15th Term Business ReportJanuary 1, 2009 December 31, 2009

Revenue

0

30,000

60,000

2005 2006 2007 20092008

90,000

120,000

180,000

150,000

(Millions of yen)

NPL Investment Management BusinessAsset Management BusinessReal Estate Investment Advisory BusinessReal Estate Investment Business

Ordinary Income

2005 2006 2007 200920080

5,000

10,000

15,000

20,000

25,000

30,000

(Millions of yen)

Net Income

2005 2006 2007 20092008

(Millions of yen)

-15,000

-10,000

-5,000

15,000

-20,000

5,000

10,000

0

Assets under Management

Office Buildings

Rental Condominiums

Commercial Facilities

Logistics Facilities

Others

0

200

100

300

400

500

600

700

1,000

900

800

2005 2006 2007 20092008

(Billions of yen)

Highlights of Business Results

We are pleased to present our business report for the

15th term (from January 1, 2009, to December 31,

2009).

During the year, due to financial market turbulence

confounded fund-raising prospects, real estate invest-

ment market liquidity was extremely limited.

In this environment, the Kenedix Group (the “Group”)

worked to achieve the objectives of its Medium-Term

Management Plan. These efforts included slimming

down our balance sheet by selling off some real estate

holdings and increasing assets under management by

offering new asset management businesses.

We established Kenedix Asset Management, Inc.

(KDAM), and moved Kenedix REIT Management, Inc.

(KDRM), and Kenedix Advisors Co., Ltd. (KDA) under

KDAM’s umbrella to create a structure that specializes

in asset management. We are convinced that shoring

up our management base will help to regularize and

increase our revenue flow.

We remain undaunted in our determination to make

steady progress as a real estate asset manager. We

ask for your continued support and understanding of

our management policy.

March 2010

Ryosuke Homma

Chairman

Note 1: We have taken into account an increase in development projects and present investments in real estate on

our own account, which were included in the Real Estate Investment Advisory Business, as the Real Estate

Investment Business—a new, independent business segment—starting with the period ended December

31, 2007.

Note 2: Previously, when offering real estate for sale, the Group recognized as revenue only the difference between

the proceeds and costs. Beginning with fiscal 2007, all proceeds are included in revenue and the corre-

sponding cost of these properties is included in the cost of revenue. Although this change resulted in large

increases in revenue, there was no effect on gross profit or other earnings figures.

Note 3: The Group uses the following standards for calculating the balance of assets under management (AUM).

(1) AUM includes real estate properties for which the Group performs asset management services, but does

not include development projects prior to completion. (2) AUM uses the purchase price of a property exclu-

sive of tax. Costs associated with acquisitions, capital expenditures to raise a property’s value and other

related items are included in the book value of a property for accounting purposes. However, these items

are not included in AUM. (3) AUM includes properties that the Group holds itself for a short period of time.

AUM also includes properties held by J-REITs (Kenedix Realty Investment Corporation and Japan Logistics

Fund) that are managed by Kenedix affiliates.

(Note 1)(Note 2)

(Note 3)

Atsushi Kawashima

President

Message from the Management

Message from the Management

1

Management Interview

Have you seen any signs that the real estate investment market is recovering?Kawashima: The real estate fundamentals are still sluggish,

as is evident from such trends as ongoing increases in office

building vacancy rates, but I believe the operating environment

is improving gradually. I think that the rise in vacancy rates will

peak by early autumn. In fact, during the past two months we

have seen an over-influx of tenants into brand-named office

buildings. In the past, worsening real estate market conditions

prompted rapid increases in the cap rate, which indicates

investors’ expected returns on profit-earning real estate.

According to recent hearings of our client investors, they are

not expecting higher yields.

The Bank of Japan publishes a quarterly tankan business

sentiment survey, which expresses a diffusion index (the per-

centage of firms that feel business is favorable, minus those

that feel business is unfavorable) for various sectors. After a

long spell of negative numbers, the diffusion index describing

the lending attitude of financial institutions is now moving into

Kenedix is working to overcome the effects of the financial crisis by reorganizing its management base. The pro-cess for achieving this goal is defined by the three objectives of our Medium-Term Management Plan: to steadily increase assets under management (AUM), downsize our balance sheet and develop a more stable profit structure. In autumn of 2009, the Japanese real estate investment market began showing signs of a comeback, as J-REIT subscriptions increased and J-REIT mergers continued. Nevertheless, the market outlook remains uncertain. Against this backdrop, which includes the Company’s biggest full-year losses ever, we asked Chairman Ryosuke Homma and President Atsushi Kawashima to provide a synopsis of performance for the year ended December 31, 2009, as well as their strategies for reversing the trend.

Restructuring Our Management Base to Overcome the Financial Crisis and Reinforcing Group Management to Reverse Our Fortunes

positive territory. In addition, J-REIT restructuring shows that

the market has entered a phase of self-cleansing. I interpret

these indicators as signals that real estate market liquidity will

increase.

Homma: This the case because of the pivotal role J-REITs

play in the fund business. In October 2009, investment in

residential and office J-REITs was up for the first time in 15

months, and many J-REITs have announced mergers among

themselves. Although the effects of these mergers will first

become apparent in 2010, I believe that overseas investors

will take a positive view of these signs that the J-REIT market

has begun a process of self-cleansing.

Posting of Highest Ever Losses, but Financial Health Improving

How would you evaluate your performance for the year ended December 31, 2009?Kawashima: During the year, revenue dropped 43.4%, to

¥77.8 billion; operating income fell 48.2%, to ¥8.4 billion; ordi-

nary income plunged 95.8%, to ¥0.2 billion; and we recorded

a net loss of ¥18.4 billion, up from a net loss of ¥10.8 billion

Real Estate Investment Market Liquidity Expected to Recover

Management Interview

2

during the preceding year. We apologize sincerely to our

investors for these results. The reason for these losses was

a decline in real estate values as economic and real estate

market conditions worsened suddenly. These circumstances

erased more than ¥16.0 billion in value from the Group’s

direct holdings, as well as nearly ¥2.0 billion in unrealized

losses on investments in securities, such as the shares we

hold in Commercial RE Co., Ltd., an equity method affiliate to

which we provide funding and outsource operations.

Homma: We worked to slim down our balance sheet in

line with the Medium-Term Management Plan that we

announced last February, but we were unable to overcome

the effects of ongoing

asset deflation. Owing

to the stagnant real

estate investment mar-

ket, we faced a decline

in fee income—such

as acquisition fees and

incentive fees. Rental

income also fell as we

disposed of real estate

holdings.

How is progress on slimming down your balance sheet?Homma: As of June

30, 2008, total assets

stood at approxi-

mately ¥430.0 billion,

Restructuring the Asset Management Business to Generate Steady Increase in AUM

Despite the difficult conditions, AUM appears to be increasing steadily.Kawashima: In the second quarter of the year, we managed

to erase the “Notice Concerning Precaution about the Going

Concern Assumption,” and since August we have seen a

steady increase in asset management (AM) contracts. Many

of these contracts have been for what we term “rescue AM,”

and interest- bearing debt was around ¥310.0 billion. By

December 31, 2009, or 18 months later, we had reduced

these levels by about half. In short, although we are still only

midway down the path, we are making progress toward

slimming down our balance sheet and will continue working

toward this goal.

Kawashima: From a financial standpoint, last autumn we

raised funds through a capital subscription and by issuing

new convertible bonds (CBs), which strengthened our capital

base. These moves were designed to allow us to fund the

year-end early redemption of a previous CB issue. Investor

demand to roll over these CBs was greater than we had

expected, as was demand for new investment, so we were

able to handle the early redemption without any problem. In

December, we also succeeded in raising ¥14.0 billion in long-

term loans through Sumitomo Mitsui Banking Corporation

and other organizations. These measures improved our finan-

cial situation.

Ryosuke Homma, Chairman

3

as they are contracts for services to fill the gap left by asset

managers that have withdrawn from the business, as well as

contracts that investors or lenders shifted to us as they were

looking to improve real estate fund performance. Thanks to

this situation, despite adverse market conditions we raised

AUM by a net amount of ¥95.6 billion, to ¥939.9 billion as of

December 31, 2009.

Homma: Last June when we sold KDX Toyosu Grandsquare,

a large-scale office building, to a fund managed by the Carlyle

Group we also took over asset management operations on

this property. In August, we received an additional AM contract

for another ¥24.0 billion in Japanese real estate funds held by

the Carlyle Group. We consider this contract a vote of confi-

dence in our asset management capabilities.

Was the sponsorship of Pacific Holdings, Inc., one aspect of these activities?Kawashima: In December, we concluded a basic contract

for sponsorship of three companies in the Pacific Holdings

Group. Through this sponsorship, the Kenedix Group aims

to help raise the value of their real estate to maximize return

to creditors when the properties are sold. In addition to asset

management fees, we have the opportunity to earn incentive

fees if the properties are sold beyond their expected val-

ues. In addition to ensuring that the properties are disposed

smoothly, by sponsoring the companies’ reorganization we

are developing a new type of business.

Homma: We can envision a number of potential patterns that

the reorganizations might take. Although we need to winnow

down the possibilities, at this stage we plan to dispose of the

properties smoothly.

Atsushi Kawashima, President

Was the goal of increasing AUM behind your establishment of a company to oversee AM for the Group?Kawashima: Yes, indeed. As AUM grows, we must provide

more robust AM offerings. Under the new company’s

umbrella are KDA., which operates private funds primarily

for pension funds, and KDRM, an asset manager of Kenedix

Realty Investment Corporation. We established KDAM in

October to reorganize this business and enhance the supervi-

sion and support of our AM business. Initially, we established

KDAM as a wholly owned subsidiary, and later MAX-REALTY

INC. acquired a 15% stake.

Homma: MAX-REALTY

is a real estate invest-

ment AM company

formed through the

joint investment of

companies including

XYMAX Corporation

and Sumitomo Mitsui

Banking Corporation. We

believe that enhancing

our relations with these

companies, which have

solid fund-raising exper-

tise and extensive infor-

mation networks, will put

us in a stronger position

as the AM market grows

more selective.

Management Interview

4

problem of an early CB redemption, which put finances on

a more stable footing. The competitive landscape has also

changed substantially, as former competitors withdraw from

its business or enter bankruptcy. Given this situation, although

we will continue to move back to the pure asset management

business, as is set forth in our Medium-Term Management

Plan, we have revised our timing for the disposal of properties

to match the speed of market recovery. The leeway to make

this revision came from such factors as increased capitaliza-

tion during the year and reflects the revaluation of our real

estate holdings and the restructuring of our balance sheet.

Furthermore, we have raised our AUM acquisition targets in

line with changes in the environment for AM contracts.

Homma: We announced the

Medium-Term Management

Plan in February 2009, amid

the unprecedented financial

crisis precipitated by the

Lehman shock, so it was

essential to be extremely

conservative. Now that busi-

ness conditions are starting

to look more positive, we can

afford to be more optimistic.

Tell us about your business directions for the year end-ing December 31, 2010.Kawashima: Strengthening

Group management will be

The Frontiers of Earning Growth at Kenedix

Sources of earnings for

Kenedix

AUMprofitability

AUM volume

1

2

2. Value added through active asset management

Attract tenants, add value to realize the full potential value of each property

Buy and sell properties at optimal prices based on superior market views, earn incentive fees

1. Strong growth in AUM

Capture “rescue” asset management contracts

Acquire platforms of other companies

Increase activities targeting distressed assets, reorganizing companies, etc.

Capture synergies with alliance partner MAX-REALTY

Medium-Term Management Plan Initiatives—Faster Growth in AUM

We understand that you have revised the targets of the Medium-Term Management Plan for next year. What was the point of these revisions?Kawashima: Though conditions in the real estate investment

market remain uncertain, some positive signals of improve-

ments in market conditions are also evident, such as the eas-

ing of the credit crunch that occurred in the first half of 2009.

During the year under review, the Group solved the potential

Revising AUM Growth Targets Upward Planning to Move into the Black in the Year Ending December 31, 2010

5

Homma: As I mentioned earlier, to stage a recovery in AM,

we need to generate multiple fees from the market.

Do you have any closing remarks for your shareholders?Kawashima: We apologize sincerely for not having been able

to pay dividends for two years in a row. We will do our utmost

to return to the black in the upcoming year, and we intend to

generate appropriate revenues to allow us to pay dividends as

soon as possible. I ask our investors for their ongoing support

as we work toward these goals.

Homma: I would like to emphasize that the size of the

Japanese real estate asset management market is certain to

increase. After the dust from last year’s financial crisis settles,

the survivors will pick up the pieces. The upcoming year

should be a time of optimism for investors.

our overriding theme for next year. To this end, we will seek

to share our awareness of conditions, expertise and issues

among Group companies even more intimately than we have

in the past. We will extend this level of sharing, which already

takes place among company presidents, to the general

manager level. By increasing the amount of information avail-

able to younger employees, we expect to provide additional

advancement opportunities. We will also offer new in-house

training programs to foster the development of our young

human resources and enhance personnel skill levels.

Homma: Raising the quality of our human resources is an

essential part of building our AM business. We intend to start

through training to boost the skills of existing human resourc-

es, and then to augment these effects by adding personnel.

Although our policy of operating with a lean staff remains

unchanged, new talent is becoming available as companies

go out of business or pull out of areas of competition. This

situation presents an opportunity for us.

Are you expecting a return to the black?Kawashima: Assiduously adding new AM contracts is the key

to ensuring that our revenue base improves steadily. Some

of our client investors are also forming new funds, and inves-

tors from other parts of Asia are showing interest in Japan.

Targeting these investors, we plan to form new funds with

superior properties, such as office buildings and commercial

facilities. Assuming that the real estate investment market

does not go back into a tailspin, causing further losses on

property valuation and disposal, we expect to generate net

income of ¥0.4 billion in the year ending December 31, 2010.

Management Interview

6

Management Discussion

What were some highlights of this year’s efforts to restruc-ture the balance sheets?Yoshikawa: One thrust of these activities was to dispose of

as much of the Group’s real estate as possible, given the illiq-

uid state of the real estate market, and to use the cash gener-

ated by the sales to reduce interest-bearing debt. Specifically,

in June we sold KDX Toyosu Grandsquare, and in November

we sold to a Singapore-based REIT a senior care home—an

asset category having particularly limited liquidity. We also

proceeded with the sales of other properties, giving careful

consideration to loan redemption periods. This approach was

instrumental in allowing us to reduce interest-bearing debt

through the disposal of property.

Another aspect of our efforts was to refinance short-term

loans. One prominent example of these activities was the

March 2009 consolidation of two syndicated loans into a

single long-term loan totaling approximately ¥15.8 billion. In

an environment in which numerous competitors are going

bankrupt, many financial institutions accepted these loan

conversions.

During the year ended December 31, 2009, Kenedix booked its largest losses ever. Even under these conditions, the Asset Management Department succeeded in steadily increasing assets under management (AUM), and the Finance & Accounting Department and the Corporate Planning Department took on the responsibility of restructuring the balance sheet from the equity side. Despite a difficult financial environment, the Group managed to repay its debts to financial institutions and raise new funds through public subscription, which significantly improved the Group’s financial health. Further balance sheet restructuring is a key point of future focus. Against this background, we asked Taiji Yoshikawa, Kenedix Director and General Manager of the Corporate Planning Department, about the Company’s activities in the year ended December 31, 2009, and strategies for the year ending December 31, 2010.

Beginning with Financial Soundness, Successfully Addressing Management Issues One by One

Two Focuses: Reducing Interest-Bearing Debt by Disposing of Properties and Refi nancing

Taiji Yoshikawa, Director

7

From a financial perspective, one of this year’s highlights was resolving the issue of an early redemption of CBs. How did you handle this?Yoshikawa: The call for the early redemption of CBs amount-

ing to as much as ¥20.0 billion represented

a major issue for management, and

we worked with the people involved to

explore a variety of options. One possibility

was to ask the investors holding the bonds

to extend the redemption period, but this

approach would simply have extended

our liability period while limiting the

Group’s leeway to develop business and

introduce financial strategies. By clearing

away this management issue, the Group

demonstrated to bondholders a vision

linked to a longer term growth strategy.

Garnering capital market support for our

subscription to increase capital came

to a successful conclusion, as 95% of

investors subscribed to this conversion.

How were you able to make such steady progress with this restructuring?Yoshikawa: One reason is that we have built strong relation-

ships with the financial institutions where we transact business.

I believe that this was the reason they responded favorably

to our request amid a difficult environment. We received

particularly solid support from our main banks, Sumitomo

Mitsui Banking Corporation (SMBC) and The Bank of Tokyo-

Mitsubishi UFJ, Ltd. (BTMU). I believe this was due in large

part to their evaluation of the steady progress the Group has

made in the asset management business.

Furthermore, even though real estate investment market

liquidity is down substantially, we sold a large-scale property

to a major fund operated by the Carlyle Group. The group

then commissioned us to conduct asset management

Quantitative improvements

Qualitative improvements

50

0.5

0.0

1.0

1.5

2.0

3.0

2.5

Jun. 2008 Dec. 2008 Dec. 2009

0

100

150

200

250

300

350

400

450

(Billions of yen) (Times)

Note: Net debt = interest-bearing debt – non-recourse loans – cash and cash equivalents

Total assets Net assets Interest-bearing debt Net debt433.9

95.2

312.6

150.9

273.1

57.6

202.8

112.4

218.6

54.5

153.0

66.3

2.36 2.40

Net DE ratio (right)

1.42

Billions of yen) (Times

Quantitative and Qualitative Improvements to the Financial Situation

operation for the property, which was instrumental in increas-

ing our AUM. I believe that the reason for this growth is that

we have gained the support of investors for our business

model, which involves raising property values through asset

management and guiding them through to disposal.

Clearing away the Issue of Accelerated CB Redemption and Raising Substantial Funds from Financial Institutions

Management Discussion

8

What is your outlook for the financial environment in the upcoming year?Yoshikawa: Responding first from a micro perspective, the

fund-raising environment has improved substantially, as

has been evident from our ability to overcome the issues

presented by the early redemption of CBs and the financ-

ing we secured through SMBC and other leading financial

The Financial Case for Revising the Medium-Term Management Plan

institutions. In particular, refinancing negotiations progressed

smoothly. I believe that the financial measures that went into

place this year are part of a virtuous cycle that will bear fruit as

we move into the upcoming year.

From a macro perspective, on the other hand, the general

consensus seems to be that financial institutions are still very

reluctant to lend funds, although there are some indications

that the worst is over in this regard. In the current real estate

investment market, J-REIT subscriptions are beginning to

rise again, accompanied by the commencement of property

acquisitions. Evaluating all of these factors together, real

estate investment market liquidity appears likely to improve

this year.

Please outline next year’s financial strategies.Yoshikawa: We plan to maintain the current focus of

our financial strategies next year, without accounting for

expected improvements in the real estate investment market.

Specifically, we are working now to accumulate a provision

that will allow us to redeem a scheduled ¥15.0 billion in

straight bonds this November.

Next, the ¥15.8 billion loan that we refinanced on a

15-month term last March will come due in June 2010.

We hope to elicit the cooperation of SMBC and BTMU to

smoothly refinance this loan.

We intend to keep reducing interest-bearing debt by selling

off properties and to keep restructuring our balance sheet.

However, as the revisions to our Medium-Term Management

Plan suggest, next year we will not rush to dispose of proper-

ties. Rather, we will steadily pursue this goal by selling prop-

erties when market conditions are appropriate and keeping

financing in place for a certain period.

A capital subscription to replace the CBs, which amounted to

¥20.0 billion in interest-bearing debt, plus ¥2.1 billion in new

CBs, allowed us to boost our capital.

KDAM, a new AM supervisory company, raised about ¥14.0 billion from financial institutions. What is the purpose of these loans?Yoshikawa: Even though the Group as a whole is reducing

its interest-bearing debt, around ¥150.0 billion remains. As

we progress with our Medium-Term Management Plan, we

have no plans to increase borrowings to acquire property

beyond this level. At the same time, it is essential to main-

tain as working capital a certain amount of on-hand liquidity

through loans. Cash provides a certain degree of maneuver-

ability that can generate trust. We believe that SMBC and

the other financial institutions that provided these loans

did so in part because they understood the importance of

improving our financial strength and saw the value of our

Group in operating as an independent real estate manage-

ment company.

Management Discussion

9

2 0 0 9T O P I C S

Sep. Oct. Nov. Dec.2009

Jul. Aug.

Kenedix Asset Management, Inc. (KDAM),

established in October 2009 as part of Group

reorganization of the asset management

business, received financing of approxi-

mately ¥14.0 billion (five-year loan) from the

Company’s principal financial institutions.

KDAM employed these funds to acquire shares

of KDRM and KDA. This move placed the two

companies firmly under KDAM’s corporate

umbrella and helped create an organization to

specialize in asset management.

KDAM Raises Funds

A court decision to commence the corporate reorganization of three companies in

the Pacific Holdings Group (Pacific Holdings, Inc., Pacific Realty Corporation and

Pacific Properties Investment, Inc.) was handed down on March 31, 2009, and on

September 30 Kenedix entered into an agreement with the trustee for corporate reor-

ganization of the three companies for negotiating rights to support their reorganiza-

tion. On December 15, Kenedix concluded a basic sponsorship contract. Under this

agreement, a foreign investment company became the majority investor, and Kenedix

was designated the minority investor, as well as the manager of the real estate assets

held by the three companies. In this role, Kenedix provides guidance on raising the

value of and disposing of real estate, thereby maximizing returns to creditors and

helping to enhance the future value of the properties. In addition to helping reorganize

the three companies, Kenedix considers the agreement a way to increase its assets

under management and build a stable revenue structure.

Decision to Sponsor Reorganization of Pacific Holdings Group

Kenedix received notification from its bondholders of a request for the

early redemption (exercisable in December 2009) of ¥20.0 billion in CBs

(euroyen-denominated convertible bonds with stock acquisition rights)

due in 2011. In accordance with this request, the Company implemented

an additional capital subscription and floated a CB conversion offering.

As a result, Kenedix raised approximately ¥18.1 billion in additionally sub-

scribed capital and succeeded in converting CBs worth approximately

¥19.0 billion, allowing the early redemption to proceed apace. Through

this combined expansion of shareholders’ equity and CB redemption,

Kenedix succeeded in addressing some of the management issues it

faced and made progress toward enhancing the Company’s financial

health and stability, objectives of its Medium-Term Management Plan.

Financial Health Enhanced through Capital Subscription and CB Conversion Offering

10

Consolidated Financial Statements

(Millions of yen) (Millions of yen) Consolidated Balance SheetsAccount title Current period

As of December 31, 2009

Previous periodAs of December 31, 2008

Assets 218,603 273,149

Current assets 98,536 245,041

Cash and cash equivalents 18,291 11,872

Deposits held in trust 4,916 8,958

Accounts receivable – trade 1,128 979

Inventories — 209,255

Land and buildings for sale 63,909 —

Land and buildings for sale in progress 2,461 —

Note receivable (loan pool) 3,210 5,259

Income tax receivable 1,191 5,304

Deferred tax assets 299 499

Others 3,265 3,037

Allowance for doubtful accounts (137) (125)

Fixed assets 120,066 28,108

Tangible assets 98,143 184

Intangible assets 275 1,510

Investment and other assets 21,647 26,412

Investment securities 19,047 23,646

Investment in capital 300 320

Long-term loans 869 1,153

Deferred tax assets 160 0

Others 1,570 1,323

Allowance for doubtful accounts (300) (32)

Total assets 218,603 273,149

Account title Current periodAs of December 31, 2009

Previous periodAs of December 31, 2008

Liabilities 164,077 215,591

Current liabilities 91,488 101,582

Accounts payable – trade 436 554

Short-term borrowings 16,898 63,712

Long-term borrowings – due within one year 48,970 20,117

Corporate bonds – due within one year 18,086 5,558

Accured income taxes 502 558

Security deposits 2,294 7,252

Deferred tax liabilities 1,722 1,725

Others 2,575 2,103

Long-term liabilities 72,588 114,009

Bonds payable 8,553 40,236

Long-term borrowings 60,529 73,181

Silent partnership contribution received — 233

Deferred tax liabilities 7 1

Allowance for employees’ retirement benefits 34 25

Security deposits 3,067 —

Others 395 331

Net assets 54,525 57,558

Shareholders’ equity 47,751 47,751

Capital 23,787 14,591

Capital surplus 24,046 14,850

Consolidated retained earnings 5 18,439

Treasury stock (88) (130)

Valuation and translation adjustments (1,009) (1,012)

Net unrealized holding gains on other securities 31 (24)

Deferred hedge gains/losses (3) —

Foreign currency translation and adjustments (1,038) (988)

Minority interests 7,784 10,819

Total liabilities and net assets 218,603 273,149

11

(Millions of yen) (Millions of yen) Consolidated Statements of Income Consolidated Statements of Cash Flows

Account titleCurrent period

From January 1, 2009

to December 31, 2009

Previous periodFrom January 1, 2008

to December 31, 2008

Revenue 77,831 137,431

Cost of revenue 64,316 115,018

Gross profit 13,514 22,413

Selling, general and administrative expenses 5,080 6,145

Operating income 8,433 16,267

Non-operating income 312 446

Non-operating expenses 8,521 11,397

Ordinary income 225 5,316

Extraordinary income 249 1,160

Extraordinary loss 17,046 11,804

Loss before provision for income taxes and profit distribution to silent partnerships

16,572 5,326

Profit distribution to silent partnerships (6) 74

Loss before provision for income taxes 16,566 5,401

Corporation tax, inhabitant tax and

enterprise tax1,048 1,895

Reversal of income taxes for previous

period— (183)

Adjustment of corporation tax, etc. 40 1,997

Minority interests 783 1,739

Net loss 18,438 10,850

Account titleCurrent period

From January 1, 2009

to December 31, 2009

Previous periodFrom January 1, 2008

to December 31, 2008

Net cash (provided by) used in

operating activities54,553 (56,864)

Net cash used in investing activities (10,980) (9,438)

Net cash provided by (used in)

financing activities(37,809) 44,094

Effect of exchange rate changes on

cash and cash equivalents(50) (179)

Net increase (decrease) in cash and

cash equivalents5,712 (22,388)

Cash and cash equivalents at

beginning of period16,281 44,962

Decrease in cash and cash

equivalents resulting from changes in

scope of consolidation

(328) (6,293)

Cash and cash equivalents at end of period 21,665 16,281

Consolidated Financial Statements

12

Corporate Profi le (As of December 31, 2009)

http://www.kenedix.com/eng

Company name: Kenedix, Inc.

Founded: April 17, 1995

Address: Head office at 2-2-9, Shimbashi,

Minato-ku, Tokyo, 105-0004

Capital: ¥23,787,345,383

Number of employees: 75 (159 on a consolidated basis)

Major financial institutions: Sumitomo-Mitsui Banking Corporation

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Mizuho Bank, Ltd.

Resona Bank, Ltd.

The Chuo Mitsui Trust and Banking Co., Ltd.

Aozora Bank, Ltd.

Chairman: Ryosuke Homma

President: Atsushi Kawashima

Director: Taiji Yoshikawa

Director: Hiroo Shibaoka

Director: Noboru Kashiwagi

Corporate Auditor: Eiji Kubota

Corporate Auditor: Harutaka Hamaguchi

Corporate Auditor: Shintaro Kanno

Corporate Auditor: Haruo Funabashi

Corporate Auditor: Tamon Ohmura

Executive Officer: Akira Tanaka

Executive Officer: Eisuke Fujii

Executive Officer: Keizo Katayama

Executive Officer: Kenichi Yamasaki

Executive Officer: Soushi Ikeda

Kenedix Advisors Co., Ltd.

Kenedix REIT Management, Inc.

Kenedix Asset Management, Inc.

Mitsui & Co. Logistic Partners Ltd.

Kenedix Development Corporation

Pacific Servicing & Asset Management Co., Ltd.

Asset One Co., Ltd.

CRES CO., LTD.

Kenedix Westwood, LLC

KW Multi-Family Management Group, LLC

Company Information Officers

Major Affiliates Website

Corporate Profi le

13

Name of Shareholder Shares held Shareholding (%)

Goldman Sachs and Company Regular Account

65,749 5.42

JP Morgan Chase Oppenheimer JASDEC Lending Account

60,000 4.95

The Chase Manhattan Bank 385036 48,241 3.98

The Master Trust Bank of Japan, Ltd. (trust account)

47,969 3.95

UBS AG London A/C IPB Segregated Client Account

41,200 3.39

Japan Securities Finance Co., Ltd. 40,247 3.32

Bank of New York. GCM Client Account JPR DISG FEAC

36,687 3.02

Japan Trustee Services Bank, Ltd.(trust account)

35,473 2.92

Rabobank International Equity Finance Account

21,200 1.74

Mellon Bank, N.A.Treaty Client Omnibus 19,000 1.56

Total number of authorized shares: 1,400,000

Number of shares outstanding: 1,211,982

Number of shareholders: 26,037

Number of Shares Issued and Shareholders

Business year: January 1 to December 31

Ordinary General

Meeting of Shareholders:To be held in March every year

Record date: December 31 every year(When otherwise required, a date to be

determined and announced in advance)

Share handling locations

Transfer agent: The Chuo Mitsui Trust and Banking Co., Ltd.

33-1, Shiba 3-chome, Minato-ku, Tokyo

Mailing address: The Chuo Mitsui Trust and Banking Co., Ltd.

Stock Transfer Agency Division

8-4, Izumi 2-chome, Suginami-ku, Tokyo,

168-0063

Telephone inquiries: 0120-78-2031 (Toll free in Japan)

Transfer agent services are provided at all

nationwide branches of The Chuo Mitsui

Trust and Banking Co., Ltd., and the head

office and all nationwide branches of Japan

Securities Agents, Ltd.

Public announcements

Notices will be posted in electronic format on our Internet web

page (http://www.kenedix.com).

However, notices will be published in the Nihon Keizai

Shimbun when it is impossible to make electronic notification

for unavoidable reasons.

Memorandum for Shareholders

Major Shareholders (Top 10)

Distribution of Shares in Terms of Category of Holder

Note: The category “Individual persons/others” includes shares in the name of Japan

Securities Depository Center.

Securities companies

37,202 (3.07%)

Other domestic companies

18,435 (1.52%)

Individual foreigners

591 (0.05%)

Foreign companies

530,301 (43.75%)

Individual persons/others

436,789 (36.04%)

Financial institutions

188,664 (15.57%)

Shareholder Information (As of December 31, 2009)

Shareholder Information

14

KDX Building, 2-2-9, Shimbashi, Minato-ku, Tokyo 105-0004, Japan

http://www.kenedix.com