FINANCIAL SECTION
Contents
Independent Auditor’s Report

17

Balance Sheets

18

Statements of Income and Retained Earnings

19

Statements of Changes in Net Assets

19Statements of Cash Flows20

Notes to Financial Statements

21

Financial Summary (Unaudited)
Historical Operating Trends
For the 17th–21st 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)Unitmn yenmn yenmn yenmn yenmn yenmn yenmn yenmn yen%mn yen%mn yen(Period-on-period change)%

Unitholders’ capitalmn yen(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
yen
mn yen
yen
yen
yen
%
%
%
%
%
propertiesm2%
mn yenmn yenmn yenmn yenyen

17th Period

18th Period

19th Period

20th Period

21st Period(as of Oct. 31, 2013)(as of Apr. 30, 2014)(as of Oct. 31, 2014)(as of Apr. 30, 2015)(as of Oct. 31, 2015)

9,819
9,501
5,578
4,845
4,240
2,832
2,831
316,753

10,895
10,330
6,611
5,047
4,283
2,887
2,885
355,167

12,928
11,295
7,899
5,557
5,028
3,570
3,569
388,169

14,13012,836
7,593
6,377
6,537
5,111
5,110
407,799

13,74013,226
7,800
6,668
5,940
4,565
4,564
407,217(+2.8)(+12.1)(+9.3)(+5.1)(–0.1)

150,558

167,746

187,685

174,600

174,100(+5.8)(+11.4)(+11.9)(–7.0)(–0.3)

150,781

170,109180,844

211,951

211,914(+0.1)(+12.8)(+6.3)(+17.2)(–0.0)

147,153

166,261

176,632

206,199

206,199(0.0)(+13.0)(+6.2)(+16.7)(0.0)

286,550
526,195
2,665
9,302
9,302
—
0.9 (1.8)
1.9 (3.7)
47.6

332,540
511,546
3,205
9,638
9,638
—
0.9 (1.7)
1.8 (3.6)
47.9

355,010509,407
3,571
10,06010,060—1.0 (1.9)
2.0 (4.0)
46.6

404,885
523,484
4,600
11,363
11,363—
1.3 (2.6)
2.6 (5.2)
52.0

404,885
523,394
4,170
10,30010,300—1.1 (2.2)
2.2 (4.3)
52.0(–1.3)(+0.3)(–1.3)(+5.4)(+0.1)

47.5

47.2

48.4

42.8

42.8

(+1.3)(–0.3)(+1.1)(–5.5)(–0.1)

94.1

111.0

100.0

90.0

91.3

85
358,517.31
95.8
1,696
894
6,352
4,293
14,984

89386,659.01
96.0
1,826
711
7,109
5,031
15,13094
437,233.24
95.6
2,022
550
7,760
7,116
20,04597453,999.44
96.5
2,221
329
8,680
6,909
17,065

97453,681.06
94.9
2,218
469
8,775
6,487
16,023notes: 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 17th Fiscal Period are calculated based on a period of 184 days, 181 days for the 18th Fiscal Period, 184 days for the 19th Fiscal Period, 181 days for the 20th Fiscal Period and 184
days for the 21st 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 – Rental expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate property + Loss on sale of real estate property
7. FFO per unit = FFO/Number of investment units issued and outstanding (figures below ¥1 rounded down)
8. Where applicable, figures are rounded down to the nearest million.

16

Kenedix Office Investment Corporation Semiannual ReportKenedix Office Investment Corporation Semiannual Report17Balance Sheets
Kenedix Office Investment Corporation
As of October 31, 2015 and April 30, 2015
In thousands of yen
As of October 31, 2015

As of April 30, 2015

ASSETS
Current assets:
Cash and bank deposits (Notes 3 and 13)¥ 22,587,773¥ 24,601,157

Rental receivables

338,287

321,915

Other current assets (Note 8)

97,212

176,000

23,023,272

25,099,072

Land

271,537,963

269,158,456

Buildings and structures (Note 6)

132,688,163

131,523,414

Machinery and equipment

1,905,006

1,890,733

Tools, furniture and fixtures

503,925484,345    Total current assets
Property and equipment, at cost: (Notes 4 and 15)

Construction in progress

—

1,785

Less-accumulated depreciation(25,521,651)(23,506,928)    Net property and equipment

381,113,406

379,551,805

Other assets:
Ground leasehold (Note 15)353,234

354,009

Investment securities (Note 13)

1,100,235

1,076,656

Corporate bond issuance costs

34,102

39,414

Unit issuance costs

167,122

223,603

Other assets (Note 15)   Total assets

1,426,091

1,454,528¥407,217,462¥407,799,087¥  1,372,165¥  1,390,897

33,300,000

35,800,000

LIABILITIES AND NET ASSETS
Liabilities
Current liabilities:
Trade and other payables
Short-term debt and current portion of long-term debt (Notes 5 and 13)
Deposits received
Rents received in advance

46,84057,472

1,958,661

2,108,001

Other current liabilities

497,937

355,338    Total current liabilities

37,175,603

39,711,708

Corporate bonds (Notes 5 and 13)

8,300,000

8,300,000

Long-term debt (Notes 5 and 13)

132,500,000

130,500,000

Leasehold and security deposits received

17,327,076

17,336,230

195,302,679

195,847,938

206,199,946

206,199,946

1,150,495

640,811Retained earnings

4,564,342

5,110,392

Total surplus

5,714,837

5,751,203

211,914,783

211,951,149   Total liabilities
Net Assets
Unitholders’ equity
Unitholders’ capital   Units authorized: 2,000,000 units   Units issued and outstanding: 404,885 units   As of October 31, 2015 and April 30, 2015, respectively
Surplus
Voluntary retained earnings   Reserve for reduction entry

Total unitholders’ equity   Total net assets (Note 9)

211,914,783

211,951,149   Total liabilities and net assets¥407,217,462¥407,799,087

See accompanying notes to the financial statements.

18

Kenedix Office Investment Corporation Semiannual ReportStatements of Income and Retained Earnings
Kenedix Office Investment Corporation
For the period from May 1, 2015 to October 31, 2015 and the period from November 1, 2014 to April 30, 2015
In thousands of yen
From May 1, 2015
to October 31, 2015

From November 1, 2014
to April 30, 2015

Operating revenues:
Rental revenues (Note 11)¥13,226,032¥12,836,807

Gain on sale of real estate property (Note 11)461,366

709,633

Dividends income

53,278583,910

13,740,676

14,130,350   Total operating revenues
Operating expenses:
Property-related expenses (Note 11)

6,668,992

6,377,605

Loss on sale of real estate property (Note 11)

165,691

287,720

Asset management fees

753,003

740,454

Administrative service and custodian fees

78,53876,528Other operating expenses

134,223

110,841   Total operating expenses

7,800,447

7,593,148

Operating income

5,940,229

6,537,202

Non-operating expenses:
Interest expense

1,058,112

1,086,470

Financing-related expenses

220,018

244,331

Amortization of unit issuance costs

56,481

56,481

Amortization of corporate bond issuance costs

5,312

5,225

Others, net

34,701

32,980   Total non-operating expenses

1,374,624

1,425,487

Ordinary income

4,565,605

5,111,715

Income before income taxes

4,565,605

5,111,715

1,263

1,323

Income taxes (Note 8)
Net income
Retained earnings at the end of period

4,564,342

5,110,392¥ 4,564,342¥ 5,110,392

See accompanying notes to the financial statements.

Statements of Changes in Net Assets
Kenedix Office Investment Corporation
For the period from May 1, 2015 to October 31, 2015 and the period from November 1, 2014 to April 30, 2015
In thousands of yen
Unitholders’ equity
Surplus
Voluntary retained
earnings

Balance as of October 31, 2014

Unitholders’ capital

Reserve for
reduction entry

Retained earnings

Total surplus

Totalunitholders’equityTotal¥176,632,550¥  642,566¥ 3,569,645¥ 4,212,211¥180,844,761¥180,844,761
29,567,396

Changes during the fiscal period
29,567,396

—

—

—

29,567,396

Reversal of reserve for reduction entry

New unit issuance—(1,755)

1,755

—

—

—

Payments of dividends——(3,571,400)(3,571,400)(3,571,400)(3,571,400)

Net income——

5,110,392

5,110,392

5,110,392

5,110,392

29,567,396(1,755)

1,540,747

1,538,992

31,106,388

31,106,388¥206,199,946¥  640,811¥ 5,110,392¥ 5,751,203¥211,951,149¥211,951,149

Provision of reserve for reduction entry—

509,684(509,684)———

Payments of dividends——(4,600,708)(4,600,708)(4,600,708)(4,600,708)
4,564,342    Total changes during the fiscal period
Balance as of April 30, 2015
Changes during the fiscal period

Net income    Total changes during the fiscal period
Balance as of October 31, 2015——

4,564,342

4,564,342

4,564,342—

509,684(546,050)(36,366)(36,366)(36,366)¥206,199,946¥1,150,495¥ 4,564,342¥ 5,714,837¥211,914,783¥211,914,783

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation Semiannual Report19Statements of Cash Flows
Kenedix Office Investment Corporation
For the period from May 1, 2015 to October 31, 2015 and the period from November 1, 2014 to April 30, 2015
In thousands of yen
From May 1, 2015
to October 31, 2015

From November 1, 2014
to April 30, 2015¥  4,565,605¥  5,111,715

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes Adjustments to reconcile income before income taxes to
net cash provided by (used in) operating activities:   Depreciation and amortization

2,494,805

2,520,961  Interest income

(738)

(772)

  Interest expense

1,058,112

1,086,470

Changes in assets and liabilities:  Rental receivables(16,372)(28,754)—752,671   Accrued consumption tax

159,196248,360   Trade and other payables

41,052

223,597   Rents received in advance(149,339)

239,132   Property and equipment due to sale

5,309,142

6,200,424   Consumption tax refundable  Others, net(145,670)

97,348    Subtotal

13,315,793

16,451,152

Interest income received

738

772

(1,070,731)(1,109,425)

(925)

(904)

12,244,875

15,341,595

Purchases of property and equipment(9,078,473)(22,545,378)

Proceeds from investment securities—

1,602,482

Proceeds from leasehold and security deposits received

1,100,651

1,599,129

Payments of leasehold and security deposits received(1,180,848)(663,116)

Cash payments of interest expense
Cash payments of income taxes
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:Payments of restricted bank deposits(59,130)(88,482)

Proceeds from restricted bank deposits

108,411

1,475,886

Others, net
Net cash provided by (used in) investing activities—

937(9,109,389)(18,618,542)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt

1,000,000

1,500,000

Payments of short-term debt

(1,500,000)(14,400,000)

Proceeds from long-term debt

14,500,000

15,450,000

Payments of long-term debt

(14,500,000)(15,635,000)—

29,451,732

Proceeds from issuance of investment units
Payment of dividends(4,599,589)(3,571,135)

Net cash provided by (used in) financing activities(5,099,589)

12,795,597

Net change in cash and cash equivalents(1,964,103)

9,518,650

Cash and cash equivalents at the beginning of period

23,724,684

14,206,034¥ 21,760,581¥ 23,724,684

Cash and cash equivalents at the end of period (Note 3)
See accompanying notes to the financial statements.

20

Kenedix Office Investment Corporation Semiannual ReportNotes to Financial Statements
Kenedix Office Investment Corporation
For the period from May 1, 2015 to October 31, 2015 and the period from November 1, 2014 to April 30, 2015

1.

ORGANIZATION AND BASIS OF PRESENTATIONORGANIZATION
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 ownership and operation of selected office buildings, residential and retail properties in Japan, with a focus on mid-sized
office buildings in the Tokyo Metropolitan Area. The Investment Corporation was incorporated on May 6, 2005 as an investment 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 and outstanding (Securities Code: 8972).
Subsequently, the Investment Corporation raised funds through seven public offerings and other means including global 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 by securing stable earnings and sustainable investment growth. To this end, the Investment Corporation adopts a dynamic and flexible
investment stance that accurately reflects its environment and market trends, and endeavors to ensure a timely response to each and every opportunity.
During the period ended April 30, 2015, the Investment Corporation acquired seven office buildings (KDX Yokohama Nishiguchi Building: acquisition price of¥2,750 million, KDX Shin-Yokohama 214 Building: acquisition price of ¥2,200 million, KDX Minami-Honmachi Building: acquisition price of ¥2,200 million,
BUREX Toranomon: acquisition price of ¥1,750 million, KDX Sakura-dori Building: acquisition price of ¥5,900 million, KDX Ginza East Building (Note): acquisition priceof ¥3,600 million and Pentel Building: acquisition price of ¥3,350 million) and sold KDX Minami Semba Dai-2 Building (initial acquisition price of ¥1,560 million), KDX
Hamacho Building (initial acquisition price of ¥2,300 million), Venus Hibarigaoka (initial acquisition price of ¥1,800 million) and Sendai Nikko Building (initial acquisition price of ¥950 million) (with a total combined disposition price of ¥6,792 million). Furthermore, the preferred equity securities (Toyonaka Property TMK) have beenrefunded in full.
During the period ended October 31, 2015, the Investment Corporation acquired one office building (Hamamatsucho Center Building: acquisition price of ¥3,950
million) located in the Tokyo Metropolitan Area, one office building (Shin Osaka Center Building: acquisition price of ¥4,550 million) located in Other Regional Areas,and sold Nagoya Nikko Shoken Building (initial acquisition price of ¥4,158 million) and KDX Nogizaka Building (initial acquisition price of ¥1,065 million) (with a total
combined disposition price of ¥5,760 million).
At the end of the twentieth and twenty-first fiscal periods, the Investment Corporation had total unitholders’ capital of ¥206,200 million with 404,885 investment
units outstanding, respectively. The Investment Corporation owned a portfolio of 97 properties (consisting of 92 office buildings, one residential property, three central
urban retail properties and one other property) with total acquisition prices of ¥385,094 million and ¥388,371 million at the end of the twentieth and twenty-firstfiscal periods, respectively. The occupancy ratios were approximately 96.5% and 94.9% at the end of the twentieth and twenty-first fiscal periods, respectively.
Note: The property name of 35 Sankyo Building will be changed to KDX Ginza East Building on February 1, 2016.

BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust Act of Japan, the JapaneseCorporation Law, the Financial Instruments and Exchange Law of Japan and related regulations, and in conformity with accounting principles and practices generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application and disclosure requirements of the International Financial
Reporting Standards or accounting principles generally accepted in the United States of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared for Japanese domestic purposes fromthe accounts and records maintained by the Investment Corporation and filed with the Kanto Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes have been added and certain reclassifications havebeen made to the financial statements issued domestically in order to present them in a form that is more familiar to readers outside Japan. The Investment
Corporation’s fiscal period is a six-month period that ends at the end of April and the end of October each year. The Investment Corporation does not prepare consolidated financial statements because it has no subsidiaries.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) SECURITIESNon-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method. Concerning silent
partnership (tokumei kumiai, “TK”) interests, the method of incorporating the amount of equity equivalent to the portion that corresponds to the net gain or loss of the
TK is adopted.
(B) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful lives of the assets
ranging as stated below:
From May 1, 2015
to October 31, 2015

From November 1, 2014
to April 30, 2015

Buildings and structures

2–49 years

2–49 years

Machinery and equipment

3–17 years

3–17 years

Tools, furniture and fixtures

3–20 years

3–20 years

Kenedix Office Investment Corporation Semiannual Report21(C) UNIT ISSUANCE COSTS
Unit issuance costs are amortized over a period of three years under the straight-line method.
(D) CORPORATE BOND ISSUANCE COSTS
Corporate bond issuance costs are amortized over a maturity period under the straight-line method.
(E) 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 assets and liabilities in trust arerecorded in the relevant balance sheets and statements of income and retained earnings.
(F) GROUND LEASEHOLD
Fixed term leaseholds on the building and special agreements on buildings sales are amortized over a contractual period of 48 years and 9 months under thestraight-line method.
(G) REVENUE RECOGNITION
Operating revenues consist of rental revenues including base rents, common area charges, and other operating revenues, which include utility charge reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an accrual basis over the life of each lease.
Utility charge reimbursements are recognized when earned and their amounts can be reasonably estimated. Reimbursements from tenants including utility charge
reimbursements are recorded on a gross basis and such amounts are recorded both as revenues and expenses during the fiscal period.
(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 the said period. Under Japanese tax rules, the seller ofproperty at the time of disposal is liable for these taxes on the property from the date of disposal to the end of the calendar year in which the property is disposed.
The seller, however, 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 dateof each property through the end of the calendar year. The amounts of those allocated portions of the property-related taxes are capitalized as part of the acquisition
costs of the related properties. Capitalized property-related taxes amounted to ¥13,308 thousand and ¥116,101 thousand as of October 31, 2015 and April 30,
2015, respectively. In subsequent calendar years, such property-related taxes are charged as operating expenses in the fiscal period to which the installments ofsuch taxes correspond.
(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 thestatutory 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 acquisitionof assets are included in the cost of acquisition for each asset.
(K) DERIVATIVE FINANCIAL INSTRUMENTS
The Investment Corporation utilizes interest-rate swap and interest-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 the criteria for deferral hedging accounting. However, the Investment Corporation adopted special treatment forinterest-swap and interest-rate cap contracts if they met the criteria for hedging accounting under this treatment, whereby the net amount to be paid or received
under the interest-rate swap and interest-rate cap contract is added to or deducted from the interest on the assets or liabilities for which the swap and cap contract
was executed. The hedge effectiveness for the interest-rate swap and interest-rate cap contract is assessed each fiscal period except for those that meet the criteriaof special treatment.
(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 andwith insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
(M) ROUNDING OF AMOUNTS PRESENTED
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory authorities in Japan,
whereas amounts have been rounded to the nearest million in the accompanying financial statements. Totals shown in the accompanying financial statements do notnecessarily agree with the sums of the individual amounts.

22

Kenedix Office Investment Corporation Semiannual Report

3.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of the following as of October 31, 2015 and April 30, 2015:
In thousands of yen
As of October 31, 2015

As of April 30, 2015

¥22,587,773¥24,601,157

Cash and bank deposits
Restricted bank deposits (Note)
Cash and cash equivalents(827,192)(876,473)¥21,760,581¥23,724,684

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

4.

SCHEDULE OF PROPERTY AND EQUIPMENT
In millions of yen
As of October 31, 2015

As of April 30, 2015

Acquisition costs

Accumulated
depreciation

Book value

Acquisition costs

Accumulated
depreciation

Book valueLand¥271,538¥    —¥271,538¥269,158¥    —¥269,158

Buildings and structures

132,688

24,428108,260

131,523

22,486109,037

Machinery and equipment

1,905

835

1,070

1,891

777

1,114

Tools, furniture and fixtures

504

259

245

484

243

241

Construction in progress

—

—

—

2

—

2

¥406,635¥25,522¥381,113¥403,058¥23,507¥379,552  Total5.

SHORT-TERM DEBT, LONG-TERM DEBT AND CORPORATE BONDS
The following summarizes short-term debt, long-term debt and corporate bonds outstanding as of October 31, 2015:
Classification

Short-term debt
Current portion of long-term debt

Subtotal

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

April 2, 2015

March 31, 20160.53%¥  1,500

July 31, 2015

July 31, 2016

0.53%

1,000

November 12, 2010

November 12, 2015

1.79%

1,200

November 12, 2010

November 12, 2015

1.79%

800

December 1, 2010

November 12, 2015

1.32%

800

December 1, 2010

November 12, 2015

1.32%

200

January 31, 2011

January 29, 2016

1.94%

800

February 28, 2011

January 29, 2016

1.95%

500

March 31, 2011

January 29, 2016

1.91%

2,000

April 28, 2011

January 29, 2016

1.89%

1,000

January 10, 2012

January 29, 2016

1.27%

2,500

February 18, 2013

February 18, 2016

0.84%

1,500

March 31, 2011

March 31, 2016

1.22%

1,000

May 1, 2006

April 30, 2016

2.73%

5,000

April 30, 2013

April 30, 2016

0.67%

1,000

July 31, 2013

July 29, 2016

0.57%

1,500

December 26, 2011

October 31, 2016

1.44%

2,500

December 26, 2011

October 31, 2016

1.42%

2,500

December 26, 2011

October 31, 2016

1.44%

2,000

October 31, 2012

October 31, 2016

1.06%

2,500

October 31, 2012

October 31, 2016

1.05%

1,500
¥ 33,300

Kenedix Office Investment Corporation Semiannual Report23Classification

Long-term debt

24

Kenedix Office Investment Corporation Semiannual Report

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

November 12, 2010

November 12, 20172.02%¥  2,300

December 1, 2010

November 12, 2017

2.21%

700

March 28, 2012

March 28, 2017

1.36%

500

March 28, 2012

March 28, 2019

1.77%

1,400

March 28, 2012

March 28, 2019

1.77%

1,000

June 29, 2012

June 30, 2017

1.29%

1,500

September 21, 2012

September 21, 2017

1.16%

5,000

September 21, 2012

September 21, 2017

1.16%

1,000

September 21, 2012

September 21, 2017

1.16%

1,000

October 31, 2012

October 31, 2017

1.10%

2,500

October 31, 2012

October 31, 2018

1.25%

2,500

December 10, 2012

December 12, 2016

0.98%

500

December 28, 2012

December 28, 2016

1.01%

2,000

December 28, 2012

December 28, 2017

1.09%

500

December 28, 2012

December 29, 2017

1.09%

500

January 15, 2013

January 15, 2017

0.97%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

July 31, 2013

July 31, 2018

0.67%

500

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.97%

500

August 19, 2013

August 19, 2018

0.95%

500

August 30, 2013

August 31, 2018

1.08%

700

August 30, 2013

August 31, 2018

1.08%

500

August 30, 2013

August 31, 2018

1.08%

300

August 30, 2013

August 31, 2020

1.42%

1,500

September 30, 2013

September 30, 2019

1.06%

1,800

September 30, 2013

September 30, 2019

1.06%

900

October 31, 2013

October 31, 2018

0.89%

500

November 12, 2013

November 12, 2018

0.82%

1,000

November 12, 2013

November 12, 2020

1.07%

2,000

November 12, 2013

November 12, 2020

1.07%

500

November 29, 2013

November 30, 2018

0.84%

200
1,000

November 29, 2013

November 30, 2020

1.12%

November 29, 2013

November 30, 2020

1.12%

900

January 10, 2014

January 31, 2021

1.21%

1,300

January 31, 2014

January 31, 2017

0.67%

1,200

January 31, 2014

January 31, 2020

0.93%

3,700

January 31, 2014

January 31, 2021

1.13%

2,300

March 12, 2014

March 12, 2018

0.75%

2,250

March 12, 2014

March 31, 2019

0.78%

450

March 12, 2014

March 12, 2020

0.92%

1,800

March 12, 2014

March 12, 2023

1.36%

1,800

March 20, 2014

March 12, 2020

0.91%

3,000

March 20, 2014

September 20, 2021

1.01%

4,000

March 20, 2014

March 20, 2022

1.20%

3,000

March 20, 2014

March 12, 2023

1.35%

2,000

March 31, 2014

March 31, 2019

0.76%

2,500

April 22, 2014

October 31, 2020

0.95%

2,900

July 10, 2014

July 10, 2019

0.64%

500

Classification

Long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)¥  2,000

July 10, 2014

July 10, 2021

0.90%

July 10, 2014

July 10, 2021

0.90%

500

July 14, 2014

July 31, 2019

0.68%

1,000

July 31, 2014

July 31, 2019

0.62%

1,000

July 31, 2014

July 31, 2020

0.74%

2,700

July 31, 2014

October 31, 2020

0.76%

300

July 31, 2014

July 31, 2022

1.01%

2,200

August 29, 2014

July 31, 2019

0.65%

1,000

September 1, 2014

August 31, 2021

0.89%

800

September 1, 2014

August 31, 2021

0.89%

500

September 3, 2014

August 31, 2022

0.98%

1,000

September 3, 2014

August 31, 2022

0.98%

950

September 22, 2014

September 30, 2020

0.80%

2,700

September 30, 2014

September 30, 2021

0.89%

1,000

October 31, 2014

October 31, 2021

0.80%

3,000

October 31, 2014

October 31, 2023

1.07%

2,000

October 31, 2014

October 31, 2023

1.13%

1,500

October 31, 2014

October 31, 2023

1.07%

1,000

October 31, 2014

October 31, 2024

1.26%

2,000

October 31, 2014

October 31, 2024

1.26%

1,000

January 30, 2015

January 31, 2021

0.71%

1,500

January 30, 2015

January 31, 2025

1.16%

1,500

February 18, 2015

February 28, 2022

0.91%

1,250

February 18, 2015

February 28, 2022

0.91%

350

February 18, 2015

February 29, 2024

1.16%

1,700

February 18, 2015

February 28, 2025

1.31%

1,250

February 27, 2015

February 28, 2025

1.15%

2,100

March 12, 2015

February 28, 2025

1.22%

1,000

March 31, 2015

March 31, 2025

1.27%

2,500

April 30, 2015

April 30, 2022

0.83%

2,300

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

September 30, 2015

September 30, 2024

1.06%

2,000

October 30, 2015

October 31, 2024

0.99%

1,000

October 30, 2015

October 30, 2025

1.11%

1,500

October 30, 2015

October 30, 2025

1.11%

2,000

October 30, 2015

October 30, 2025

1.11%

2,500

October 30, 2015

October 30, 2025

1.12%

Subtotal
Corporate bonds

2,500¥132,500

March 15, 2007

March 15, 20172.37%¥  3,000March 8, 2012

September 8, 2017

2.00%

1,500

September 12, 2013

September 12, 2018

1.00%

1,800

July 25, 2014

July 25, 2024

1.18%

2,000

Subtotal¥  8,300  Total¥174,100

Kenedix Office Investment Corporation Semiannual Report25

The following summarizes short-term debt, long-term debt and corporate bonds outstanding as of April 30, 2015:
Classification

Short-term debt

Current portion of long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

May 30, 2014

May 29, 2015

0.53%¥    500

July 31, 2014

July 31, 2015

0.48%

1,000

April 2, 2015

March 31, 2016

0.53%

1,500

February 28, 2011

August 31, 2015

1.91%

3,000

March 30, 2012

September 30, 2015

1.21%

2,000

April 27, 2012

October 30, 2015

1.27%

1,000

April 28, 2011

October 31, 2015

1.86%

1,500

December 26, 2011

October 31, 2015

1.34%

2,500

December 26, 2011

October 31, 2015

1.32%

2,500

December 26, 2011

October 31, 2015

1.34%

2,000

November 12, 2010

November 12, 2015

1.79%

1,200

November 12, 2010

November 12, 2015

1.79%

800

December 1, 2010

November 12, 2015

1.38%

800

December 1, 2010

November 12, 2015

1.38%

200

January 31, 2011

January 29, 2016

1.94%

800

February 28, 2011

January 29, 2016

1.95%

500

March 31, 2011

January 29, 2016

1.91%

2,000

April 28, 2011

January 29, 2016

1.89%

1,000

January 10, 2012

January 29, 2016

1.27%

2,500

February 18, 2013

February 18, 2016

0.84%

1,500

March 31, 2011

March 31, 2016

1.24%

1,000

May 1, 2006

April 30, 2016

2.73%

5,000

April 30, 2013

April 30, 2016

0.68%

SubtotalLong-term debt

26

Kenedix Office Investment Corporation Semiannual Report

1,000¥ 35,800

November 12, 2010

November 12, 2017

2.02%

December 1, 2010

November 12, 20172.21%¥  2,300
700

December 26, 2011

October 31, 2016

1.44%

2,500

December 26, 2011

October 31, 2016

1.42%

2,500

December 26, 2011

October 31, 2016

1.44%

2,000

March 28, 2012

March 28, 2017

1.36%

500

March 28, 2012

March 28, 2019

1.77%

1,400

March 28, 2012

March 28, 2019

1.77%

1,000

June 29, 2012

June 30, 2017

1.29%

1,500

September 21, 2012

September 21, 2017

1.16%

5,000

September 21, 2012

September 21, 2017

1.16%

1,000

September 21, 2012

September 21, 2017

1.16%

1,000

October 31, 2012

October 31, 2016

1.06%

2,500

October 31, 2012

October 31, 2016

1.05%

1,500

October 31, 2012

October 31, 2017

1.10%

2,500

October 31, 2012

October 31, 2018

1.25%

2,500

December 10, 2012

December 12, 2016

0.98%

500

December 28, 2012

December 28, 2016

1.01%

2,000

December 28, 2012

December 28, 2017

1.09%

500

December 28, 2012

December 29, 2017

1.09%

500

January 15, 2013

January 15, 2017

0.97%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

July 31, 2013

July 29, 2016

0.58%

1,500

July 31, 2013

July 31, 2018

0.68%

500

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.97%

500

Classification

Long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)August 19, 2013

August 19, 20180.95%¥    500

August 30, 2013

August 31, 2018

1.08%

700

August 30, 2013

August 31, 2018

1.08%

500

August 30, 2013

August 31, 2018

1.08%

300

August 30, 2013

August 31, 2020

1.42%

1,500

September 30, 2013

September 30, 2019

1.06%

1,800

September 30, 2013

September 30, 2019

1.06%

900

October 31, 2013

October 31, 2018

0.89%

500

November 12, 2013

November 12, 2018

0.82%

1,000

November 12, 2013

November 12, 2020

1.07%

2,000

November 12, 2013

November 12, 2020

1.07%

500

November 29, 2013

November 30, 2018

0.84%

200
1,000

November 29, 2013

November 30, 2020

1.12%

November 29, 2013

November 30, 2020

1.12%

900

January 10, 2014

January 31, 2021

1.21%

1,300

January 31, 2014

January 31, 2017

0.67%

1,200

January 31, 2014

January 31, 2020

0.93%

3,700

January 31, 2014

January 31, 2021

1.13%

2,300

March 12, 2014

March 12, 2018

0.75%

2,250

March 12, 2014

March 31, 2019

0.78%

450

March 12, 2014

March 12, 2020

0.92%

1,800

March 12, 2014

March 12, 2023

1.36%

1,800

March 20, 2014

March 12, 2020

0.91%

3,000

March 20, 2014

September 20, 2021

1.01%

4,000

March 20, 2014

March 20, 2022

1.20%

3,000

March 20, 2014

March 12, 2023

1.35%

2,000

March 31, 2014

March 31, 2019

0.76%

2,500

April 22, 2014

October 31, 2020

0.95%

2,900

July 10, 2014

July 10, 2019

0.64%

500

July 10, 2014

July 10, 2021

0.90%

2,000

July 10, 2014

July 10, 2021

0.90%

500

July 14, 2014

July 31, 2019

0.68%

1,000

July 31, 2014

July 31, 2019

0.62%

1,000

July 31, 2014

July 31, 2020

0.74%

2,700

July 31, 2014

October 31, 2020

0.76%

300

July 31, 2014

July 31, 2022

1.01%

2,200

August 29, 2014

July 31, 2019

0.65%

1,000

September 1, 2014

August 31, 2021

0.89%

800

September 1, 2014

August 31, 2021

0.89%

500

September 3, 2014

August 31, 2022

0.98%

1,000

September 3, 2014

August 31, 2022

0.98%

950

September 22, 2014

September 30, 2020

0.80%

2,700

September 30, 2014

September 30, 2021

0.89%

1,000

October 31, 2014

October 31, 2021

0.80%

3,000

October 31, 2014

October 31, 2023

1.07%

2,000

October 31, 2014

October 31, 2023

1.13%

1,500

October 31, 2014

October 31, 2023

1.07%

1,000

October 31, 2014

October 31, 2024

1.26%

2,000

October 31, 2014

October 31, 2024

1.26%

1,000

January 30, 2015

January 31, 2021

0.71%

1,500

January 30, 2015

January 31, 2025

1.16%

1,500

February 18, 2015

February 28, 2022

0.91%

1,250

February 18, 2015

February 28, 2022

0.91%

350

February 18, 2015

February 29, 2024

1.16%

1,700

Kenedix Office Investment Corporation Semiannual Report27Classification

Long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)February 18, 2015

February 28, 2025

1.31%¥  1,250

February 27, 2015

February 28, 2025

1.15%

2,100

March 12, 2015

February 28, 2025

1.22%

1,000

March 31, 2015

March 31, 2025

1.27%

2,500

April 30, 2015

April 30, 2022

0.83%

2,300

Subtotal
Corporate bonds¥130,500
March 15, 2007

March 15, 20172.37%¥  3,000March 8, 2012

September 8, 2017

2.00%

1,500

September 12, 2013

September 12, 2018

1.00%

1,800

July 25, 2014

July 25, 2024

1.18%

2,000

Subtotal¥  8,300  Total¥174,600

6.

REDUCTION ENTRY
The amount of reduction entry of property and equipment acquired by government subsidy
In thousands of yen
As of October 31, 2015

Buildings and structures

7.

As of April 30, 2015

¥26,230¥26,230PER UNIT INFORMATION
Yen
From May 1, 2015
to October 31, 2015

From November 1, 2014
to April 30, 2015

Net asset value per unit

¥523,395¥523,485

Net income per unit

¥ 11,273¥ 12,860

Weighted average number of units (units)404,885

397,394

The weighted average number of units outstanding of 404,885 as of October 31, 2015 and 397,394 as of April 30, 2015 was used for the computation of theamount of net income per unit. Net income per unit after adjusting for residual units is not included because there were no residual investment units.

28

Kenedix Office Investment Corporation Semiannual Report

8.

INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 32%. However, the Investment Corporation may deductfrom its taxable income amounts distributed to its unitholders, provided the requirements are met under the Special Taxation Measures Law of Japan. Under this law,the Investment Corporation must meet a number of tax requirements, including a requirement that it currently distribute in excess of 90% of its net income for the
fiscal period in order 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. The Investment Corporation distributed in excess of 90% of its distributable income in theform of cash distributions totaling ¥4,170 million (deducting ¥394 million as the provision of reserve for reduction entry) and ¥4,601 million (deducting ¥510 million
as the provision of reserve for reduction entry) for the periods ended October 31, 2015, and April 30, 2015. Therefore such distributions were treated as deductible
distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.03% for the fiscal periods ended October
31, 2015 and April 30, 2015. The following table summarizes the significant differences between the statutory tax rate and the effective tax rate:
From May 1, 2015
to October 31, 2015

From November 1, 2014
to April 30, 2015

Statutory tax rate

32.31%

34.15%

Deductible cash distributions(29.51)(30.74)

Provision of reserve for reduction entry(2.79)(3.41)

Others0.02

0.03

Effective tax rate

0.03%

0.03%

The significant components of deferred tax assets and liabilities as of October 31, 2015 and April 30, 2015 were as follows:
In thousands of yen
As of October 31, 2015

As of April 30, 2015

Enterprise tax payable¥   32¥   33

Amortization of leasehold rights

2,460

2,210

Subtotal deferred tax assets

2,492

2,243

Valuation allowance

2,460

2,210

Total deferred tax assets¥   32¥   33

Deferred tax assets:

9.

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.

Kenedix Office Investment Corporation Semiannual Report

29

10.

RELATED-PARTY TRANSACTIONS
1. PARENT COMPANY, CORPORATE UNITHOLDERS AND OTHER
Twenty-first Fiscal Period (May 1, 2015 to October 31, 2015) and Twentieth Fiscal Period (November 1, 2014 to April 30, 2015): Not applicable
2. AFFILIATED COMPANIES AND OTHER
Twenty-first Fiscal Period (May 1, 2015 to October 31, 2015) and Twentieth Fiscal Period (November 1, 2014 to April 30, 2015): Not applicable
3. FELLOW SUBSIDIARY COMPANIES AND OTHER
Twenty-first Fiscal Period (May 1, 2015 to October 31, 2015) and Twentieth Fiscal Period (November 1, 2014 to April 30, 2015): Not applicable
4. DIRECTORS, INDIVIDUAL UNITHOLDERS AND OTHER
Twenty-first Fiscal Period (May 1, 2015 to October 31, 2015) and Twentieth Fiscal Period (November 1, 2014 to April 30, 2015): Not applicable REAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES,B
GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY
Rental and other operating revenues, property-related expenses, gain and loss on sale of real estate property for the periods from May 1, 2015 to October 31, 2015
and from November 1, 2014 to April 30, 2015 consist of the following:

11.

In thousands of yen
From May 1, 2015
to October 31, 2015

From November 1, 2014
to April 30, 2015

¥ 9,124,877¥ 9,075,126

1,981,677

1,983,917

11,106,554

11,059,043

Rental and other operating revenues:
Rental revenues
Common area charges   Subtotal
Others:Parking space rental revenues

472,738

471,152

Utility charge reimbursement

1,131,096

1,019,055

Miscellaneous

515,644

287,557   Subtotal

2,119,478

1,777,764     Total rental and other operating revenues

13,226,032

12,836,807

Property management fees and facility management fees

1,261,503

1,241,711

Depreciation

2,218,871

2,221,037

Utilities

1,232,969

1,208,553

Taxes

1,097,079

957,213

Property-related expenses:

Insurance

18,325

18,294

Repairs and maintenance

497,904

437,406

Trust fees

52,43945,464

Others289,902247,927

6,668,992

6,377,605

Revenue from sale of investment property

4,800,000

5,742,169

Cost of investment property

4,214,661

4,892,161

123,973

140,375

461,366

709,633

960,000

1,050,000

1,094,481

1,308,263    Total property-related expenses
Gain on sale of real estate property:

Other sales expenses     Gain on sale of real estate property
Loss on sale of real estate property:
Revenue from sale of investment property
Cost of investment property
Other sales expenses     Loss on sale of real estate property

30

Kenedix Office Investment Corporation Semiannual Report

31,21029,457¥  165,691¥  287,720

12.

LEASES
The Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease terms of generally two years for officebuildings and residential properties and with lease terms ranging from two to ten years for retail properties. The future minimum rental revenues under existing
non-cancelable operating leases as of October 31, 2015 and April 30, 2015 are as follows:
In thousands of yen
As of October 31, 2015

As of April 30, 2015

Due within one year

¥ 1,759,328¥ 2,246,302

Due after one year

9,540,266

10,202,936¥11,299,594¥12,449,238  Total13.

FINANCIAL INSTRUMENTS
Twenty-first Fiscal Period (May 1, 2015 to October 31, 2015)(A) OVERVIEW(1) POLICY FOR FINANCIAL INSTRUMENTS
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily through bank loans and the issuanceof corporate bonds and new investment units. The Investment Corporation uses derivatives for the purpose of hedging its exposure to changes in interest rates anddoes not enter into derivatives for speculative or trading purposes. Management of surplus funds is undertaken in a prudent manner that considers fully such factors
as safety, liquidity, interest rate conditions and cash flows.
(2) TYPES OF FINANCIAL INSTRUMENTS AND RELATED RISK
Investment securities, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer and risk of fluctuation of value of
its property.
Debt and corporate bonds are used primarily for procuring funds necessary for the acquisition of properties and have a redemption date of a maximum of approximately ten 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 used as derivative financial instruments. Utilizing interest-rate swap and interest-rate cap transaction, theInvestment Corporation fixes its interest expense for long-term debt bearing interest at a variable rate. With regard to hedge accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please see Note 2 (K) “Derivative Financial Instruments”.
(3) RISK MANAGEMENT FOR FINANCIAL INSTRUMENTS(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and interest-rate cap transactions in order to minimize risk arising from fluctuations in interest rates on funds
procured. The Investment Corporation periodically reviews the value of the property and financial condition of the issuer with regard to investment securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due dates) associated withprocurement of funds
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates and by using
diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.
(4) SUPPLEMENTARY EXPLANATION OF THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value is reasonably
estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in a different fair value.

Kenedix Office Investment Corporation Semiannual Report31

(B) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments on the balance sheet as of October 31, 2015 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
Carrying value

Estimated fair value

Difference¥ 22,587,773¥ 22,587,773¥          —

   Subtotal

22,587,773

22,587,773—① Short-term debt

2,500,000

2,500,000—

8,300,000

8,474,360

174,360

163,300,000

163,761,383

461,383¥174,100,000¥174,735,743¥635,743———① Cash and bank deposits② Corporate bonds(including current portion of corporate bonds)③ Long-term debt(including current portion of long-term debt)   Subtotal
Derivative transactions (*)(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability position.

*1: METHODS TO DETERMINE THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS AND
OTHER MATTERS RELATED TO SECURITIES AND DERIVATIVE TRANSACTIONSASSETS① Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.
LIABILITIES① Short-term debt
Since these items are settled in a short period of time, their carrying value approximates fair value.
② Corporate bonds
The fair value of corporate bonds is based on quoted market prices.
③ Long-term debt
The fair value of long-term debt 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 debt bearing interest at a variable rate, which is subject to fixed interest rates resulting from interest-rate swaps andspecial treatment applied to said swaps, is based on the present value of the total of principal and interest, which is handled together with the applicable interest-rate
swaps, discounted by the interest rate to be applied if similar loans were entered into.
DERIVATIVE TRANSACTIONS
Please refer to Note 14 “DERIVATIVE TRANSACTIONS”.
*2: FINANCIAL INSTRUMENTS FOR WHICH IT IS EXTREMELY DIFFICULT TO DETERMINE THE FAIR VALUE
Carrying value(In thousands of yen)Classification

Investment securities¥1,100,235

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 bank deposits¥22,587,773  Total¥22,587,773*4: REDEMPTION SCHEDULE FOR DEBT AND CORPORATE BONDS
In thousands of yen

32

Due within 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

Short-term debt

¥ 2,500,000¥       —

¥       —

¥       —

¥       —

¥       —Corporate bonds—

4,500,000

1,800,000——

2,000,000

Long-term debt

¥30,800,000¥16,200,000¥16,750,000¥12,750,000¥18,600,000¥68,200,000

Kenedix Office Investment Corporation Semiannual ReportTwentieth Fiscal Period (November 1, 2014 to April 30, 2015)(A) OVERVIEW(1) POLICY FOR FINANCIAL INSTRUMENTS
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily through bank loans and the issuanceof corporate bonds and new investment units. The Investment Corporation uses derivatives for the purpose of hedging its exposure to changes in interest rates anddoes not enter into derivatives for speculative or trading purposes. Management of surplus funds is undertaken in a prudent manner that considers fully such factors
as safety, liquidity, interest rate conditions and cash flows.
(2) TYPES OF FINANCIAL INSTRUMENTS AND RELATED RISK
Investment securities, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer and risk of fluctuation of value of
its property.
Debt and corporate bonds are used primarily for procuring funds necessary for the acquisition of properties and have a redemption date of a maximum of approximately ten 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 used as derivative financial instruments. Utilizing interest-rate swap and interest-rate cap transactions,the Investment Corporation fixes its interest expense for long-term debt bearing interest at a variable rate. With regard to hedge accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please see Note 2 (K) “Derivative Financial Instruments”.
(3) RISK MANAGEMENT FOR FINANCIAL INSTRUMENTS(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and interest-rate cap transactions in order to minimize risk arising from fluctuations in interest rates on funds
procured. The Investment Corporation periodically reviews the value of the property and financial condition of the issuer with regard to investment securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due dates) associatedwith funds procurement
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates and by using
diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.
(4) SUPPLEMENTARY EXPLANATION OF THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value is reasonably
estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in a different fair value.
(B) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments on the balance sheet as of April 30, 2015 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
Carrying value

Estimated fair value

Difference¥ 24,601,157¥ 24,601,157¥     —   Subtotal

24,601,157

24,601,157—① Short-term debt

3,000,000

3,000,000—

8,300,000

8,500,380

200,380

163,300,000

163,418,891

118,891¥174,600,000¥174,919,271¥319,271———① Cash and bank deposits② Corporate bonds(including current portion of corporate bonds)③ Long-term debt(including current portion of long-term debt)   Subtotal
Derivative transactions (*)(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability position.

Kenedix Office Investment Corporation Semiannual Report33*1: METHODS TO DETERMINE THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS AND
OTHER MATTERS RELATED TO SECURITIES AND DERIVATIVE TRANSACTIONSASSETS① Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.
LIABILITIES① Short-term debt
Since these items are settled in a short period of time, their carrying value approximates fair value.
② Corporate bonds
The fair value of corporate bonds is based on quoted market prices.
③ Long-term debt
The fair value of long-term debt 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 debt bearing interest at variable rates, which is subject to fixed interest rates resulting from interest-rate swaps andspecial treatment applied to said swaps, is based on the present value of the total of principal and interest, which is handled together with the applicable interest-rate
swaps, discounted by the interest rate to be applied if similar loans were entered into.
DERIVATIVE TRANSACTIONS
Please refer to Note 14 “DERIVATIVE TRANSACTIONS”.
*2: FINANCIAL INSTRUMENTS FOR WHICH IT IS EXTREMELY DIFFICULT TO DETERMINE THE FAIR VALUE
Carrying value(In thousands of yen)Classification

Investment securities¥1,076,656

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 bank deposits¥24,601,157  Total¥24,601,157*4: REDEMPTION SCHEDULE FOR DEBT AND CORPORATE BONDS
In thousands of yen
Due within 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

Short-term debt

¥ 3,000,000¥       —

¥       —

¥       —

¥       —

¥       —Corporate bonds—

3,000,000

1,500,000

1,800,000—

2,000,000

Long-term debt

¥32,800,000¥17,700,000¥19,250,000¥15,050,000¥14,700,000¥63,800,000

14.

DERIVATIVE TRANSACTIONS
The following summarizes the contracted amount and the fair value of interest-rate swap and the interest-rate cap contracts as of October 31, 2015:① Hedge accounting not applied
Not applicable② Hedge accounting applied
Hedge accounting
methodType of derivativetransactions

Hedged items

Contracted amount(In thousands of yen)
Maturing after 1 year

Fair value(In thousands of yen)Calculation method for
applicable fair value

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating and pay/fixedLong-term debt

¥ 98,050,000¥92,050,000*—

Special treatment ofinterest-rate caps

Interest-rate caps transaction

Long-term debt

3,000,000

500,000*—¥101,050,000¥92,550,000  Total—(*) 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 fair value is included in the fair value of the hedged
long-term debt.

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Kenedix Office Investment Corporation Semiannual Report

The following summarizes the contracted amount and the fair value of interest-rate swap and the interest-rate cap contracts as of April 30, 2015:① Hedge accounting not applied
Not applicable② Hedge accounting applied
Hedge accounting
methodType of derivativetransactions

Hedged items

Contracted amount(In thousands of yen)
Maturing after 1 year

Fair value(In thousands of yen)Calculation method for
applicable fair value

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating and pay/fixedLong-term debt

¥90,550,000¥86,050,000*—

Special treatment ofinterest-rate caps

Interest-rate caps transaction

Long-term debt

3,000,000

2,000,000*—¥93,550,000¥88,050,000  Total—(*) 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 fair value is included in the fair value of the hedged
long-term debt.

15.

INVESTMENT AND RENTAL PROPERTIES
Twenty-first Fiscal Period (May 1, 2015 to October 31, 2015)
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, 2015

Net change

As of October 31, 2015

Fair value As of October 31, 2015
(In thousands of yen)

¥379,905,814¥1,560,827¥381,466,641¥392,422,000

notes 1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The fair value is the appraisal value or the survey value determined by outside appraisers.
3.	Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increases and decreases were the acquisition of two properties totaling ¥8,621,306
thousand, the sale of two properties totaling ¥5,309,142 thousand and depreciation amounting to ¥2,218,871 thousand.

Income and loss in the fiscal period ended October 31, 2015 for real estate for rental purposes is listed in Note 11. “BREAKDOWN OF RENTAL AND OTHER
OPERATING REVENUES, PROPERTY-RELATED EXPENSES, GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY”.
Twentieth Fiscal Period (November 1, 2014 to April 30, 2015)
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, 2014

Net change

As of April 30, 2015

Fair value As of April 30, 2015
(In thousands of yen)

¥365,835,095¥14,070,719¥379,905,814¥381,864,000

notes 1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The fair value is the appraisal value or the survey value determined by outside appraisers.
3.	Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increases and decreases were the acquisition of seven properties totaling¥22,140,043 thousand, the sale of four properties totaling ¥6,200,424 thousand and depreciation amounting to ¥2,221,037 thousand.

Income and loss in the fiscal period ended April 30, 2015 for real estate for rental purposes is listed in Note 11. “BREAKDOWN OF RENTAL AND OTHER OPERATINGREVENUES, PROPERTY-RELATED EXPENSES, GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY”.

Kenedix Office Investment Corporation Semiannual Report

35

16.

SEGMENT AND RELATED INFORMATION
Twenty-first Fiscal Period (May 1, 2015 to October 31, 2015)(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 statementof income.
(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.
(b) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounts for over 90% of the amount of property and equipment on thebalance 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 of income.
Twentieth Fiscal Period (November 1, 2014 to April 30, 2015)(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 statementof income.
(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.
(b) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounts for over 90% of the amount of property and equipment on thebalance 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 of income.

17.

SUBSEQUENT EVENTS
Not applicable

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Kenedix Office Investment Corporation Semiannual Report