 2018) from the fiscal period
under review, changes are made to present deferred tax assets
under investments and other assets and deferred tax liabilities
under non-current liabilities.
As a result, ¥29 thousand of deferred tax assets which was
included in “other” under “current assets” in the balance sheets ofthe previous fiscal period is included in “other” under “investments
and other assets.”

Kenedix Office Investment Corporation23

3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of October 31, 2018 and April 30, 2018.
In thousands of yen

As of April 30, 2018

As of October 31, 2018

Cash and deposits
Cash and deposits in trust
Restricted deposits in trust (Note)
Cash and cash equivalents in trust¥13,033,326
10,444,809(1,731,450)¥21,746,685¥14,050,532
10,973,654(1,741,770)¥23,282,416

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

4. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of October 31, 2018.
In thousands of yen

Type of asset

Buildings
Structures
Machinery andequipment
Tools, furniture andfixtures¥ 17,943,798
32,618Land
Property,plant andequipment

Structures in trust
Machinery andequipment in trust
Tools, furniture andfixtures in trust
Land in trust
Construction inprogress in trust

Intangible
assets

Other
Total intangible assets
Total¥ 5,316,656
13,848¥ 299,675 ¥ 12,376,655
875
18,770421,857

235,745

11,81886,58654,482

2,987

—

—

5,620,733

315,356

3,532

540

—

1,983,122

105,275

2,325,684¥ 4,974,504

1,592,359

108,240

345,717466,546

259,908,839

83

380,836,725¥¥ 342,022 ¥ 17,693,312—
32,61883,593¥118,523,178

428,812,411
290,050

363,784
6,123

659,958¥429,472,370

23,362

15,822

16,539,695—

21,769,751¥

27,520,902

45,755,276¥1,490,907 ¥122,006,776
15,559353,520

76,701

1,623,898
476,8625,506

3,620,482¥27,897,343

159,867

272,828,051

—

2,850
21,664,475

5,209,158

2,933

397,292,042

18,235————29,058,667

2,042,251363,784

12,260—659,958¥7,534,843 ¥443,707,278

20,287¥34,699,687—¥21,769,751

34,679,400
4,792

3,234

Note 1: The amount of increase during the period is primarily attributable to the acquisition of the one real estate property.
Note 2: The amount of decrease during the period is primarily attributable to the sales of the two real estate properties.

24

Kenedix Office Investment Corporation

Notes 1 and 2

293,197—

6,123¥1,962,090 ¥ 94,109,432

915,639—¥

Note 240,134,543

51,309—290,050

32,103

708,259—— ¥Note 2

27,520,902

193,653443,047,319¥

Remarks

186,111

10,6157,534,843—

Netbalance atthe endof period

Depreciation
for the period

10,20747,975,686

Subtotal
Total property, plant and equipment
Leasehold rightLeasehold rightin trust

91,535—

Depreciation
Accumulated
depreciation

411,649
29,504,025

Subtotal
Buildings in trust¥

Balance atthe endof period

Decreaseduringthe period

Increaseduringthe period

Balance atthe beginningof period

183,665

272,828,051

2,933

368,233,375

2,357,607

408,367,919

774

351,524

¥

— ¥

612

285,257
2,889

1,386
639,671¥2,358,994 ¥409,007,590

Notes 1 and 2

Property, plant and equipment and intangible assets consist of the following as of April 30, 2018.
In thousands of yen

Type of asset

Buildings
Structures
Machinery andequipment
Tools, furniture andfixtures¥ 17,814,001
32,618403,054

Land
Property,plant andequipment

Subtotal
Buildings in trustTotal— ¥ 17,943,798—
32,6188,595—

Depreciation
for the period¥ 5,111,557
12,973¥ 298,559 ¥ 12,832,241884
19,645

411,649

223,927

11,581

Remarks

187,722

83,593——83,59351,7672,826

31,82529,504,025——

29,504,025——

29,504,025—

47,975,686

5,400,225

313,850

42,575,460¥ 4,073,882 ¥118,523,178¥26,581,425

138,392¥ 5,999,351

373,778

2,965

31,026

345,717

162,368

10,607

183,349

1,752,248

70,522

230,411

1,592,359

719,408

51,647872,951

Subtotal
Total property, plant and equipment

Other
Total intangible assets¥

Accumulated
depreciation

47,837,294

Land in trust
Construction inprogress in trust

Intangible
assets129,797—

Netbalance atthe endof period¥116,597,709

Structures in trust
Machinery andequipment in trust
Tools, furniture andfixtures in trust

Leasehold rightLeasehold rightin trust¥

Depreciation

Balance atthe endof period

Decreaseduringthe period

Increaseduringthe period

Balance atthe beginningof period

463,275

8,169

4,898

466,546

278,421

17,884

188,125

246,626,638

19,360,002

6,077,802

259,908,839——

259,908,839

1,142

—

1,059

83

—

—

83

365,814,792

25,441,011

10,419,079

380,836,725

27,741,622

1,980,683

353,095,102

25,579,404

10,419,079

428,812,411

2,294,534

395,670,563¥¥

413,652,086¥¥1,900,544 ¥ 91,941,753

290,050—— ¥290,050

33,141,848
¥

4,792

¥

— ¥

285,257

363,784——

363,784

11,486774

352,298

6,123

—

—

6,123

2,622

612

3,501

659,958¥414,312,045—¥25,579,404—
659,958¥10,419,079 ¥429,472,370

18,900¥33,160,748

Notes 1 and 2

Notes 1 and 2

1,386
641,057¥2,295,920 ¥396,311,621

Note 1: The amount of increase during the period is primarily attributable to the acquisition of the two real estate properties.
Note 2: The amount of decrease during the period is primarily attributable to the sales of the three real estate properties.

5. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From May 1, 2018
to October 31, 2018

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

2,000,000
428,510

From November 1, 2017
to April 30, 2018

2,000,000
404,885

6. SHORT-TERM LOANS PAYABLE, LONG-TERM LOANS PAYABLE AND INVESTMENT CORPORATION BONDS
The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of
October 31, 2018:
Classification

Short-term loans payable

Subtotal
Current portion of long-term loans payable

November 30, 2017
January 31, 2018
January 31, 2018
March 30, 2018
July 31, 2018
August 31, 2018

Last repayment dateNovember 30, 2018
January 31, 2019
January 31, 2019
March 29, 2019
July 31, 2019
August 31, 2019

Weighted-averageinterest rate

November 12, 2013
November 29, 2013
March 28, 2012
March 28, 2012
March 12, 2014
March 31, 2014

November 12, 2018
November 30, 2018
March 28, 2019
March 28, 2019
March 31, 2019
March 31, 2019

0.82%
0.84%
1.77%
1.77%
0.78%
0.76%

Drawdown date

0.36%
0.31%
0.36%
0.36%
0.36%
0.32%

Balance(In thousands of yen)¥¥

2,000,000
500,000
500,000
1,000,000
1,000,000
1,000,000
6,000,000
1,000,000
200,000
1,400,000
1,000,000
450,000
2,500,000

Kenedix Office Investment Corporation25

Classification

Current portion of long-term loans payable

SubtotalLong-term loans payable26

Kenedix Office Investment Corporation

Drawdown date

Last repayment date

Weighted-averageinterest rate

March 30, 2016
July 10, 2014
July 14, 2014
July 31, 2014
August 29, 2014
September 30, 2013
September 30, 2013

March 31, 2019
July 10, 2019
July 31, 2019
July 31, 2019
July 31, 2019
September 30, 2019
September 30, 2019

0.17%
0.64%
0.68%
0.62%
0.65%
1.06%
1.06%

August 30, 2013
November 12, 2013
November 12, 2013
November 29, 2013
November 29, 2013
January 10, 2014
January 31, 2014
January 31, 2014
March 12, 2014
March 12, 2014
March 20, 2014
March 20, 2014
March 20, 2014
March 20, 2014
April 22, 2014
July 10, 2014
July 10, 2014
July 31, 2014
July 31, 2014
July 31, 2014
September 1, 2014
September 1, 2014
September 3, 2014
September 3, 2014
September 22, 2014
September 30, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
January 30, 2015
January 30, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 27, 2015
March 12, 2015
March 31, 2015
April 30, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
September 30, 2015
October 30, 2015
October 30, 2015

August 31, 2020
November 12, 2020
November 12, 2020
November 30, 2020
November 30, 2020
January 31, 2021
January 31, 2020
January 31, 2021
March 12, 2020
March 12, 2023
March 12, 2020
September 20, 2021
March 20, 2022
March 12, 2023
October 31, 2020
July 10, 2021
July 10, 2021
July 31, 2020
October 31, 2020
July 31, 2022
August 31, 2021
August 31, 2021
August 31, 2022
August 31, 2022
September 30, 2020
September 30, 2021
October 31, 2021
October 31, 2023
October 31, 2023
October 31, 2023
October 31, 2024
October 31, 2024
January 31, 2021
January 31, 2025
February 28, 2022
February 28, 2022
February 29, 2024
February 28, 2025
February 28, 2025
February 28, 2025
March 31, 2025
April 30, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
September 30, 2024
October 31, 2024
October 30, 2025

1.42%
1.07%
1.07%
1.12%
1.12%
1.21%
0.93%
1.13%
0.92%
1.36%
0.91%
1.01%
1.20%
1.35%
0.95%
0.90%
0.90%
0.74%
0.76%
1.01%
0.89%
0.89%
0.98%
0.98%
0.80%
0.89%
0.80%
1.07%
1.13%
1.07%
1.26%
1.26%
0.71%
1.16%
0.91%
0.91%
1.16%
1.31%
1.15%
1.22%
1.27%
0.83%
0.87%
0.87%
0.87%
0.87%
0.87%
0.87%
1.07%
0.99%
1.11%

Balance(In thousands of yen)¥

1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,800,000
900,000
13,750,000¥ 1,500,000
2,000,000
500,000
1,000,000
900,000
1,300,000
3,700,000
2,300,000
1,800,000
1,800,000
3,000,000
4,000,000
3,000,000
2,000,000
2,900,000
2,000,000
500,000
2,700,000
300,000
2,200,000
800,000
500,000
1,000,000
950,000
2,700,000
1,000,000
3,000,000
2,000,000
1,500,000
1,000,000
2,000,000
1,000,000
1,500,000
1,500,000
1,250,000
350,000
1,700,000
1,250,000
2,100,000
1,000,000
2,500,000
2,300,000
500,000
500,000
500,000
500,000
500,000
500,000
2,000,000
1,000,000
1,500,000

Classification

Long-term loans payable

Drawdown date

Last repayment date

Weighted-averageinterest rate

October 30, 2015
October 30, 2015
October 30, 2015
November 12, 2015
January 29, 2016
January 29, 2016
January 29, 2016
January 29, 2016
February 18, 2016
February 18, 2016
March 31, 2016
April 28, 2016
April 28, 2016
April 28, 2016
July 29, 2016
August 2, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
December 12, 2016
December 28, 2016
January 16, 2017
January 31, 2017
March 28, 2017
June 30, 2017
August 10, 2017
August 31, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
October 31, 2017
November 13, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 28, 2017
December 28, 2017
December 28, 2017
March 12, 2018
March 26, 2018
March 26, 2018
July 31, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 31, 2018
August 31, 2018
August 31, 2018
October 31, 2018

October 30, 2025
October 30, 2025
October 30, 2025
November 30, 2025
January 31, 2022
January 31, 2022
January 29, 2026
January 29, 2026
February 18, 2026
February 18, 2026
March 31, 2026
April 30, 2024
April 30, 2026
April 30, 2026
July 31, 2026
July 31, 2026
October 31, 2024
October 31, 2026
October 31, 2026
October 31, 2026
October 31, 2026
November 30, 2026
December 28, 2026
January 31, 2027
January 31, 2027
March 31, 2027
June 30, 2027
July 28, 2027
August 31, 2023
March 31, 2024
September 30, 2025
March 31, 2027
September 21, 2027
September 30, 2027
October 31, 2027
November 13, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
December 28, 2025
December 28, 2026
December 28, 2027
March 31, 2028
March 31, 2027
March 31, 2028
July 31, 2028
August 31, 2025
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2025
August 31, 2025
August 31, 2028
October 31, 2028

1.11%
1.11%
1.12%
1.17%
0.59%
0.64%
1.07%
1.02%
1.00%
1.00%
0.90%
0.65%
0.84%
0.87%
0.61%
0.54%
0.67%
0.88%
0.76%
0.73%
0.83%
0.98%
0.95%
0.86%
0.85%
0.85%
0.85%
0.80%
0.54%
0.56%
0.68%
0.73%
0.87%
0.85%
0.81%
0.93%
0.90%
0.82%
0.97%
0.94%
0.87%
0.90%
0.87%
0.74%
0.88%
0.86%
0.91%
0.81%
0.90%
0.99%
0.70%
1.00%
1.00%
1.00%
0.97%
0.70%
0.72%
1.01%
1.01%

Balance(In thousands of yen)¥

2,000,000
2,500,000
2,500,000
1,000,000
2,500,000
500,000
2,000,000
1,800,000
1,000,000
500,000
1,000,000
2,000,000
2,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
1,000,000
4,000,000
1,500,000
500,000
1,500,000
500,000
700,000
500,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
2,500,000
3,000,000
1,400,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
600,000
500,000
500,000
500,000
1,500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
1,000,000
500,000
500,000
500,000
300,000
700,000
1,500,000

Kenedix Office Investment Corporation27

Classification

Long-term loans payable
Subtotal
Investment corporation bonds

Subtotal
Total

Drawdown date

Last repayment date

Weighted-averageinterest rate

October 31, 2018
October 31, 2018

October 31, 2028
October 31, 2028

0.91%
1.01%

July 25, 2014
April 28, 2016
July 19, 2017
July 19, 2017

July 25, 2024
April 28, 2028
July 19, 2022
July 16, 2027

1.18%
0.90%
0.26%
0.64%

Balance(In thousands of yen)¥

1,000,000
500,000
157,300,000¥ 2,000,000
1,000,000
1,000,000
2,000,000
6,000,000¥183,050,000

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as ofApril 30, 2018:
Classification

Short-term loans payable

Subtotal
Current portion of long-term loans payable

SubtotalLong-term loans payable28

Kenedix Office Investment Corporation

July 31, 2017
August 31, 2017
November 30, 2017
January 31, 2018
January 31, 2018
March 30, 2018

Last repayment dateJuly 31, 2018
August 31, 2018
November 30, 2018
January 31, 2019
January 31, 2019
March 29, 2019

Weighted-averageinterest rate

July 31, 2013
August 19, 2013
August 19, 2013
August 19, 2013
August 19, 2013
August 19, 2013
August 30, 2013
August 30, 2013
August 30, 2013
October 31, 2012
October 31, 2013
October 31, 2016
November 12, 2013
November 29, 2013
March 28, 2012
March 28, 2012
March 12, 2014
March 31, 2014
March 30, 2016

July 31, 2018
August 19, 2018
August 19, 2018
August 19, 2018
August 19, 2018
August 19, 2018
August 31, 2018
August 31, 2018
August 31, 2018
October 31, 2018
October 31, 2018
October 31, 2018
November 12, 2018
November 30, 2018
March 28, 2019
March 28, 2019
March 31, 2019
March 31, 2019
March 31, 2019

0.57%
0.95%
0.95%
0.95%
0.95%
0.97%
1.08%
1.08%
1.08%
1.25%
0.89%
0.35%
0.82%
0.84%
1.77%
1.77%
0.78%
0.76%
0.17%

August 30, 2013
September 30, 2013
September 30, 2013
November 12, 2013
November 12, 2013
November 29, 2013
November 29, 2013
January 10, 2014
January 31, 2014
January 31, 2014
March 12, 2014
March 12, 2014
March 20, 2014
March 20, 2014
March 20, 2014
March 20, 2014
April 22, 2014
July 10, 2014

August 31, 2020
September 30, 2019
September 30, 2019
November 12, 2020
November 12, 2020
November 30, 2020
November 30, 2020
January 31, 2021
January 31, 2020
January 31, 2021
March 12, 2020
March 12, 2023
March 12, 2020
September 20, 2021
March 20, 2022
March 12, 2023
October 31, 2020
July 10, 2019

1.42%
1.06%
1.06%
1.07%
1.07%
1.12%
1.12%
1.21%
0.93%
1.13%
0.92%
1.36%
0.91%
1.01%
1.20%
1.35%
0.95%
0.64%

Drawdown date

0.35%
0.30%
0.35%
0.31%
0.36%
0.36%

Balance(In thousands of yen)¥

1,000,000
1,000,000
2,000,000
500,000
500,000
1,000,000
6,000,000¥
500,000
1,000,000
1,000,000
500,000
500,000
500,000
700,000
500,000
300,000
2,500,000
500,000
1,000,000
1,000,000
200,000
1,400,000
1,000,000
450,000
2,500,000
1,000,000
17,050,000¥ 1,500,000
1,800,000
900,000
2,000,000
500,000
1,000,000
900,000
1,300,000
3,700,000
2,300,000
1,800,000
1,800,000
3,000,000
4,000,000
3,000,000
2,000,000
2,900,000
500,000

Classification

Long-term loans payable

Drawdown date

Last repayment date

Weighted-averageinterest rate

July 10, 2014
July 10, 2014
July 14, 2014
July 31, 2014
July 31, 2014
July 31, 2014
July 31, 2014
August 29, 2014
September 1, 2014
September 1, 2014
September 3, 2014
September 3, 2014
September 22, 2014
September 30, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
January 30, 2015
January 30, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 27, 2015
March 12, 2015
March 31, 2015
April 30, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
September 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
November 12, 2015
January 29, 2016
January 29, 2016
January 29, 2016
January 29, 2016
February 18, 2016
February 18, 2016
March 31, 2016
April 28, 2016
April 28, 2016
April 28, 2016
July 29, 2016
August 2, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016

July 10, 2021
July 10, 2021
July 31, 2019
July 31, 2019
July 31, 2020
October 31, 2020
July 31, 2022
July 31, 2019
August 31, 2021
August 31, 2021
August 31, 2022
August 31, 2022
September 30, 2020
September 30, 2021
October 31, 2021
October 31, 2023
October 31, 2023
October 31, 2023
October 31, 2024
October 31, 2024
January 31, 2021
January 31, 2025
February 28, 2022
February 28, 2022
February 29, 2024
February 28, 2025
February 28, 2025
February 28, 2025
March 31, 2025
April 30, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
September 30, 2024
October 31, 2024
October 30, 2025
October 30, 2025
October 30, 2025
October 30, 2025
November 30, 2025
January 31, 2022
January 31, 2022
January 29, 2026
January 29, 2026
February 18, 2026
February 18, 2026
March 31, 2026
April 30, 2024
April 30, 2026
April 30, 2026
July 31, 2026
July 31, 2026
October 31, 2024
October 31, 2026
October 31, 2026
October 31, 2026

0.90%
0.90%
0.68%
0.62%
0.74%
0.76%
1.01%
0.65%
0.89%
0.89%
0.98%
0.98%
0.80%
0.89%
0.80%
1.07%
1.13%
1.07%
1.26%
1.26%
0.71%
1.16%
0.91%
0.91%
1.16%
1.31%
1.15%
1.22%
1.27%
0.83%
0.87%
0.87%
0.87%
0.87%
0.87%
0.87%
1.07%
0.99%
1.11%
1.11%
1.11%
1.12%
1.17%
0.59%
0.64%
1.07%
1.02%
1.00%
1.00%
0.90%
0.65%
0.84%
0.87%
0.61%
0.54%
0.67%
0.88%
0.76%
0.73%

Balance(In thousands of yen)¥

2,000,000
500,000
1,000,000
1,000,000
2,700,000
300,000
2,200,000
1,000,000
800,000
500,000
1,000,000
950,000
2,700,000
1,000,000
3,000,000
2,000,000
1,500,000
1,000,000
2,000,000
1,000,000
1,500,000
1,500,000
1,250,000
350,000
1,700,000
1,250,000
2,100,000
1,000,000
2,500,000
2,300,000
500,000
500,000
500,000
500,000
500,000
500,000
2,000,000
1,000,000
1,500,000
2,000,000
2,500,000
2,500,000
1,000,000
2,500,000
500,000
2,000,000
1,800,000
1,000,000
500,000
1,000,000
2,000,000
2,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
1,000,000
4,000,000

Kenedix Office Investment Corporation

29

Classification

Long-term loans payable

Subtotal
Current portion of investment corporation bonds
Subtotal
Investment corporation bonds

Subtotal
Total

Drawdown date

Last repayment date

Weighted-averageinterest rate

October 31, 2016
December 12, 2016
December 28, 2016
January 16, 2017
January 31, 2017
March 28, 2017
June 30, 2017
August 10, 2017
August 31, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
October 31, 2017
November 13, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 28, 2017
December 28, 2017
December 28, 2017
March 12, 2018
March 26, 2018
March 26, 2018

October 31, 2026
November 30, 2026
December 28, 2026
January 31, 2027
January 31, 2027
March 31, 2027
June 30, 2027
July 28, 2027
August 31, 2023
March 31, 2024
September 30, 2025
March 31, 2027
September 21, 2027
September 30, 2027
October 31, 2027
November 13, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
December 28, 2027
December 28, 2025
December 28, 2026
March 31, 2028
March 31, 2027
March 31, 2028

0.83%
0.98%
0.95%
0.86%
0.85%
0.85%
0.85%
0.80%
0.54%
0.56%
0.68%
0.73%
0.87%
0.85%
0.81%
0.93%
0.90%
0.82%
0.97%
0.94%
0.87%
0.90%
0.87%
0.86%
0.74%
0.88%
0.91%
0.81%
0.90%

September 12, 2013

September 12, 2018

1.00%

July 25, 2014
April 28, 2016
July 19, 2017
July 19, 2017

July 25, 2024
April 28, 2028
July 19, 2022
July 16, 2027

1.18%
0.90%
0.26%
0.64%

Balance(In thousands of yen)¥

1,500,000
500,000
1,500,000
500,000
700,000
500,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
2,500,000
3,000,000
1,400,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
600,000
500,000
500,000
500,000
1,500,000
1,000,000
1,000,000
155,000,000¥ 1,800,000
1,800,000¥ 2,000,000
1,000,000
1,000,000
2,000,000
6,000,000¥185,850,000

7. REDUCTION ENTRY
The amount of reduction entry of property, plant and equipment acquired by government subsidy is as follows:
In thousands of yen

Buildings in trust¥26,230¥26,230

8. PER UNIT INFORMATION

Net asset value per unit
Net income per unit
Weighted-average number of units (units)

As of April 30, 2018

As of October 31, 2018

Yen

From May 1, 2018
to October 31, 2018

¥535,141¥ 14,373
424,933

From November 1, 2017
to April 30, 2018

¥527,661¥ 14,396
404,885

The weighted-average number of units outstanding of 424,933 and 404,885 as of October 31, 2018 and April 30, 2018, respectively, wasused for the computation of the amount of net income per unit. Net income per unit after adjusting for residual units is not included because
there were no residual investment units.

30

Kenedix Office Investment Corporation

9. INCOME TAXESThe Investment Corporation is subject to corporate income taxes
at a regular statutory rate of approximately 32%. However, theInvestment Corporation may deduct from its taxable income
amounts distributed to its unitholders, provided the requirements
are met under the Special Taxation Measures Law of Japan. Under
this law, the Investment Corporation must meet a number of tax
requirements, including a requirement that it currently distributein excess of 90% of its net income for the fiscal period in order tobe able to deduct such amounts. If the Investment Corporation
does not satisfy all of the requirements, the entire taxable incomeof the Investment Corporation will be subject to regular corporate

Statutory tax rate
Deductible cash distributions
Provision of reserve for reduction entry
Others
Effective tax rateincome taxes. The Investment Corporation distributed in excessof 90% of its distributable income in the form of cash distributions
totaling ¥5,766 million and ¥5,247 million for the fiscal periods
ended October 31, 2018 and April 30, 2018, respectively. Therefore, such distributions were treated as deductible distributions forpurposes of corporate income taxes. The effective tax rate on theInvestment Corporation’s income was 0.02% for the fiscal periods
ended October 31, 2018 and April 30, 2018, respectively. The
following table summarizes the significant differences between thestatutory tax rate and the effective tax rate.

From May 1, 2018
to October 31, 201831.51%(29.74)(1.76)
0.01
0.02%

From November 1, 2017
to April 30, 201831.74%(28.57)(3.17)
0.02
0.02%

The significant components of deferred tax assets and liabilities as of October 31, 2018 and April 30, 2018 are as follows:
In thousands of yen

Deferred tax assets:
Enterprise tax payable
Amortization of leasehold right
Subtotal
Valuation allowance
Total deferred tax assets

As of October 31, 2018

As of April 30, 2018

¥

¥

30
3,873
3,904
(3,873)
¥
30

29
3,628
3,657
(3,628)¥29

10. 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 the Investment Trust Act.

11. RELATED-PARTY TRANSACTIONS(A) Parent Company, Major Corporate Unitholders and Other
Twenty-seventh fiscal period (From May 1, 2018 to October 31, 2018) and Twenty-sixth fiscal period (From November 1, 2017 toApril 30, 2018):
Not applicable(B) Affiliated Companies and Other
Twenty-seventh fiscal period (From May 1, 2018 to October 31, 2018) and Twenty-sixth fiscal period (From November 1, 2017 toApril 30, 2018):
Not applicable(C) Fellow Subsidiary Companies and Other
Twenty-seventh fiscal period (From May 1, 2018 to October 31, 2018) and Twenty-sixth fiscal period (From November 1, 2017 toApril 30, 2018):
Not applicable(D) Directors, Major Individual Unitholders and Other
Twenty-seventh fiscal period (From May 1, 2018 to October 31, 2018) and Twenty-sixth fiscal period (From November 1, 2017 toApril 30, 2018):
Not applicable

Kenedix Office Investment Corporation

31

12. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSSON SALE OF REAL ESTATE PROPERTY
Rent revenue - real estate, expenses related to rent business, and gain and loss on sale of real estate property for the fiscal periods fromMay 1, 2018 to October 31, 2018 and from November 1, 2017 to April 30, 2018 consist of the following:
In thousands of yen

Rental and other operating revenues:
Rent revenue - real estate:
Rental revenues
Common area charges
Subtotal
Others:Parking space rental revenues
Utility charge reimbursement
Miscellaneous
Subtotal
Total rent revenue - real estate
Property-related expenses:
Expenses related to rent business:
Property management fees and facility management fees
Depreciation
Utilities
Taxes
Insurance
Repairs and maintenance
Trust fees
OthersTotal expenses related to rent business
Gain on sale of real estate properties:
Revenue from sale of investment properties
Cost of investment properties
Other sales expenses
Gain on sale of real estate properties

From May 1, 2018
to October 31, 2018

From November 1, 2017
to April 30, 2018¥10,893,102
1,837,671
12,730,773¥10,509,225
1,842,504
12,351,730

519,171
1,230,853
321,947
2,071,972¥14,802,746

513,392
1,054,416
302,558
1,870,367¥14,222,098¥ 1,378,278
2,358,382
1,241,455
1,225,685
19,886
568,517
32,791
280,955¥ 7,105,951¥ 1,355,289
2,295,308
1,102,668
1,148,754
19,318767,074
32,748
256,837¥ 6,977,998¥ 7,297,000
6,714,787
49,722¥ 532,490¥ 9,730,000
9,056,075
123,782¥ 550,142

13. LEASESThe Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease terms of generally
two years for office buildings. The future minimum rental revenues under existing non-cancelable operating leases as of October 31, 2018
and April 30, 2018 are as follows:
In thousands of yen

Due within one year
Due after one year
Total

32

Kenedix Office Investment Corporation

As of October 31, 2018

¥1,621,774
5,956,433¥7,578,208

As of April 30, 2018

¥1,446,246
5,943,183¥7,389,430

14. FINANCIAL INSTRUMENTS
Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiringproperties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation
bonds and new investment units. The Investment Corporation
uses derivatives for the purpose of hedging its exposure tochanges in interest rates and does not enter into derivatives for
speculative or trading purposes. Management of surplus funds isundertaken in a prudent manner that considers fully such factors
as safety, liquidity, interest rate conditions and cash flows.
(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership(tokumei kumiai, “TK”) interests, are exposed to credit risk of theissuer and risk of fluctuation of value of its property.
Loans payable and investment corporation bonds are usedprimarily for procuring funds necessary for the acquisition ofproperties and have a redemption date of a maximum of approximately 10 years following the accounting date. Although a certain
portion of said liabilities are subject to interest rate fluctuation risk,
the Investment Corporation utilizes derivatives (interest-rate swap
and interest-rate cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are usedas derivative financial instruments. Utilizing interest-rate swap andinterest-rate cap transactions, the Investment Corporation fixes its
interest expense for long-term loans payable bearing interest at a
variable rate. With regard to hedge accounting methods, hedging
instruments and hedged items, hedge policy, and the assessmentof the effectiveness of hedging activities, please see Note 2 (L)“Derivative Financial Instruments.”(3) Risk management for financial instruments(a)	Monitoring of market risk (the risks arising from­fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and­interest-­rate cap transactions in order to minimize risk arising fromfluctuations in interest rates on funds procured. The Investment
Corporation periodically reviews the value of the property andfinancial condition of the issuer with regard to investment­securities.
(b)	Monitoring of liquidity risk (the risk that the Investment
Corporation may not be able to meet its obligations onscheduled due dates) associated with procurement offunds
Although loans and other liabilities are subject to liquidity risk,
the Investment Corporation reduces such risk by spreading out
payment due dates and by using diversified fund procurement
methods. Liquidity risk is also managed by such means as­regularly checking the balance of cash reserves.
(4)	Supplementary explanation of the estimated fair valueof financial instruments
The fair value of financial instruments is based on their quoted
market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various
assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in a different fairvalue.

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of October 31, 2018 and estimated fair value are shown in the following
table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
In thousands of yen(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable(4) Investment corporation bonds(5) Long-term loans payable
Subtotal
Derivative transactions (*)

Carrying value

Estimated fair value¥ 14,050,532
10,973,654
25,024,186
6,000,000—
13,750,000
6,000,000
157,300,000¥183,050,000
100,798¥ 14,050,532
10,973,654
25,024,186
6,000,000—
13,768,881
6,050,100
157,675,962¥183,494,943
100,798

Difference

¥

—
—
—
—
—
18,881
50,100375,962¥444,943—(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability position.

Kenedix Office Investment Corporation33

*1	Methods to determine the estimated fair value of financial instruments and other matters related to securities and­derivative 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 value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5) Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate
to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is
subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present valueof the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be
applied if similar loans were entered into.
Derivative Transactions
Please refer to Note 15 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification

Carrying value (In thousands of yen)

Investment securities¥1,114,806

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in
the preceding table.
*3 Redemption schedule for receivables

Due within 1 year or less
(In thousands of yen)

Cash and deposits
Cash and deposits in trust
Total¥14,050,532
10,973,654¥25,024,186*4 Redemption schedule for loans payable and investment corporation bonds
In thousands of yen

Short-term loans payable
Investment corporation bonds
Long-term loans payable
Total

Due within 1 year
or less¥ 6,000,000—
13,750,000¥19,750,000

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

¥

¥

¥

¥

—
—
18,600,000¥18,600,000——
21,300,000¥21,300,000—
1,000,000
17,050,000¥18,050,000——
9,300,000¥9,300,000

Due after
5 years¥—
5,000,000
91,050,000¥96,050,000

Twenty-sixth fiscal period (from November 1, 2017 to April 30, 2018)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiringproperties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation
bonds and new investment units. The Investment Corporation
uses derivatives for the purpose of hedging its exposure tochanges in interest rates and does not enter into derivatives for
speculative or trading purposes. Management of surplus funds isundertaken in a prudent manner that considers fully such factors
as safety, liquidity, interest rate conditions and cash flows.
(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership(tokumei kumiai, “TK”) interests, are exposed to credit risk of theissuer and risk of fluctuation of value of its property.

34

Kenedix Office Investment Corporation

Loans payable and investment corporation bonds are usedprimarily for procuring funds necessary for the acquisition ofproperties and have a redemption date of a maximum of approximately 10 years following the accounting date. Although a certain
portion of said liabilities are subject to interest rate fluctuation risk,
the Investment Corporation utilizes derivatives (interest-rate swap
and interest-rate cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are usedas derivative financial instruments. Utilizing interest-rate swap andinterest-rate cap transactions, the Investment Corporation fixes its
interest expense for long-term loans payable bearing interest at a
variable rate. With regard to hedge accounting methods, hedging
instruments and hedged items, hedge policy, and the assessmentof the effectiveness of hedging activities, please see Note 2 (L)“Derivative Financial Instruments.”

(3) Risk management for financial instruments(a)	Monitoring of market risk (the risks arising from­fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and­interest-­rate cap transactions in order to minimize risk arising fromfluctuations in interest rates on funds procured. The Investment
Corporation periodically reviews the value of the property andfinancial condition of the issuer with regard to investment­securities.

(4)	Supplementary explanation of the estimated fair valueof financial instruments
The fair value of financial instruments is based on their quoted
market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various
assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in a different fairvalue.

(b)	Monitoring of liquidity risk (the risk that the Investment
Corporation may not be able to meet its obligations onscheduled due dates) associated with procurement offunds
Although loans and other liabilities are subject to liquidity risk,
the Investment Corporation reduces such risk by spreading out
payment due dates and by using diversified fund procurement
methods. Liquidity risk is also managed by such means as­regularly checking the balance of cash reserves.
(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of April 30, 2018 and estimated fair value are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
In thousands of yen(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable(4) Investment corporation bonds(5) Long-term loans payable
Subtotal
Derivative transactions (*)

Carrying value

Estimated fair value¥ 13,033,326
10,444,809
23,478,136
6,000,000
1,800,000
17,050,000
6,000,000
155,000,000¥185,850,000
60,587¥ 13,033,326
10,444,809
23,478,136
6,000,000
1,804,644
17,088,337
6,057,000
155,280,513¥186,230,495
60,587

Difference

¥

—
—
—
—
4,644
38,33757,000280,513¥380,495—(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability position.

*1	Methods to determine the estimated fair value of financial instruments and other matters related to securities and­derivative 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 value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5) Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate
to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is
subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present valueof the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be
applied if similar loans were entered into.
Derivative Transactions
Please refer to Note 15 “DERIVATIVE TRANSACTIONS.”

Kenedix Office Investment Corporation35

*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification

Carrying value (In thousands of yen)

Investment securities¥1,090,336

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in
the preceding table.
*3 Redemption schedule for receivables

Due within 1 year or less
(In thousands of yen)

Cash and deposits
Cash and deposits in trust
Total¥13,033,326
10,444,809¥23,478,136*4 Redemption schedule for loans payable and investment corporation bonds
In thousands of yen

Short-term loans payable
Investment corporation bonds
Long-term loans payable
Total

Due within 1 year
or less¥ 6,000,000
1,800,000
17,050,000¥24,850,000

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

¥

¥

¥

¥

—
—
14,700,000¥14,700,000——
19,600,000¥19,600,000——
21,700,000¥21,700,000

Due after
5 years—
1,000,000
10,950,000¥11,950,000¥—
5,000,000
88,050,000¥93,050,000

15. DERIVATIVE TRANSACTIONS
The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of October 31, 2018:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Contracted amount (In thousands of yen)

Hedge accounting method

Type of derivative transactions

Hedged items

Principle method

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableSpecial treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableTotal

Maturing after
1 year

¥ 23,900,000 ¥ 23,900,000

93,900,000

82,550,000¥117,800,000 ¥106,450,000

Fair value(In thousands of yen)Calculation method for
applicable fair value¥100,798

Based on theamount provided
by counterparty
financial institutions*¥100,798(*) 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.

36

Kenedix Office Investment Corporation

The following summarizes the contracted amount and the fair value of interest-rate swap and interest-rate cap contracts as ofApril 30, 2018:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Contracted amount (In thousands of yen)
Maturing after
1 yearFair value(In thousands of yen)Calculation method for
applicable fair value¥60,587

Based on theamount provided
by counterparty
financial institutions

Hedge accounting method

Type of derivative transactions

Hedged items

Principle method

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableSpecial treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payable97,400,000

88,750,000*

Special treatment ofinterest-rate caps

Interest-rate caps
transaction

Long-term loans
payable500,000

—

*

Total

¥ 17,900,000 ¥ 17,900,000¥115,800,000 ¥106,650,000¥60,587(*) Interest-rate swaps and interest-rate caps 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.

16. INVESTMENT AND RENTAL PROPERTIES
Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo metropolitan area for the purpose of generating rental
revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of April 30, 2018

¥396,308,119

Net change¥12,696,581

As of October 31, 2018

¥409,004,701

Fair value
As of October 31, 2018
(In thousands of yen)

¥465,637,000*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers. Fair value at the end of the fiscal period under review of Frame
Jinnan-zaka (51.0% of quasi co-ownership interest) that was sold on November 1, 2018 is calculated based on the sale price (¥5,253,000 thousand) in the transaction
agreement on May 14, 2018.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increase/decrease factors were theacquisition of one property totaling ¥20,841,117 thousand, the sales of two properties totaling ¥6,714,787 thousand and depreciation amounting to ¥2,358,382
thousand.

Income and loss in the fiscal period ended October 31, 2018 for real estate for rental purposes is listed in Note 12 “BREAKDOWN OFRENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATEPROPERTY.”
Twenty-sixth fiscal period (from November 1, 2017 to April 30, 2018)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo metropolitan area for the purpose of generating rental
revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of October 31, 2017

¥382,081,158

Net change¥14,226,960

As of April 30, 2018

¥396,308,119

Fair value
As of April 30, 2018
(In thousands of yen)¥442,773,000*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers. Fair value at the end of the fiscal period under review of KDX­Hamamatsucho Dai-2 Building and Frame Jinnan-zaka (49.0% of quasi co-ownership interest) that were sold on July 2, 2018 and Frame Jinnan-zaka (51.0% of quasi
co-ownership interest) that is scheduled to be sold on November 1, 2018 are calculated based on the sale price (¥12,550,000 thousand) in the transaction agreement
on May 14, 2018.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increase/decrease factors were theacquisition of two properties totaling ¥24,692,691 thousand, the sales of three properties totaling ¥9,056,075 thousand and depreciation amounting to ¥2,295,308
thousand.

Income and loss in the fiscal period ended April 30, 2018 for real estate for rental purposes is listed in Note 12 “BREAKDOWN OF RENTALAND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATEPROPERTY.”

Kenedix Office Investment Corporation

37

17. SEGMENT AND RELATED INFORMATION
Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no r­eportablesegment subject to disclosure.
(B) Related Information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating
revenues on the statement of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues on the statement ofincome and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount ofproperty, plant and equipment on the balance sheet.
(3) Information about each major customer
Disclosure is omitted because net sales to a single external ­customer account for less than 10% of the operating revenues on the statementof income and retained earnings.
Twenty-sixth fiscal period (from November 1, 2017 to April 30, 2018)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no r­eportablesegment subject to disclosure.
(B) Related Information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating
revenues on the statement of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues on the statement ofincome and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount ofproperty, plant and equipment on the balance sheet.
(3) Information about each major customer
Disclosure is omitted because net sales to a single external ­customer account for less than 10% of the operating revenues on the statementof income and retained earnings.

18. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable38

Kenedix Office Investment Corporation

19. DISTRIBUTIONS

I. Retained earnings at the end of period
II. Total distributions
Distributions per unit
III. Voluntary reserve (provision)
Provision of reserve for reduction entry
IV. 	Retained earnings brought forward to
the next period
Method of calculating distribution amount

Yen

Twenty-seventh fiscal period(From May 1, 2018 to October 31, 2018)¥6,107,886,067¥5,766,887,580¥
13,458

Twenty-sixth fiscal period(From November 1, 2017 to April 30, 2018)¥5,828,847,806¥5,247,309,600¥
12,960¥ 340,998,487¥ 581,538,206—
In accordance with the policy stipulated in
Article 35 (1) of its Articles of Incorporation,
the Investment Corporation determines thatthe amount of distribution shall exceed theamount equivalent to 90% of its distributableprofit as stipulated in Article 67-15 of the Act
on Special Measures Concerning Taxation,and shall be up to the amount of its profits
as the ceiling. Following this policy, theInvestment Corporation has decided that, of
the amount remaining after the provision ofreserve for reduction entry as stipulated in
Article 66-2 of the Act on Special Measures
Concerning Taxation is deducted from unappropriated retained earnings, it shall distribute the outstanding ¥5,766,887,580 as profit
distribution.
In addition, the Investment Corporation
decided not to distribute cash in excess of
distributable profit, stipulated in Article 35 (2)of its Articles of Incorporation.

—
In accordance with the policy stipulated in
Article 35 (1) of its Articles of Incorporation,
the Investment Corporation determines thatthe amount of distribution shall exceed theamount equivalent to 90% of its distributableprofit as stipulated in Article 67-15 of the Act
on Special Measures Concerning Taxation,and shall be up to the amount of its profits
as the ceiling. Following this policy, theInvestment Corporation has decided that, of
the amount remaining after the provision ofreserve for reduction entry as stipulated in
Article 66-2 of the Act on Special Measures
Concerning Taxation is deducted from unappropriated retained earnings, it shall distribute the outstanding ¥5,247,309,600 as profit
distribution.
In addition, the Investment Corporation
decided not to distribute cash in excess of
distributable profit, stipulated in Article 35 (2)of its Articles of Incorporation.

Kenedix Office Investment Corporation

39