KENEDIX Realty Investment Corporation, 16th Period Results (Ended April 2013) une 20, 2013 S97D KENEDIX ENEDIX Office Partners, IN
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Highlights of the 16th period (2013/4)
νοιδ ● Increased portfolio quality through diversification of acquisition methods and property sales ¥2.02B Nomura Fudosan Omiya Kyodo Bldg. Equity interest in silent partnership whose asset consists of DNI Mita Bldg. (May 23, 2013) Acquisition ¥0.20B
●  Achieved lease-up of KDX Nihonbashi Kabutocho Bldg. 13.4% • Occupancy rate: 99.8% (16th period) (17th period) (October 31, 2013) ● Bottoming out of rent income for the existing properties • Improving trend in rental income (- 2.7% → -0.2%) ● Achieved a gradual decline in financing costs of debt • Reduction in interest rate of debt: _1.96% 1.88% • Maintaining stable financial base • Upgrading of credit rating A Long-term issuer rating: (outlook: positive) A+ (outlook: stable) ents lejoureup
Future efforts
Increasing needs of investment in real estate / active property transaction market ● Development of a quality portfolio through focused investments in mid-sized office buildings mainly in Tokyo metropolitan area νοιδ լɐuɹə ● Property acquisition facilitated by multiple pipelines including the sponsor network as well as KRI's own network ● Investment opportunities through joint investments with the sponsor Stabilized office supply / stable demand / bipolarization ● Rental income shift from a bottoming out phase to a turnaround phase oug jeulej • Improvement in rental conditions (asking rents, rent level at times of rent revisions) • Revenue contribution of KDX Nihonbashi Kabutocho Building • Increase in tenant satisfaction through CS survey / strengthening of relationship with tenants Continued monetary easing measures / unstable trend in long-term interest rate ● Continuous efforts to reduce interest costs and strategic measures in case of a hike in interest rate (extending terms of debt / fixing interest rate) ● Continues to consider diversification of debt maturities iwo16 |eu.191 otsute Idioneup (forecast) Section 1 16th period results, DPU level
2: FFO (Funds From Operation) = Net income＋Depreciation expense for the period - Gain on sales of real estate properties + Loss on sales of real estate properties

A. Operating revenues
● Increase of ¥359 million due to whole-period operation of 3 properties acquired in 15th period. ● Decrease in gains on the sales of properties from ¥595 million (15th) to ¥462 million (16th) Decrease in rental income due to lease termination in Nihonbashi Kabutocho Bldg, and Note: Utilities revenues are  not included in operating revenues
C. Leasing NOI
● NOI increased due to whole-period operation of 3 properties acquired in 15th period but B. Expenses related to leasing business (not incl. depreciation & loss from property disposal) ● Decrease in restoration cost for Nihonbashi Kabutocho Bldg • Repair, maintenance and renovation expenses of ¥87 million for Nihonbashi Kabutocho Bldg. ● Increase in expense by ¥53 million due to whole-period operation of 3 properties acquired in 15th (Unit: ¥M) period Note: Operating costs do not include utilities costs
D. DPU
● Net impact of gains/losses on the sales of properties is +64 yen ● Net income per unit remains at similar level
2. Utilities revenues / costs are not included in NOI calculation.
. Seek to improve DPU level through revenue contribution of KDX Nihonbashi Kabutocho Bldg. and use of external growth potential . Provision for reserve for reduction entry to be prepared for one time losses Future trend of DPU level Changes in balance/amounts of provision for reserve for reduction entry (夫) Total DPU ■ Increase in DPU due to sales of properties etc (¥ M) Note: Actual DPU for the 14th – 16th periods and forecasted DPU for the 17th period. Notes: (13/10) 1. Balance / amounts of provision for reserve for reduction entry are at the end of each period and rounded down  to the nearest ￥1 million. 2. Figures in parentheses are calculated by the balance of a reserve for reduction entry at the end of each period divided by the total outstanding units (286,550 units) as of the end of the 16th period (2013/4) and rounded down to the nearest integer. Section 2 External growth
. Focusing on mid-sized office buildings in the Tokyo metropolitan area . AUM has quadrupled since the listing Distribution of office buildings by acquisition price Note: As of the end of the 16th period (2013/4). Distribution of office buildings by distance from the nearest station Distribution of office buildings by size (based on leasable floor area) Portfolio growth (based on total acquisition price) 2. Central Tokyo represents Chiyoda, Chuo, Minato, Shibuya and Shinjuku wards. Distribution by property type (based on acquisition price) Distribution of office buildings by region (based on acquisition price) Note:  The percentage breakdown by property type based on the acquisition price as of the end of May, 2013 (Figures are rounded down to the first decimal place).
. Acquisition from a third party using KRI's own network Acquisition in prospect of potential cash flow growth through improvement in operation . Description of acquisition property Nomura Fudosan Omiya Kyodo Building A prime location approximately a 4-minute walk from Omiya station, a hub station which accommodates a multiple train routes Stable demand for office buildings in the largest commercial and business area in Saitama prefecture

Operation policy
Improvement in occupancy rate based on lease-up plan A new contract concluded after acquisition raising the occupancy rate up to 95.1% (as of April 30, 2013) • Value-up works in common area and replacement of existing facilities based on building examination at the time of acquisition • Work toward cash flow growth through reduction in building management cost directed by KOP which is owned by collectively three parties including an individual 1. Occupancy rate and the number of tenants are as of March 26, 2013 which was disclosed at the time of acquisition. 2. Actual NO) is the net operating incorne (annualized) estimated based on operating income and operating expenses (taking into consideration of property and city-planning t lease contracts at time of acquisition. Amounts are rounded down to the nearest ¥1 million and NOI yield is rounded to the first decimal place. 3. Appraisal NOI is the net operating income (annualized) calculated in the direct capitalization method included in the relevant appraisal report at the time of acquisitio nearest ¥1 million and appraisal NOI is rounded to the first decimal place.
. Acquiring an existing silent partnership equity interest from a third party with the sponsor • Securing preferential negotiation right for future external growth Overview of equity interest in silent partnership Acquired silent partnership equity interest of G.K. KRF 31 with Kenedix, whose asset consists of a trust beneficiary interest in DNI Mita Building • Secured preferential negotiation right of DNI Mita Building at time of acquisition of the silent partnership equity interest. By submitting a notice of interest of purchasing the asset for above ¥3,180 million before November 23, 2014, the preferential negotiation right will be granted . Assumed dividend yield of the silent partnership is 13.8% (Note 5) Notes: 1. The balance sheet of the silent partnership is as of March 31, 2013. 2. The appraisal value of the asset in operation is ¥3,430M as of May 1, 2013. 3. The balance of non-recourse loan is ¥2,839M as of April 30, 2013. 4. The balance of the net assets including silent partnership investment as of the date of acquisition of the silent partnership equity interest is ¥1,741 million, all of which is owned by the seller. KRI acquired a ¥839 million portion (approximately 48.2% of the whole) of the silent partnership investment for ¥200 million and Kenedix  acquired a ¥902 million portion (approximately 51.8% of the whole) for ¥215 million. 5. The assumed dividend yield is computed based on the total amount of assumed dividend from the silent partnership which the Investment Corporation will receive when the G.K. KRF 31 manages the trust beneficiary interest for 2 years, divided by the acquisition price (¥200 million) and annualized (rounded to the first decimal place). This is based on the assumption that there will be no change in tenant contracts from the time of acquisition of the silent partnership equity interest
Description of the asset

Notes: 1. Appraisal NOI is the net operating incorne (annualized) calculated in the direct capitalization method included in the relevant appraisal report as of May 1, 2013. Amount nearest ¥1 million and appraisal NOI is rounded to the first decimal place. 2. Occupancy rate and number of terams include 2 signed contracts with new ternants (a food term lease contract with sublease conditor that started on May 23, 2013 and a ge cancellation of lease contracts and contraction of leased area of existing tenants.
. Sold properties considering evaluations of mid to long-term profitability and an aim to increase portfolio quality . Securing gains on the sales of property catching sales opportunity in a timely manner List of properties sold Kanazawa Nikko Building KDX Yotsuya Building Ikebukuro Nikko Building (Note 3)
Reasons for sales Acquired as a part of a portfolio transaction (8 properties) although the property by itself did not meet our investment criteria as it is classified as "Other" property type and the acquisition price falls below minimum investment value of ¥1 billion → Have been seeking sales opportunity right after the time of acquisition Sales price that exceeds book value by ¥0.10 billion (+15.2%) Current contracted rent is higher than the market average → Future cash flow growth potential is limited Received a notice of lease cancellation from a tenant on the first floor →Risk of a drop in rental revenue at the time of lease cancellation in the near future Sales price that exceeds book value by ¥0.43 billion (+22.2%) and appraisal value by ¥20 million(+0.8%) Risk of falling profitability assessed based on current building specifications and replacement expenses of building facilities Sales price that exceeds assumed book value by ¥0.29 billion (+17.8%) and appraisal value by ¥0.27 billion (+15.9%) Notes: 1. Assumed book value is the book value as of  the settlement date and is rounded down to the nearest million yen. 2. The difference between sales price and (assumed) book value is presented for reference purpose and is not equal to gain/loss of sales of relevant properties. Amounts are 3. The purchase and sales agreement for Ikebukuro Nikko Building was concluded on March 21, 2013 during the 16th period  and was sold on May 10, 2013.
. Focusing on investment in mid-sized office buildings in Tokyo metropolitan area through diversified acquisition methods Sourcing of properties by using multiple pipelines and our acquisition track record
Section 3 Internal growth
. . Steady performance of occupancy rate - aiming to maintain the current high level of occupancy rate and improve rent conditions hereafter Continuing downward trend in turnover ratio after the 15th period (excluding the move-out of a large tenant) Occupancy rate performance of office buildings (by region) (Note 1) Annualized turnover rate for office buildings (Note 2, 3) The forecast occupancy rate for the 17th period are the assumed occupancy rates used for earnings forecast for the 17th period. 2. The figures are calculated and annualized as follows: (total leasable area of the tenants who cancelled the lease agreement during the six-month period from the beginning area of all office buildings owned by KRI as of each month-end during the relevant period) x 2. 3. The estimates for the 17th period (2013/10) are based on the cancellation notice received prior to  the end of 16th period (2013/4). The breakdown of turnover ratio is co for each property 17
. Numbers of move-out and move-in are nearly equal for the 16th period . Move-ins mainly for expansion purposes, move-outs mainly for contraction purposes Turnover of office buildings by a number of tenants and leased floor area I Move-in (left axis) ■ Move-out (left axis) —Net leased area (right axis) Notes 1. A number of end-tenants and leasable floor area based on floors. For example, an end-tenant vacating a floor and leasing another floor at any of our properties is counted as one each for incoming and outgoing. 2. Net leasable area for the 16th period (13/4) includes a decrease in leased area of KDX Nihonbashi Kabutocho Bldg (2,369.49 tsubo). Excluding the area, net leased area for the 16th period becomes 859.92 tsubo. A number of floor expansion and its proportion against total newly-contracted areas during the relevant periods ■ Number of floor expansions (right axis) 1. A number of floor expansions takes into account new tenants which contracted and moved into the same buildings during the relevant periods. The numbers include tenants that are affiliated with existing tenants. 2. Proportion of floor expansions against newly contracted area only takes into account newly contracted floor area during the relevant periods.
Reasons of move-in for the 16th period (13/4) (Note)
Reasons of move-out for the 16th (13/4) and 17th (13/10) periods
office relocation for relevant tenants.  We classify responses of the survey into three categories; "Expansion", "Contraction" and "Other/unknown". For move-in, the figures are based on the number of tenants on office floors on the 2nd floor or above. For move-out, figures are based on the number of tenants on all floors except  for residential part. 18
Change in asking rents is on a recovering trend after the 15th period (2012/10) for overall office buildings Percentage change in asking rent
-30.0% Notes: 1. The figures represent the simple  average value of percentage differences of average monthly rents (per tsubo) for existing tenants and new tenants in the respective buildings. In case there is difficulty to calculate an average monthly rent for the end of the previous month as a result of vacancy due to tenant move-out, the above figures are calculated using the average monthly rent before the tenant moves out. 2. The analysis is based on office floors on the 2nd floor or above and excludes buildings that were newly acquired during the relevant fiscal periods. date of new contract by new tenant for newly contract floor area for relevant period. Rent-free period refers to a period from the start date of contract until the start date of contracted full rent. Above figures are monthly average and are expressed in terms of month by dividing by 30 days. Figures are rounded to the first decimal place. 2. The analysis is based on office floors on the 2nd floor or above and excludes buildings that were newly acquired during the relevant fiscal periods. 3. Figures in brackets represent number of tenants. If the same tenant leases multiple sections on the same floor, the number of tenants is combined and is counted as one given vacancy and rent free periods are identical for different sections. Distribution of rent free periods during 16th period (2013/4) for properties in Tokyo metropolitan area .
. Contraction trend for change in rent level at the time of rent revisions . Increasing proportion of "Increase" and "No change" for rent revision while that of "decline" decreasing Change in rent level at time of rent revision (based on monthly rent) (11/4) (10/10) (11/10) (13/4) (12/4) (12/10) Note: The above figures are the monthly rent level difference before and after the rent revision and are calculated separately for each tenant. Numbers are rounded to the nearest ¥1,000 Rent revision during 16th period (based on leased floor area) Note: Based on leased floor area that are either renewed or revised during the 16th period, including leased floor area that are renewed before the renewal deadline. Status of rent revision (based on leased floor area) Note: Above figures are for any renewed or revised contracts during relevant periods and such contracts are summarized by the status of rent revision (increase / decrease / no change) . The percentages are based on leased floor area and are rounded to the first decimal place.
. Bottoming out of rental income as the result of improvement in rent-based occupancy rate . Percentage change in rent per unit has improved and the trend will continue for the next period Key steps to rent income recovery Rise in occupancy rate Upward trend in occupancy rate: 92.8% (14th period) → 94.5% (15th period) → 95.1% (16th period)  → 95.5% (17th period, forecast) Rise in rent-based occupancy rate Rise in rent per unit Rise in rent income Rent-based occupancy rate increased to 93.5% (16th period) and is expected to further improve to 94.4% for the 17th period due to a drop in remaining periods of free rent Percentage change in rent per unit has been contracting from -3.1% (15th period) to -1.5% (16th period). Expected to contract further for the 17th period Percentage change in rent income expected to slightly decline in the 17th period. Expecting rent income to bottom out after the next period. Occupancy and rent-based occupancy rates -Occupancy rate (average) •Rent-based occupancy rate (average) Percentage changes in rent per unit and rent income 1. Based on 71 properties that KRI owned from the beginning of the 14th period (12/4), excluding properties sold over the period. Rental revenue includes common area charges 2. Rent-based occupancy rate is a monthly average of rents paid (contracted rents – rents equivalent to rent free period) divided by total potential rent (contracted rent + 3. Percentage change in rent per unit is calculated by taking a change from the end of previous fiscal period to the current fiscal period.
. Occupancy rate based on rent paid steadily improving due to the fall of vacant floor space Extent of a fall in total rent diminishing period by period . Notes: 1. The above figures reflect the 71 properties (excluding the properties sold) held at the beginning of the 14th period (2012/4). The rents include common area charges. 2. The rent-based occupancy rates are calculated by dividing the contract rent or the rent paid (the contract rent – the portion of rent that is not paid due to the rent-ree + the minimum rent expected for new tenants to move in)
. • Achieved contract rate of 99.8% in 6 months from lease termination of the entire building at Nov 31, 2012 Reduced rental revenue fluctuation risk in the event of tenant move-out by introducing multiple tenants Value-up works for KDX Nihonbashi Kabutocho Building Changed the building specification to  accommodate a multi-tenants switching from a single-tenant property. Concurrently, improved functionality and interior of the building Details of the works Renewal of common area
Upgrading of central monitoring system Conversion of office space (1F) to retail shop tenant and establishment of rooms Addition of new signboard
Actual and forecasts for  NOI (Note 4)
Achieved introduction of multi-tenants A wide range of tenants including service, manufacturer, wholesale, retail and Notes: 1. Figures are based on the lease contracts concluded as of disclosure date of this material with an assumption that no tenant would move out up until the end of 19th period 2. Occupancy rate for the contract that has started is calculated by dividing leased floor area by leasable floor area and is rounded to the first decimal place. 3. Contract rate is calculated by dividing contracted area by text leased area besied on lease contracts which are already contracts which are already contracted by find dec for which lease contract has not yet started. 23 4. NOI (Net operating income) is calculated by the Asset Management Company using its own formula. Figures are rounded down to the nearest ¥1 million. However, the projected
. Implemented strategic measures to maintain/improve property value . Achieved early lease-up through timely value-up works Changes in depreciation and construction expense (actual/estimate) Major repair/renovation works during 17th /18th periods (Note)
Note: Estimated expense is an approximate estimate as of the date in which repair schedule is prepared. Minor repair works are not included above. Occupancy rate performance of KDX Shiba-Daimon Bldg. and example of value-up works . Implemented value-up works on five floors at the time of tenant move-outs Achieved early lease-up of new tenants by improving competitiveness of the property through value-up works while minimizing duration of such works through detailed management of entire schedule Notes: 1. Occupancy rates are as of the end of relevant month. 2. Above table describes monthly occupancy rate. Lease cancellation in the middle of a month is considered as if it  occurred at the end of the previous month. New lease contract in the middle of a month is considered as if it occurred at the beginning of the month. 3. The figures are forecast up to the end of the 17th period based on available information as of the disclosure date of this material. Due to various reasons including addisonal receipts of notices of lease cancellation, actual result might not turn out as described.
. Largest tenant occupies 3% of total leased floor area for entire portfolio Top 10 tenants occupy 11% of total leased floor area for entire portfolio (As of May 31, 2013) .
2. Ikebukuro Nikko Bldg  is sold on May 10, 2013. Numbers in bracket represent figures after the sales of Ikebukuro Nikko Bldg.
Distribution by leased floor area (based on # of tenants) Distribution by contracted rent (based on leased floor area) Distribution by type of tenant (based on # of tenant) 1. Average rent is a weighted average by area and is truncated o the nearest ¥100. 2. These figures include KDX Nihonbashi Kabutocho Bldg where a major tenant moved out during the 16th period. If the property is excluded, percentage change of average rent would be -2.1% and -1.9% for Tokyo metropolitan area and Japan, respectively. they are in, based on the total number of tenants in office portfolio (aggregated by name-base) 25 Section 4 Financial strategy
. . Achieving a gradual decline in financing cost of debt Maintaining stable financial base by extending terms of debt and fixing interest rates Note:  Average interest rate and average life of debt are weighted averages based on outstanding debts at the end of each fiscal period. Average interest rate (including up front fees) and average life of debt are rounded to the second and first decimal places respectively. Average interest rate and average life of debt 8.0 6.0 4.0 2.0 0.0 Changes in borrowings for relevant periods 1. Average borrowing term is a weighted average based on amount of borrowings (rounded to the first decimal place). 2. Average interest rateis weighted by amount of new borrowings and by adding annualized upfront fee to the spread cost for total debt costs (rounded to the second decimal place). 3. Borrowings that are repaid within the same period are not included for the calculation. Fixing rate of interest and extending terms of debt as of the end of 16th period (13/4) (Note 1) Notes: 1. Fixed rate includes borrowings that are fixed through interest rate swap but excludes those that are hedged by interest  rate cap (numbers are rounded to the first decimal place). Diversification of debt maturity as of the end of 16th period (13/4) ■ Refinance in 16th period  ■ New finance in 16th period  ■ Investment corporation bond  ■ Borrowings 2.40 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 28th 27th period (13/4) (13/10) (14/4) (14/10) (15/4) (15/10) (16/4) (16/10) (17/4) (17/10) (18/4) (18/10) (19/4) Note:  The chart illustrates total debt amounts that reach maturity in each period, including repayment of a part of principle based on contract (rounded to the second decimal place).
. Maintaining conservative LTV level . Upgrade of credit rating (A → A+) reflecting positive evaluations on our abilities on property operation and financial management LTV performance Status of credit ratings
Credit rating agency: Japan Credit Rating Agency (JCR) Note: Credit rating was altered on Mar 8, 2013 List of lenders based on outstanding amount of borrowings Breakdown of lenders
corporation bonds (totaling ¥6.0 billion).(Amounts are rounded to the second decimal place.) Appendices
Notes: 1. Acquisition price is the purchase price of the trust beneficiary interests etc. acquired by KRI. 2. Year built shows the completion date recorded in land register book. The average value shown in subtest section is a weighted average number calculated basied on acquasit decimal place. 3. Occupancy rate is calculated by dividing leased floor area by leasable floor area and is rounded to the first decimal place. 4. Purchase and sales agreement of likebükuro Nikko Building was concluded on March 21, 2013 during the 16th period and the property was sold on May 10, 2013.
Regional Areas
Total (83 properties, excluding investment securities) Portfolio (83 properties) Total 292,553 Ave. 220 yrs 93.9 Note: The total number of end tenants for 78 office buildings is 878 (843 if tenants are aggregated based on their names)
Investment Securities (2 properties)
Type
Investment Securities
Properties sold (2 properties)
Properties sold during the 16th period (13/4) 93 L /an.227 yrs
Central Urban Retail Properties (2 properties)

Type

Residential Properties (3 properties)
Notes:
1. Acquisition price is the purchase price of the trust beneficiary interests etc. acquired by KRI. 2. Year built shows the completion date recorded in land register book. The average value shown in subtotal section is a weighted average number calculated based on acquisition prices with a base date of April 30, 2013, and is rounded down to the first decimal place. 3. Occupancy rate is calculated by dividing leased floor area by leasable floor area and is rounded to the first decimal place. 4. Purchase and sales agreement of Ikebukuro Nikko Building was concluded on March 21, 2013 during the 16th period and the property was sold on May 10, 2013. 5. Acquired silent partnership equity interests of G.K. KRF 31 during the 17th  period (May 23, 2013).
Average rent of KRI office buildings: comparison with market average (Tokyo central 5 wards) (¥/tsubo) ■ Average market rent ■ KRI's average rent Occupancy rate of KRI's office buildings: comparison with market average (Tokyo central 5 wards) (%) - Market average occupancy rate -KRI's occupancy rate 86 8th period 3rd period 4th period 5th period 6th period 7th period (06/10) (07/4) (07/10) (08/4) (08/10) (09/4) 9th period (09/10) (10/4) 10th period 11th period 12th period 13th period 14th period 15th period 16th period (10/10) (11/4) (11/10) (12/4) (12/10) (13/4) Notes: 1. Average market rent and occupancy rate of the market refer to the average values of Tokyo central 5 wards published by Miki Shoji. 2. Average rent and occupancy rate of KRI refer to the average values of office buildings in Tokyo central 5 wards held at the end of each period. 3. KDX Nihonbashi Nikko Building where a major tenant vacated during the 16th period is included for calculation of KRTs average rent. If excluded, the KRTs average rent for 4. KDX Nhonboshi Nikko Building where a major tenant vacated during the 16th period is included for calculation of KDI's average occupancy rate. If excluded, the KDI's avera 33
. Competitive advantages among mid-sized office building leasing market attained through integration of AM/PM functions . High motivation for continuous occupancy among tenants backed by proactive measures targeted at maintaining/improving property value based on CS survey Integration of AM/PM functions • KRI's structure •   Common structure for J-REITs Tenant PM company Outsourcing Asset Management company Tenant The result of the 4th CS survey: reasons of satisfaction Motivation for continuous occupancy Note: Percentage based on answers to a question regarding continuous occupancy in tenant satisfaction surveys in 2007, 2009, and 2011 (interviewed the person in charge of general affairs). 34
. For move-ins, space expansion motives continue to remain high . For move-outs, space reduction motives occupy the majority Reasons of move-in for office buildings (Note) Reasons of move-out for office buildings (Note) ■ Space expansion ■ Space reduction ■ Other/unknown ■ Space expansion ■ Space reduction ■ Other/unknown Note: The above data is based on the survey by the Asset Management company with regard to reasons of office relocation for relevant tenants. We classify responses of the su categories; "Space expansion", "Space reduction" and "Other/unknown". For move-ins, the figures are based on the number of tenants on office floors on the 2nd floor or above figures are based on the number of tenants on all floors except for residential part.
. • Successfully achieved energy cost reduction through planned repairing/renovation works Three properties additionally certified by DBJ Green Building Certification System Energy reduction in accordance with Energy Saving Act • Implemented renovation works based on 5-year energy reduction plan • Achieving reduction rate well below the targeted level (99% of the previous year) Note: Amount of energy reduced are compared using their crude oil equivalent. over 5 years
Major planned energy-saving measures during 17th period
• Total amount of energy reduction amounts to 888.96kℓ (crude oil equivalent) since KRI implemented energy-saving measures • Energy-saving measures are  applied to all properties in portfolio with main focuses on upgrades of air conditioning and lighting
List of properties certified by DBJ Green Building Certification System • On Dec 26, 2012, three properties are additionally certified by DBJ Green Building Certification System, increasing the number of certified buildings to 7 • Built in 1982, Karasuma Building is relatively old but our proactive repairing/renovation works and use of consulting company for energy • List of properties certified by DBJ Green Building Certification System
Notes: 1. Definitions of each rank are as follows: Silver: Properties with excellent environmental & social awareness Bronze: Properties with high environmental & social awareness Certified: Properties with sufficient environmental & social awareness 2. On August 22, 2012, the properties received the certifications again but there are no changes in certification levels.
. Improvement in portfolio profitability achieved through continuous property acquisitions 1. KDX Shin-Yokohama 381 Building Annex Tower (acquired in the 10th period) is counted as one property. Investment securities (acquired in the 14th period) are excluded. 2. Change in asset size is calculated based on acquisition price. 3. Figures are rounded down to the nearest ¥100 million. Details of portfolio growth (Note 1, 2)
Notes: 1. Acquisition price is rounded down to the nearest ¥100 million 2. Properties that are sold prior to relevant fiscal periods are excluded. 3. Data for KDX Shin-Yokohama 381 Bldg. Annex Tower (acquired in the 10th period) is included in the data for A47 KDX Shin-Yokohama 381 Bldg. (acquired in the 6th period). 4. For Nomura Fudosan Omiya Kyodo Bldg., NOI yield is calculated based on actual NOI at the time of acquisition. Property tax and city planning tax are not imposed in the first year of acquisition but are assumed as if they are imposed for the calculation 5. Annual NOI is annualized based on the actual NOI data for  the 16th period (13/4) 6. NOI yield is rounded to the first decimal place.
(08/4) (09/4) (11/4) (12/4) (13/4) (07/4) (10/4) Notes: 1. Figures are change in appraisal values at the end of each period compared with that of the previous period. 2. For the properties acquired during relevant period, the appraisal value at the time of acquisition is used for the appraisal value of the previous period Changes in average appraisal cap rate
Notes: 1. Changes in mid- and long-term rent and cap rate (average) of appraisal office buildings owned at the end of each period. 2. Figures are based on weighted average acquisition price. 3. For the properties acquired during relevant period, the rent and cap rate at the time of acquisition is used for the values of the previous period. Office buildings: Percentage changes in appraisal value Office buildings: Changes in appraisal profit/loss amount and ratio
Appraisal profit/loss is calculated by subtracting office buildings' book values from appraisal values for properties owned at the end of each period. The ratio is calculated by dividing the appraisal profit/loss by the total book value.
Office buildings: Changes in appraisal value
1. Properties owned at the end of each period is categorized into three types based on the extent of the change in appraisal values (increase, no change, decrease). The change in appraisal values are calculated by comparing appraisal value of the properties owned as of the end of relevant period with that of the previous period. 2. For the properties acquired in relevant period, appraisal values as of the date of acquisition is used  for the appraisal value of previous period. Note: "Percentage changes in appraisal value", "Appraisal profit/oss amount", "Appraisal profit/loss ratio" are calculated based on properties owned as of the end of 16th pe excluded for the calculations.  "Percentage changes  in appraisal value" and "Appraisal profit/oss ratio" are rounded to the first decimal place and "appraisal profit/loss a 38
1. Acquisition price, appraisal value and book value are rounded down to the nearest ¥1 million (ratios are rounded to the first decimal place). 2. Total cap rate for each property type are based on the weighted average of acquisition price. 3. KDX Shin-Yokohama 381 Building (existing tower) and KDX Shin-Yokohama 381 Building Annex Tower are counted as one property.
1. Acquisition price, appraisal value and book value are rounded down to the nearest ¥1 million (ratios are rounded to the first decimal place). 2. Total cap rate for each property type are based on the weighted average of acquisition price.
Kenedix Realty Investment Corporation (KRI) price/volume performance (from the listing to June 14, 2013) Note : Excluding over 8,000 trading volume (2008/10/20:19,728 units) • As of April 30, 2013 •   Highest price (trading price):  ¥988,000 (2007/5/31) • Lowest price (trading price): ￥100,300 (2008/10/20) • Average trading volume during 16th period: 1,519units
Change in % share of investment units by unitholders ■ Individuals and Others ■ Financial Inst. (incl. Securities)
Note: Ratios are rounded to the first decimal place.
1. The percentage of total units owned to total units outstanding is rounded down to the second decimal place. 2. The standing proxy is Custody department of The Hongkong and Shanghai Banking Corporation Limited, Tokyo Branch. 3. The standing proxy is Settlement & Clearing Services Division,Mizuho Corporate Bank, Ltd.
. Most abundant in terms of number of properties and potential tenants in Tokyo metropolitan area Relatively less rent volatile compared to large-sized buildings . Institute (as of 2011/3). Source: Survey conducted by CB Richard Ellis Research Institute based on KOP's request "Market survey of Medium-sized buildings  (2011/5)" Breakdown of office buildings by GFA (Tokyo 23 wards) Note: The above data covers rental office buildings located in Tokyo 23 wards that were surveyed by CB Richard Ellis Research Institute. The above data may not include the data of all properties in the Tokyo 23 wards (as of 2011/3). Source: Survey conducted by CB Richard Ellis Research Institute based on KOP's request "Market survey of Medium-sized buildings"(2011/5) Source: Created by KOP based on data from 2009 Economic census-basic survey for Tokyo 2000 2001 2002 2003 2005 2006 2007 2008 2010 2011 2012 Source:Created by KOP based on the data compiled by CB Richard Ellis Research Inssitute (the latest value as of 2013/3) Office market in Tokyo central 5 wards (by on number of buildings) Breakdown of office buildings by a number of employees (Tokyo) Tokyo 23 wards: rent level by total floor area
Source: Miki Shoji "Latest Office Building Markets in Tokyo (central 5 wards)" (from 2002/1 to 2013/4) Minato, Shinjuku and Shibuya) Source: Created by KOP based on the data compiled by Miki Shoji (2002/2 to 2013/4)
metropolitan government website. Breakdown of number of offices and employees by prefecture (2009) Note: Data of top 10 prefectures listed in each chart. Source: MIAC, Statistics Bureau "2009 Economic census-basic survey" (June, 2011)
Change in population for Tokyo and Japan (1992-2011)
Metropolitan Government
Global Cities Index (A.T. Kearney Global Cities Index (2012))
across five dimensions: "Business activity" (30%), "Human capital" (30%), "Information exchange" (15%), "Cultural experience" (15%), and "Political engagement" (10%). Source :2012 Global Cities Index and Emerging Cities Outlook
Decision-making process
Structure of the Sponson Memorandum of Understanding (Note) Unitholders Investment Kenedix Realty Investment Corporation (J-REIT) Asset management agreement Kenedix Office Partners, Inc. (the Asset Management Company) 90% Investment 10% Investment Kenedix Asset Management, Inc. 100% Investment Kenedix, Inc. Note: On June 5, 2013, Kenedix Office Parners became a wholly-owned consolidated subsidiary of Kenedix, Inc. Note: To be changed after the scheduled reorganization of Kenedix Group.

Purpose of reorganization
Overview of new support-line
Consolidating the real estate asset management know-how throughout the whole Group   1.   When Kenedix (KDX) obtains information about the sales of real estates from third Increasing in the asset management capability and competitiveness of the Kenedix parties, and when KDX reaches the reasonable decision that the real estate Group by strategically strengthening the resources deployed in the acquisition and complies with the investment standards of KRI and KDR, the information about the management of real estate investment targets sales of real estate will be provided to Kenedix Real Estate Fund Management Building up a structure that contributes to the benefit of our client investors by (KFM) no later than the information is provided to entities other than KFM. reinforcing our internal management systems 2. For the consideration of sales of real estate that KDX directly and/or indirectly Aiming to improve the efficiency of the asset management operations within the invests or that private fund for which KDX performs asset management services Kenedix Group owns, and when KDX reaches the reasonable decision that the real estate complies with the investment standards of KRI and KDR, the information about the sales of real estate will be provided to KFM no later than the information is provided to entities other than KFM. 3. For the purpose of securing an acquisition opportunity for KRI, KFM can ask KDX to temporarily acquire/hold real estate or to create real estate fund. KDX must sincerely consider taking the requested actions.
Overview of preferential study rights for property information
•    For office buildings (note) which are KRI's main investment targets, KRI Fund Division of KFM will have the first opportunity to consider an acquisition given the following conditions are satisfied:
Note: Office building refers to properties where floor area for office use is the largest share of total floor area based on floor area use in accordance with the Building Standards Law.
Timetable for reorganization

Overview of reorganization
Private funds (Business based primarily on investment advisory agreement)
*: Business based primarily on investment advisory agreement
Organization chart
2 Auditors (part-time)
After joining the Ministry of Finance, he served as commissioner of Tokyo Customs, Deputy Commissioner of the National Tax Administration, Secretary General of the Securities and Exchange Surveillance Commission, Director General, Minister's Secretariat of the National Land Agency Currently working for Kenedix as an auditor Auditor (part-time) After working for  Mitsubishi UFJ Trust and Banking as General Manager of Real Estate Custody Division etc., he joined Kenedix on April, 2006. Currently appointed auditor for Kenedix after working for Kenedix Advisors, Inc. as Representative Director Auditor (part-time) Auditors Board of Directors Asset Management committee CEO and President Compliance Officer Compliance Committee Property Financial planning div. Business administration div. Business Administration Group Running unitholders' and directors' meetings Administration/ Accounting/ Human resources Director & General Manager of Property Management Division   Division
Key members
Worked for Mitsubishi UFJ Trust and Banking Corporation for approximately 17 years (Real Estate Division, Real Estate Project Origination Division) After working for Joint Asset Management Co., Ltd. as its Representative Director, he joined Kenedix Office Partners, Inc. where he was a member of the Financial Planning Division for approximately 2 years Appointed Representative Director of Kenedix Office Partners, Inc. on Feb 2, 2012 Worked for Tokyu Land Corporation for approximately 9 years (Urban Business Division) Joined Kenedix, Inc. after having worked for JPMorgan Securities Japan Co., Ltd., Prudential Real Estate Investors (Japan) K.K. • Property appraiser Appointed General Manager of Investment Management Division on Aug 1, 2012 Worked for Mitsui Fudosan Building Management for 12 years Joined Kenedix Office Partners, Inc. on Jan, 2011 after working as a director for asset management companies of Pacific Management and  Nippon Commercial Investment Corporation Appointed General Manager of Property Management Division on July 1, 0212 after working as PM Manager of Property Management After working for Sakura Bank for 6 years, he moved to Sakura Securities, Daiwa Securities SMBC, and Goldman Sachs  where he experienced investment banking business for 10 years Joined Kenedix Office Partners, Inc. after having worked for Goldman Sachs Realty Japan Appointed General Manager of Financial Planning Division on Aug 1, 2012 • Worked for 27 years at Shinsei Bank, Ltd. • Joined Kenedix Office Partners, Inc. after 8 years of experience as a compliance officer at Shinsei Bank Appointed Compliance Officer on Sep 16, 2008 Investment Management div. • Property acquisition and disposition • Research and analysis of real estate markets • Property management • Assessment of property management /risk management management div. Property Management Group • Property leasing • Property Management management Construction activities • Negotiations with regulatory agencies and concerned bodies Finance & Accounting Group Formulation of budget, financial statements Procurement of funds Engineering Group Group • Investor relations IR
. No expected change in key members of KRI after the reorganization Organization chart of KFM (planned) Board of Directors CEO and President KRI Fund Div. Key members Internal Audit Dept. Compliance Dept./ Compliance officer Compliance Committee (common) KRI General Manager of Fund Div. (Director and COO) KRI Fund Div. Kenedix Realty Investment Corporation KDR General Manager of Fund Div. (Director and COO) KDR Fund Div. General Manager of Private Fund Div. Private Fund Div. Private Fund Asset Management Committee Investment Management Dept. Finance & Accounting Dept. Business Administration Dept. Auditors Kenedix Residential Investment Corporation Private funds (Business based primarily on discretionary advisory agreement) Manager of Compliance Dept. (KFM administration Division)   52 The contents of this document, including summary notes, quotes, data and other information,  are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please be aware that matters described herein may change or cease to exist without prior notice of any kind. This document contains forward-looking statements and anticipations of future results, based on current assumptions and beliefs in light of currently available information and resources. Risks and uncertainties, both known and unknown, including those relating to the future performance of the real estate market in Japan, interest rate fluctuations, competitive scenarios, and changing regulations or taxation, may cause Kenedix Realty Investment Corporation (KRI)'s actual results, performance, achievements and financial performance to be materially different from those explicitly or implicitly expressed in this document. With respect to any and all terms herein, including without limitation, this document, the information provided is intended to be thorough. However, no assurance or warranties are given with respect to the accuracy or completeness thereof. Neither KRI nor Kenedix Office Partners (KOP) shall be liable for any errors, inaccuracies, loss or damage, or for any actions taken in reliance thereon, or undertake any obligation to publicly update the information contained in this document after the date of this document. Revised editions of our annual reports will be posted on our website (http://www.kdx-reit.com/) if there should be major corrections going forward.