Financial Statements(3rd Fiscal Period: From February 1, 2013 to July 31, 2013)(2nd Fiscal Period: From August 1, 2012 to January 31, 2013)
Independent Auditor’s Report
Balance Sheets
Statements of Income and Retained Earnings
Statements of Changes in Net Assets
Statements of Cash Flows
Notes to Financial Statements

1

KENEDIX RESIDENTIAL INVESTMENT CORPORATION

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

Second Fiscal Period
as of January 31, 2013

(in thousands of yen)
ASSETS
Current assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Other
Total current assets¥507,327
637,662
4,399
9,925
17
-

¥836,814
665,818
5,503
4,236
17
385

1,159,330

1,512,773

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

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

2,787,377
14,715,539(275,406)
14,440,133
118,485(5,091)
113,394
316,924(9,703)
307,221
3,679
(30)
3,649
13,766,910

Total property, plant and equipment, net

31,239,647

31,418,684

405,922
10,15693,43939,498

10,156
122,672
36,318Investments and other assets
Investment securities
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total noncurrent assets
Deferred assets
Deferred organization costs
Investment unit issuance costs
Total deferred assets
Total assets

549,015

169,146

31,788,662

31,587,830

34,62839,84243,01055,30877,63895,150¥33,025,630¥33,195,753

2

Third Fiscal Period
as of July 31, 2013

Second Fiscal Period
as of January 31, 2013

(in thousands of yen)
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Tenant leasehold and security deposits in trust
Total noncurrent liabilities
Total liabilities¥57,096
2,830,000
5,500,000
49,025
405
944
1,837
160,145
9,671¥29,9093,000,000
40,217
424
946
4,158
157,6399,391

8,609,123

3,242,684

10,000,000
245,321

15,500,000
240,016

10,245,321

15,740,016

18,854,444

18,982,700

13,773,456

13,773,456

Net assets
Unitholders' equity
Unitholders' capital
Surplus
Unappropriated retained earning

406,661

463,620

Total surplus

406,661

463,620

Total unitholders' equity

14,180,117

14,237,076(8,931)(24,023)

Valuation and translation adjustments
Deferred gains or losses on hedges(8,931)(24,023)

Total net assets

Total valuation and translation adjustments

14,171,186

14,213,053

Total Liabilities and net assets¥33,025,630¥33,195,753

See accompanying notes to the financial statements.

3

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Income and Retained Earnings
For the period from February 1, 2013 to July 31, 2013 and the period from August 1, 2012 to January 31, 2013

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

Second Fiscal Period
from August 1, 2012
to January 31, 2013

(in thousands of yen)
Operating revenues
Rent revenue-real estate
Other lease business revenue¥1,018,433
117,076¥1,021,344
92,813

Total operating revenues

1,135,509

1,114,157

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

442,61970,886
2,075
11,0184,500
51,247367,195
74,406
2,062
11,221
4,500
39,401

Total operating expenses

582,345498,785

553,164

615,372

38
-

18
221

38

239

74,611
11,913
41,593
5,215
12,29885,743
4,308
43,2105,301
12,502

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

145,630

151,064

Ordinary income

407,572

464,547

Income before income taxes

407,572

464,547

952
(0)

950
9

Income taxes
Current
Deferred
Total income taxes
Net income

952

959

406,620

463,588

Retained earnings brought forward

41

32

Unappropriated retained earnings¥406,661¥463,620

See accompanying notes to the financial statements.

4

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Changes in Net Assets
For the period from February 1, 2013 to July 31, 2013 and the period from August 1, 2012 to January 31, 2013
Valuation andtranslation
adjustments

Unitholders' equity
Surplus

Unitholders'
capitalUnappropriatedretainedearnings

Total
unitholders'equityTotal
surplusDeferred gains
or losses on
Total net assets
hedges(in thousands of yen)
Balance as of July 31, 2012¥

13,773,456 ¥

254,868 ¥

254,868 ¥14,028,324 ¥- ¥ 14,028,324

Changes of items during the period
Dividends from surplus-(254,836)(254,836)(254,836)-(254,836)

Net income
Net changes of items other thanunitholders' equity-

463,588463,588463,588-463,588

-

-

-

-

(24,023)(24,023)

Total changes of items during the period-

208,752

208,752

208,752(24,023)

184,729

13,773,456

463,620463,620

14,237,076(24,023)

14,213,053

Dividends from surplus-(463,579)(463,579)(463,579)-(463,579)

Net income
Net changes of items other thanunitholders' equity-

406,620

406,620

406,620-

406,620

-

-

-

-

15,092

15,092

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

15,092(41,867)

406,661 ¥406,661 ¥14,180,117 ¥Balance as of January 31, 2012
Changes of items during the period

Balance as of July 31, 2013¥

13,773,456 ¥(8,931) ¥ 14,171,186

See accompanying notes to the financial statements.

5

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Cash Flows
For the period from February 1, 2013 to July 31, 2013 and the period from August 1, 2012 to January 31, 2013
Second Fiscal Period
from August 1, 2012
to January 31, 2013

Third Fiscal Period
from February 1, 2013
to July 31, 201(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes¥407,572¥464,547

Depreciation and amortization

194,877

194,501

Amortization of deferred organization costs

5,215

5,301

Amortization of investment unit issuance costs

12,29812,502

Interest income

(38)

(18)

Interest expenses

74,61185,743

Derivatives-related expenses

11,913

4,308

Decrease (increase) in operating accounts receivable

1,104

114

-

75,195Decrease (increase) in prepaid expenses(5,689)

9,342

Increase (decrease) in operating accounts payable

23,036(4,160)

Increase (decrease) in accounts payable-other

7,207

12,384

Decrease (increase) in consumption taxes refund receivable(2,321)

4,158

Increase (decrease) in advances received

2,506

3,660

Decrease (increase) in long-term prepaid expenses

Increase (decrease) in accrued consumption taxes

29,23329,717

Other, net

657

469

Subtotal

762,181

897,763Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

38

18(74,630)(85,806)(946)(1,379)686,643

810,596

Net cash provided by (used in) investing activities-(16,273)

Purchase of property, plant and equipment in trust(11,690)(32,592)

Purchase of investment securities(405,012)-

Repayments of tenant leasehold and security deposits in trust(41,264)(27,948)

Purchase of property, plant and equipment

Proceeds from tenant leasehold and security deposits in trust
Net cash provided by (used in) investing activities

46,56924,176(411,397)(52,637)

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

2,830,000-

Decrease in short-term loans payable(3,000,000)-(462,889)(250,983)-(64,650)(632,889)(315,633)

Dividends paid
Payments for purchase of derivatives
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents(357,643)

442,326

Cash and cash equivalents at the beginning of period

1,502,632

1,060,306

Cash and cash equivalents at the end of period¥1,144,989¥1,502,632

See accompanying notes to the financial statements.

6

KENEDIX RESIDENTIAL INVESTMENT CORPORATION

Notes to Financial Statements
For the period from February 1, 2013 to July 31, 2013 and the period from August 1, 2012 to January 31, 2013

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Residential Investment Corporation (“the Investment Corporation”) was established on November 15, 2011 with an initial capitalizationof ¥150 million (750 units) under the Act on Investment Trusts and Investment Corporations of Japan (“the Investment Trust Act”) with Kenedix
Real Estate Fund Management, Inc. (previous corporate name: Kenedix Residential Partners, Inc.,)(“the Asset Management Company”) as thesponsor. Registration with the Kanto Local Finance Bureau under Article 187 of the Investment Trust Act was completed on December 13, 2011
(Registration Number: 76, Director of the Kanto Local Finance Bureau). Subsequently, the Investment Corporation issued new investment units
through a public offering (74,690 available units) with April 25, 2012 as the payment date, and it was listed on the Real Estate Investment Trust
Market of the Tokyo Stock Exchange on April 26, 2012 (Securities Code: 3278). As of July 31, 2013, the end of the third fiscal period, the numberof investment units issued and outstanding totaled 75,440 units.
The Investment Corporation began management upon newly acquiring a total of 20 properties: two properties on April 26, 2012 (total acquisition
price of ¥2,710 million), and 18 properties on May 1, 2012 (total acquisition price of ¥27,765 million).
The occupancy rate of the overall portfolio (excluding land with leasehold interest) was 96.2% as of July 31, 2013, the end of the third fiscal
period, and 95.1% as of January 31, 2013, the end of the second fiscal period. Furthermore, the occupancy rate of the overall portfolio including
land with leasehold interest was 96.6% as of July 31, 2013, the end of the third fiscal period, and 95.6% as of January 31, 2013, the end of thesecond fiscal period.
During the first fiscal period , the Investment Corporation conducted a public offering rasing ¥13,623 million, and on April 26, 2012, it was newly
listed on the Tokyo Stock Exchange. As of July 31, 2013, the end of the third fiscal period, total capitalization was ¥13,773 million. Also, withregard to the procurement of interest-bearing debt, borrowings were made for the acquisition of assets and the amount of borrowings as of the endof the third fiscal period was ¥18,330 million. Short-term borrowings of ¥2,830 million (Series 1-A and Series 1-E) with a repayment date of April 30,
2013 were refinanced with the same borrowing term as before (one year) with the expectation that the applicable interest rate will remain low for
the near future.
Basis of Presentation
The Investment Corporation maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (Japanese GAAP), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, theFinancial Instruments and Exchange Act of Japan and related regulations, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Investment Corporation, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Investment Corporation filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial
statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes tofinancial statements include certain information that might not be required under Japanese GAAP but is presented herein as additional information.
The Investment Corporation fiscal period is a six-month period which ends at the end of January or July. The Investment Corporation does notprepare consolidated financial statements because it has no subsidiaries.

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

Buildings

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

From August 1, 2012
to January 31, 2013
3-62 years

Structures

3-25 years

3-25 years

Machinery and equipment

8-30 years

8-27 years

Tools, furniture and fixtures

30 years

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

8

When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of theproperty-related taxes are capitalized as part of the acquisition costs of the related properties. There were no capitalized property-related
taxes as of July 31, 2013 and January 31, 2013.
(I)

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

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

9

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

Assets pledged as collateral

As of July 31, 2013

As of January 31, 2013

(in thousands of yen)

Cash and deposits in trust¥637,662¥665,818

Buildings in trust

14,267,405

14,440,133

Structures in trust

110,373

113,394

Machinery and equipment in trust

301,973

307,221

Tools, furniture and fixtures in trust

5,609

3,649

Land in trust

13,766,910

13,766,910

Total

29,089,932

29,297,125

Short-term loans payable

2,8300,000

3,000,000

Current portion of long-term loans payable

5,5000,000-

Long-term loans payable

10,000,000

15,500,000¥18,330,000¥18,500,000

Secured liabilities

Total

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

10

5. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUESAND PROPERTY-RELATED EXPENSES
Rental and other operating revenues and property-related expenses for the periods from February 1, 2013 to July 31, 2013 and from August 1,
2012 to January 31, 2013 consist of the following:
From August 1, 2012

From February 1, 2013
to July 31, 2013

to January 31, 2013

(in thousands of yen)

Rental and other operating revenues:
Rental revenues¥884,944¥889,042

Rental revenues from limited proprietary rights of land

78,31078,310Common area charges

55,17953,992

1,018,433

1,021,344

Parking space rental revenues

40,673

41,472

Miscellaneous

76,40351,341

Subtotal

117,076

92,813¥1,135,509¥1,114,157

Property management fees and facility management fees

¥84,438¥79,526

Utilities

16,37816,565

Taxes

59,69622

Repairs and maintenance

37,244

31,987

Subtotal
Others:Total rental and other operating revenues

Insurance

2,230

2,360

Trust fees

8,700

8,700

Depreciation

194,877

194,501

Others39,05633,534¥442,619¥367,195

Total property-related expenses

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

5,000,000

From August 1, 2012
to January 31, 2013
5,000,000

75,44075,440

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

As of January 31, 2013

(in thousands of yen)

Cash and deposits¥507,327¥836,814

Cash and deposits in trust

637,662

665,818

Cash and cash equivalents¥1,144,989¥1,502,632

11

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

As of January 31, 2013

(in thousands of yen)Due in 1 year

¥204,105¥204,105

Due after 1 year

5,884,373

5,986,425

Total¥6,088,478¥6,190,530

9. FINANCIAL INSTRUMENTS(A). Overview(1) Policy for financial instruments
The Investment Corporation procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc. through loans fromfinancial institutions, issuance of investment units and other means. With regard to the procurement of interest-bearing debts, the Investment
Corporation ensures that it can effectively combine stable long-term funds with flexible short-term funds. Management of surplus funds isundertaken through various bank deposits focusing on safety, liquidity and effectiveness. The Investment Corporation uses derivatives for the
purpose of hedging its exposure to changes in interest rates and other risks and does not enter into derivative transactions for speculative or
trading purposes.
(2) Types of financial instruments and related risk
Bank deposits are for managing the Investment Corporation’s surplus funds and are exposed to credit risk such as the bankruptcy of financial
institutions at which funds are deposited. Investment securities represent equity investments in an anonymous association and are exposed tocredit risk of the issuer and interest rate fluctuation risk.
Borrowings, which are made primarily for the purpose of procuring funds for the acquisition of real estate and trust beneficiary interests in realestate and have a repayment date of a maximum of 2 years and 9 months as of July 31, 2013, the end of the third fiscal period, are exposed toliquidity risk where alternative funds may not be procured by the repayment date. Also, borrowings with floating interest rates are exposed tointerest rate fluctuation risk. Derivatives are used for the purpose of hedging interest rate fluctuation risk for a certain portion of the borrowings.
(3) Risk management for financial instruments
a. Credit risk
While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, such risk is monitored
by deposits in non-interest bearing ordinary savings accounts or with financial institutions with credit ratings above a certain level. Investment
securities represent equity investments in an anonymous association and are exposed to credit risk of the issuer and interest rate fluctuation risk.
To manage this credit risk, the Investment Corporation regularly evaluates the results of operations and the financial condition of the issuer, etc. In
utilizing derivatives, the Investment Corporation aims to mitigate counterparty risk such as by transacting with financial institutions with favorable
ratings.
b.

Market risk

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

Liquidity risk

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

12

(B). Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet and estimated fair value are shown in the following table.
As of July 31, 2013
Carrying amount

Estimated fair value

Difference(in thousands of yen)

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

637,662

637,662-

Subtotal¥-

1,144,989

1,144,989-(1) Short-term loans payable

2,830,000

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

5,500,000

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

10,000,000

10,000,000¥18,330,000¥18,330,000¥-¥39,498¥39,498¥-

As of January 31, 2013
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits¥ 836,814¥836,814(2) Cash and deposits in trust

665,818

665,818

Subtotal¥-

1,502,632

1,502,632-(1) Short-term loans payable

3,000,000

3,000,000-(2) Current portion of long-term loans payable

15,500,000

15,500,000-

18,500,000

18,500,000-¥36,318¥36,318(3) Long-term loans payable
Subtotal
Derivative transactions¥-

Note 1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying amount approximates fair value.
Liabilities(1)Short-term loans payable
Since these items are settled in a short period of time with floating interest rates, their carrying amount approximates fair value.

(2)Current portion of long-term loans payable and (3) Long-term loans payable
Since these items have floating interest rates, market interest rates are reflected in the short term. Also, as the credit standing of the Investment
Corporation has not changed significantly since the loans were made, the fair value of the long term loans payable is believed to approximate thecarrying amount and therefore is based on the carrying amount.
Derivative transactions
Please refer to Note 10 “DERIVATIVE TRANSACTIONS”.
Note 2: Financial instruments whose fair values are recognized to be extremely difficult to grasp(in thousands of yen)Classification
Investment securities *As of July 31, 2013
405,922

As of January 31, 2013-

*Fair values of investment securities are not subject to disclosure of fair value as they have no market value and their fair values are recognized to
be extremely difficult to grasp.

13

Note 3: Redemption schedule for financial assets with maturities
As of July 31, 2013
Due in 1 year or
less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years(in thousands of yen)

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

637,662¥1,144,989

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

¥

-

¥

-

Due after 1 year
through 2 years

¥

-

¥

-

Due after 2 years
through 3 years

¥

-

¥

-

Due after 3 years
through 4 years

¥

¥

-

Due after 4 years
through 5 years

-

¥

-

Due after 5 years(in thousands of yen)

Cash anddeposits
Cash anddeposits in trust
Total¥836,814¥-

665,818¥1,502,632

¥

-

¥

-

¥

-

¥

-

¥

-

¥

-

¥

¥

-

-

¥

-

Note 4: Redemption schedule for loans payable
As of July 31, 2013
Due in 1 year or
less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years(in thousands of yen)

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

¥

-

¥

-

¥

-

5,500,000

6,500,000

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

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

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

¥

-

¥

¥

-

Due after 4 years
through 5 years

-

¥

-

Due after 5 years(in thousands of yen)

Short-term loans
payableLong-term loans
payableTotal¥3,000,000

¥

-

¥

-

¥

-

-

5,500,000

6,500,000

3,500,000¥3,000,000¥5,500,000¥6,500,000¥3,500,000

10. DERIVATIVE

TRANSACTIONS

¥

-

¥

¥

-

-

¥

-

The contract amount and the fair value of interest-rate cap contracts as of July 31, 2013 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable(2) Transactions subject to hedge accounting
Hedge
Type of derivative
Hedged items
accounting
transactions
methodAccounting
method, inprinciple

Interest-rate cap
transaction:

Long-termloans payable

Contract amount(in thousands of yen)
Maturing after 1
year¥10,000,000¥10,000,000

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

Based on the amountprovided by counterparty
financial institutions

The contract amount and the fair value of interest-rate cap contracts as of January 31, 2013 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable14(2) Transactions subject to hedge accounting
Hedge
Type of derivative
Hedged items
accounting
transactions
methodAccounting
method, inprinciple

Interest-rate cap
transaction:

Long-termloans payable

Contract amount(in thousands of yen)
Maturing after 1
year¥10,000,000

Fair value(in thousands of yen)Calculation method
for applicable fair value¥36,318

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

11. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 40%. However, the Investment
Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements under the Special Taxation
Measures Law of Japan are met, including a requirement that it currently 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. Since the Investment Corporation distributed in excess of 90% of its
distributable income in the form of cash distributions totaling ¥407 million and ¥464 million for the periods ended July 31, 2013 and January 31,
2013, respectively, the distributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rates on theInvestment Corporation’s income were 0.23% and 0.21% for the periods ended July 31, 2013 and January 31, 2013, respectively. The following
table summarizes the significant differences between the statutory tax rate and the effective tax rate:
From February 1, 2013
to July 31, 2013
Statutory tax rate

36.59%

From August 1, 2012
to January 31, 201336.59%

Deductible cash distributions(36.50)(36.51)

0.14

0.13

0.23%

0.21%

Others
Effective tax rate

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

As of January 31, 2013

(in thousands of yen)

Deferred tax assets:
Enterprise tax payable

¥17

¥17

Deferred gains or losses on hedges

3,855

8,648

Subtotal deferred tax assets

3,872

8,665

Valuation allowance

3,855

8,648

Total deferred tax assets

¥17

¥17

15

12. RELATED-PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other
Second Fiscal Period (August 1, 2012 to January 31, 2013) and Third Fiscal Period (February 1, 2013 to July 31, 2013): Not applicable
2．Affiliated companies and other
Second Fiscal Period (August 1, 2012 to January 31, 2013) and Third Fiscal Period (February 1, 2013 to July 31, 2013): Not applicable
3．Fellow subsidiary companies and other
Second Fiscal Period (August 1, 2012 to January 31, 2013) and Third Fiscal Period (February 1, 2013 to July 31, 2013): Not applicable
4．Directors, major individual unitholders and other
Third Fiscal Period (Feburay 1, 2013 to July 31, 2013)
Classification

Directors
and Close
Relatives

Name

Akira
TanakaPrincipal business /Ratio of

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

Nature ofTransaction

transaction

amountthe end ofrights（inperiodheld (%)

thousands(inof yen)thousands(Note 3)of yen)－Relationship
Position held
Relation to
concurrently.
the entity

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

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

¥74,886

Account

Accounts
payable-other

Balance at(Note 3)
¥22,577

Note 1: Akira Tanaka serves as a representative of the third party (Kenedix Residential Partners, Inc.), and the asset management fee isestablished in the Articles of Incorporation of the Investment Corporation.
Note 2: Asset management fee includes ¥4,000 thousand related to the acquisition of investment securities and is accounted for in the book value
for the individual assets.
Note 3: Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.
Second Fiscal Period (August 1, 2012 to January 31, 2013)
Classification

Name

Principal business /Position

Ratio ofvotingrightsheld (%)

Relationship
Position held
Relation to
concurrently.
the entity

Nature oftransaction

Transaction
amount（inthousandsof yen)(Note 2)

Account

Directors
and Close
Relatives

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

－

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

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

¥74,406

Accounts
payable-other

Balance atthe end of
period(inthousandsof yen)(Note 2)
¥25,733

Note 1: Akira Tanaka serves as a representative of the third party (Kenedix Residential Partners, Inc.), and the asset management fee isestablished in the Articles of Incorporation of the Investment Corporation.
Note 2: Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

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

Third Fiscal Period
from February 1, 2012
to July 31，2013

Second Fiscal Period
from August 1, 2012
to January 31，2013(in thousands of yen)Book value
Balance at the beginning of period
Changes during the period
Balance at the end of period
Fair value at the end of period¥31,418,684(179,037)
31,239,647¥32,180,000¥31,563,998(145,314)
31,418,684¥31,746,000

Note 1: Book value excludes accumulated depreciation from acquisition costs.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the second fiscal period, the principal decrease wasdepreciation (¥194,501 thousand) and in the third fiscal period the principal decrease was depreciation (¥194,877 thousand).
Note 3:The fair value is the appraisal value or the survey value determined by outside appraisers.
Income and loss in the fiscal periods ended July 31, 2013 and January 31, 2013 for real estate for rental purposes is listed in Note “5.
BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES AND PROPERTY-RELATED EXPENSES.”

14. SEGMENT INFORMATION
Segment information for the period end from February 1, 2013 to July 31, 2013 and from August 1, 2012 to January 31, 2013 is as follows:(A) Segment information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.
(B) Related information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue
on the statement of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement of income
and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property,
plant and equipment on the balance sheet.
(3) Information about each major customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statement ofincome and retained earnings.

1715. PER UNIT INFORMATION

Net asset value per unit

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

From August 1, 2012
to January 31, 2013
¥188,402

Net income per unit

¥5,389¥6,145Weighted average number of units (units)

75,44075,440The weighted average number of units outstanding of 75,440 was used for the computation of the amount of net income per unit for the periods
ended July 31, 2013 and January 31, 2013, respectively.
Net income per unit after adjusting for residual units is not included because there were no residual investment units.
The basis for calculating net income per unit is as follows:
From February 1, 2013
to July 31, 2013
Net income (in thousands of yen)
Net income not available to ordinary unitholders (in thousands of yen)
Net income available to ordinary unitholders (in thousands of yen)
Weighted average number of units during the period (units)

From August 1, 2012
to January 31, 2013

¥406,620¥463,588--¥406,620¥463,588

75,44075,44018

16. SIGNIFICANT SUBSEQUENT EVENTS(A) Acquisition of Properties
On August 7, 2013, the Investment Corporation acquired the 60 properties shown in the following table (total acquisition price: ¥68,556,000
thousand ) .
The acquisition prices do not include the related acquisition costs, property taxes, city-planning taxes and consumption taxes, etc.
Property
number

Property nameLocation(city or ward, prefecture)

SellerAcquisition price(in thousands of yen)

T-13

KDX Residence Shirokane I

Minato ward, Tokyo

G.K. KDX10

3,000,000

T-14

KDX Residence Shirokane III

Minato ward, Tokyo

G.K. KDX9

2,900,000

T-15

KDX Residence Shirokane II

Minato ward, Tokyo

G.K. KDX9

2,800,000

T-16

KDX Residence Minami-aoyama

Minato ward, Tokyo

G.K. KDX10

2,230,000

T-17

KDX Residence Minami-azabu

Minato ward, Tokyo

G.K. KDX9

2,080,000

T-18

KDX Residence Shiba Koen

Minato ward, Tokyo

G.K. KDX10

1,781,000

T-19

KDX Residence Azabu East

Minato ward, Tokyo

G.K. KDX9

1,560,000

T-20

KDX Residence Takanawa

Minato ward, Tokyo

G.K. KDX9770,000

T-21

KDX Residence Nishihara

Shibuya ward, Tokyo

G.K. KDX9

1,450,000

T-22

KDX Residence Daikanyama II

Shibuya ward, Tokyo

G.K. KDX9

730,000

T-23

KDX Residence Sendagaya

Shibuya ward, Tokyo

G.K. KDX9

650,000

T-24

KDX Residence Nihombashi Suitengu

Chuo ward, Tokyo

G.K. KDX9

3,240,000

T-25

KDX Residence Nihombashi Hakozaki

Chuo ward, Tokyo

G.K. KDX10

1,147,000

T-26

KDX Residence Higashishinjuku

Shinjuku ward, Tokyo

G.K. KDX10

3,270,000

T-27

KDX Residence Yotsuya

Shinjuku ward, Tokyo

G.K. KDX9

2,260,000

T-28

KDX Residence Nishi-shinjuku

Shinjuku ward, Tokyo

G.K. KDX10

1,000,000

T-29

KDX Residence Kagurazaka

Shinjuku ward, Tokyo

G.K. KDX10

720,000

T-30

KDX Residence Futako Tamagawa

Setagaya ward, Tokyo

G.K. KDX9

1,250,000

T-31

KDX Residence Komazawa Koen

Setagaya ward, Tokyo

G.K. KDX10

920,000

T-32

KDX Residence Mishuku

Setagaya ward, Tokyo

G.K. KDX9

760,000

T-33

KDX Residence Yoga

Setagaya ward, Tokyo

G.K. KDX10

700,000

T-34

KDX Residence Shimouma

Setagaya ward, Tokyo

G.K. KDX10

600,000

T-35

Raffine Minami-magome

Ota ward, Tokyo

Y.K. KW 5th

1,250,000

T-36

KDX Residence Yukigaya Otsuka

Ota ward, Tokyo

G.K. KDX10

1,050,000

T-37

KDX Residence Denen Chofu

Ota ward, Tokyo

G.K. KDX10

1,000,000

T-38

KDX Residence Tamagawa

Ota ward, Tokyo

G.K. KDX9

776,000

T-39

KDX Residence Monzennakacho

Koto ward, Tokyo

G.K. KDX9

773,000

T-40

KDX Residence Okachimachi

Taito ward, Tokyo

G.K. KDX10

850,000

T-41

KDX Residence Moto-asakusa

Taito ward, Tokyo

G.K. KDX10

800,000

T-42

KDX Residence Itabashi Honcho

Itabashi ward, Tokyo

G.K. KDX10

620,000

T-43

KDX Residence Azusawa

Itabashi ward, Tokyo

G.K. KDX9

550,000

T-44

KDX Residence Tobu Nerima

Nerima ward, Tokyo

G.K. KDX9420,000

T-45

KDX Residence Yokohama Kannai

Yokohama city, Kanagawa

G.K. KDX10

800,000

T-46

KDX Residence Miyamaedaira

Kawasaki city, Kanagawa

G.K. KDX9

999,000

T-47

KDX Residence Machida

Sagamihara city, Kanagawa

G.K. TSM108

1,800,000

R-9

KDX Residence Odori Koen

Sapporo city, Hokkaido

G.K. KDX9

765,000

R-10

KDX Residence Kikusui Yojo

Sapporo city, Hokkaido

G.K. KDX9

830,000

R-11

KDX Residence Toyohira Koen

Sapporo city, Hokkaido

G.K. KDX9

445,000

R-12

KDX Residence Kamisugi

Sendai city, Miyagi

G.K. KDX10

700,000

R-13

KDX Residence Ichiban-cho

Sendai city, Miyagi

G.K. KDX10

530,000

R-14

KDX Residence Kotodai

Sendai city, Miyagi

G.K. KDX9

520,000

R-15

KDX Residence Izumi Chuo

Sendai city, Miyagi

G.K. KDX9

480,000

19

R-16

KDX Residence Higashi-sakura I

Nagoya city, Aichi

Y.K. KW Property 7

2,350,000

R-17
R-18

KDX Residence Higashi-sakura II

Nagoya city, Aichi

G.K. KDX10

900,000

KDX Residence Atsuta Jingu

Nagoya city, Aichi

G.K. KDX9

840,000

R-19

KDX Residence Nishi-oji

Kyoto city, Kyoto

G.K. KDX9

813,000

R-20

KDX Residence Saiin

Kyoto city, Kyoto

G.K. KDX9

440,000

R-21

KDX Residence Namba

Osaka city, Osaka

G.K. KDX9

1,410,000

R-22

KDX Residence Namba-minami

Osaka city, Osaka

G.K. KDX9

1,350,000

R-23

KDX Residence Shin-osaka

Osaka city, Osaka

G.K. KDX9

510,000

R-24

KDX Residence Ibaraki I ・II

Ibaraki city, Osaka

G.K. KDX10

1,275,000

R-25

KDX Residence Toyonaka-minami

Toyonaka city, Osaka

G.K. KDX9

740,000

R-26

KDX Residence Moriguchi

Moriguchi city, Osaka

G.K. KDX9

551,000

R-27

KDX Residence Sannomiya

Kobe city, Hyogo

G.K. KDX9

1,080,000

R-28

Ashiya Royal Homes

Ashiya city, Hyogo

G.K. KDX10

1,360,000

R-29

KDX Residence Funairi Saiwai-cho

Hiroshima city, Hiroshima

G.K. KDX9

588,000

R-30

KDX Residence Tenjin-higashi II

Fukuoka city, Fukuoka

G.K. KDX9

680,000

R-31

KDX Residence Tenjin-higashi I

Fukuoka city, Fukuoka

G.K. KDX9

370,000

R-32

KDX Residence Nishi Koen

Fukuoka city, Fukuoka

G.K. KDX10

763,000

R-33

KDX Residence Hirao Josui-machi

Fukuoka city, Fukuoka

G.K. KDX10

760,000－

68,556,000

Total

－

(B) Issuance of New Investment Units
On July 17, 2013 and July 30, 2013, respectively, the Board of Directors of the Investment Corporation resolved to issue new investment units asdetailed below in order to procure funds for acquisition of the 60 properties etc, shown in the preceding table. The payments were completed on
August 6, 2013 through a public offering and September 4, 2013 by way of third-party allotment. As a result of the issuance of new investment
units, the Investment Corporation had total unitholders’ capital of ¥48,592,739,550 with 241,622 investment units outstanding as of September 4,
2013.
(Issuance of new investment units through public offering)
Total number of units issued：165,000 units (122,500 units issued domestically, 42,500 units issued internationally)
Issue price (Offer Price)：¥217,327 per unit
Total amount (Offer Price)：¥35,858,955,000
Paid-in value (Issue value)：¥209,525 per unit
Gross proceeds：¥34,571,625,000
Payment date：August 6, 2013
(Issuance of new investment units by way of third-party allotment)
Total number of units issued：1,182 units
Paid-in value (Issue Value)：¥209,525 per unit
Gross proceeds：¥247,658,550
Payment date：September 4, 2013
Allottee：SMBC Nikko Securities Inc.

20

(C) Debt Financing
As of August 7, 2013, the Investment Corporation borrowed funds in order to procure financing for the acquisition of the 60 properties, etc, shownin the preceding table.
LenderSeriesAmount(in thousands of yen)Interest rate

Repayment date

Sumitomo Mitsui Banking Corporation
3-A

1,700,000 Base rate (JPY TIBOR for 1-month in August 31, 2014
JBA) + 0.40%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.

Payment
methodRemarks

Full on

Unsecured/maturity

Unguaranteed

Full on

Unsecured/
Unguaranteed

Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.
3-B

Resona Bank, Ltd.

rate (JPY TIBOR for 1-month in August 31, 2015
5,500,000 Base
JBA) + 0.45%

maturity

Base rate (JPY TIBOR for 1-month in
8,500,000 JBA) + 0.50%
August 31, 2016
(Note)

maturity

Base rate (JPY TIBOR for 1-month in
11,000,000 JBA) + 0.55%
August 31, 2017
(Note)

maturity

Base rate (JPY TIBOR for 1-month in
8,000,000 JBA) + 0.60%
August 31, 2018
(Note)

maturity

Sumitomo Mitsui Trust Bank, Limited
Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.
3-C

Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Ltd.

Full on

Unsecured/
Unguaranteed

Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.
3-D

Resona Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited

Full on

Unsecured/
Unguaranteed

Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.
3-E

Resona Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited

Full on

Unsecured/
Unguaranteed

Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.
3-F

3,000,000 1.0875% (Fixed rate)

Development Bank of Japan Inc.

August 31, 2018

Full onmaturity

Unsecured/
Unguaranteed

Note : The Investment Corporation entered into an interest-rate swap agreement to the hedge the risk of interest rate fluctuations by converting
floating interest rates payable into fixed rates for following the long-term borrowings. (Series 3-C, 3-D and 3-E).
The interest rates are as follows:
Series 3-C

0.7870%

Series 3-D

0.9095%

Series 3-E

1.0520%21

17. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following as of July 31, 2013

Type of asset

Balance atthe beginningof period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

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

Property,plant andequipment¥2,787,377

¥

-

¥

-

¥2,787,377

¥

-

¥

-

¥2,787,377

Sub total

2,787,377--

2,787,377--

2,787,377

Buildings in trust

14,715,539

12,160-14,727,699

460,294

184,888

14,267,405

Structures in trust

118,485419-

118,904

8,531

3,440

110,373

316,9241,225-

318,149

16,176

6,474

301,973

3,679

2,036

-

5,715

106

75

5,609

Land in trust

13,766,910--

13,766,910--

13,766,910

Sub total

28,921,537

15,840-28,937,377

485,107

194,877

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

Machinery andequipmentin trust
Tools, furnitureand fixturesin trust

Total¥

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

Type of asset

Balance atthe beginningof period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

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

Property,plant andequipment¥2,771,104¥16,273¥-¥2,787,377

¥

-

¥

-

¥2,787,377

Sub total

2,771,104

16,273-

2,787,377--

2,787,377

Buildings in trust

14,688,904

26,635-

14,715,539

275,406

184,613

14,440,133

Structures in trust

115,728

2,757-

118,485

5,091

3,398

113,394

Machinery andequipment in trust

316,924--

316,924

9,703

6,460

307,221

156

3,523

-

3,679

30

30

3,649

13,766,910--

13,766,910--

13,766,910

Tools, furnitureand fixtures intrust
Land in trust
Sub total
Total

28,888,622

32,915¥31,659,726¥49,188¥-

28,921,537

290,230

194,501

28,631,307-¥31,708,914¥290,230¥194,501¥31,418,684

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

2218. SHORT-TERM DEBT AND LONG-TERM DEBT
Short-term debt and long-term debt consists of the following as of July 31, 2013:

Classification

LenderBalance at the

Increase

Decrease

Balance at

beginning ofduring theduring thethe end of

periodperiodperiodperiodAverageinterest rate
（Note 3）（Note 4）

Payment due
date

Use

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

Corporation

0.769%The Bank ofTokyo-Mitsubishi

1,000,000-

1,000,000

April 30,
2013-

UFJ, Ltd.
Sumitomo Mitsui
Banking
Short-term

Corporation

loans

Sumitomo Mitsui

payableBanking

April 30,
1,000,000-

1,000,000-

1.169%-

1,000,000-

1,000,000

0.650%-

1,000,000-

1,000,000

0.650%-

830,000-

830,000

1.100%

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

Secured/Non-guaran(Note 5)

April 30,

teed
(Note 9)2014

April 30,
2014
April 30,

Corporation
Sub Total

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

2,830,000

3,000,000

2,830,000

2,000,000--

2,000,000

1,500,000--

1,500,000

Sumitomo Mitsui
Banking
Corporation(Note 2)Current
portion of

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

The Bank ofloansTokyo-Mitsubishi

payableUFJ, Ltd.

Secured/0.809%

1,000,000--

1,000,000

1,000,000--

1,000,000

Sub Total

5,500,000--

5,500,000

Aozora Bank, Ltd.

2,000,000--

2,000,000

April 30,
2014

(Note 5)

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

The Bank ofloansTokyo-Mitsubishi

payableUFJ, Ltd.
Resona Bank, Ltd.

Secured/2,000,000--

2,000,000

1.060%

April 30,
2015

(Note 5)

Non-guaran
teed(Note 9)1,500,000--

1,500,000

23

Sumitomo Mitsui
Banking

1,000,000--

1,000,000

2,500,000--

2,500,000

Corporation
Sumitomo Mitsui
Banking
Corporation

1.053%The Bank ofTokyo-Mitsubishi

Secured/1,000,000--

1,000,000

10,000,000--

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

April 30,
2016

(Note 5)

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

24

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

Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

through 2 years

through 3 years

through 4 years

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

¥

-

¥

-

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

25

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

Classification
LenderBalance atthe beginningof period

Increaseduring theperiodDecreaseduring theperiodBalance at theend of period

Averageinterest rate
（Note 2）
（Note 3）

Payment
due date（Note 6）Use

Remarks(Note 4)

Secured/Nonguaranteed(Note 7)(Note 4)

Secured/Nonguaranteed(Note 7)(in thousands of yen)
The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

¥1,000,000

¥

-

¥

-

¥1,000,000
0.780%

Short-termloanspayableLong-term
loans
payableSumitomo Mitsui
Banking
Corporation

1,000,000--

1,000,000

Sumitomo Mitsui
Banking
Corporation

1,000,000--

1,000,000

Sub total

3,000,000--

3,000,000

Sumitomo Mitsui
Banking
Corporation

2,000,000--

2,000,000

Aozora Bank, Ltd.

1,500,000--

1,500,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

1,000,000--

1,000,000

Resona Bank, Ltd.

1,000,000--

1,000,000

Aozora Bank, Ltd.

2,000,000--

2,000,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

2,000,000--

1,500,000--

1,500,000

Sumitomo Mitsui
Banking
Corporation

1,000,000--

1,000,000

Sumitomo Mitsui
Banking
Corporation

2,500,000--

2,500,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

1,000,000--

1,000,000

Sub total

15,500,000--

15,500,000-¥18,500,000¥18,500,000

¥

-

¥

1.180%

April 30,
2013
（Note 5）0.830%

April 30,2014

2,000,000

Resona Bank, Ltd.

Total

April 30,2013

1.044%

April 30,2015

1.077%

April 30,2016

26

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

Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

through 2 years

through 3 years

through 4 years

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

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

27

19. DISTRIBUTIONS
Third Fiscal Period(From February 1, 2013 to July 31, 2013)

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

Second Fiscal Period(From August 1, 2012 to January 31, 2013)¥406,661,143¥463,620,113¥406,621,600¥463,578,800¥5,390¥6,145¥39,543¥41,313

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

In accordance with the policy described in Article
38-1 of its Articles of Incorporation, the Investment
Corporation determines that the amount of
distribution shall exceed the amount equivalent to
90% of its distributable profit as stipulated in
Article 67-15 of the Special Taxation Measures
Law, and shall be up to its profits as the maximum
amount. Following this policy, the Investment
Corporation has decided that it shall distribute¥463,578,800 which is the maximum integral
multiple to 75,440 units issued and outstanding as
the distribution of earnings. Procedures for the
distribution of amounts exceeding distributable
income are outlined in Article 38-2 of theInvestment Corporation’s Articles of Incorporation.
In the second fiscal period, the Investment
Corporation has decided not to distribute cash inexcess of distributable profit.

III. Retained earnings brought forward
to the next period

Method of calculating distribution
amount28

29