Results of Operations

for the Six Months Ended June 30, 2009

Table of Contents

Introduction

1. First Half of 2009 Results Highlights

2. Business Environment

3. Kenedix Strategic Objectives

Appendices

1

Introduction: Deletion of “Notice ConcerningPrecaution about the Going Concern Assumption”

Kenedix (the “Company”) deleted the item “Notice Concerning Precaution about the Going Concern Assumption” in theearnings release (kessan tanshin) for the second quarter of 2009 released on August 11, 2009.

In the summary of financial results for 2008, there is a Notice Concerning Precaution about the Going Concern Assumptiondue to a significant net loss and continued negative operating cash flow on a consolidated basis in the previous fiscal year,which violated financial covenants in certain loan contracts.

In order to eliminate this situation, Kenedix Group (the “Group”) established a medium-term management plan andimplemented measures to create a business structure that is capable of flexibly responding to drastic market changes.These measures include the sale of KDX Toyosu Grandsquare and the reclassification of some properties from inventoriesto fixed assets along with the longer time frames of funds procured. Accordingly, the Group is building an increasingly clear,stable earnings structure .

As a result, for the second quarter of the current fiscal year, the Group recorded consolidated net income of ¥6.7 billion.And for the first half of the current fiscal year, the Group achieved a positive consolidated operating cash flow of ¥47.7 billion.Quarterly net income and operating cash flow are expected to remain positive going forward.

The Group is also adding stability to its fund procurement structure with the conclusion in March 2009 of a syndicated loanagreement in the amount of ¥15.8 billion with borrowing period in excess of one year, co-arranged by Sumitomo MitsuiBanking Corporation and The Bank of Tokyo-Mitsubishi UFJ, Ltd. Although still in violation of financial covenants in certainloan agreements as of June 30, 2009, the Company requested agreements from the financial institutions participating in thesyndicated loan facility in order to not forfeit the benefit of time, and expects to receive a sufficient number of writtenagreements from the syndicate so as not to forfeit the benefit of time. In addition, the Company will endeavor to stabilize themanagement base with a solid financial position going forward through initiatives including obtaining more concrete supportfrom correspondent financial institutions with regard to near-term fundraising.

As a result of the foregoing, it has been determined that significant uncertainty is not deemed to exist, and the item “NoticeConcerning Precaution about the Going Concern Assumption” has therefore been deleted. The Company plans to conductmore active business operations to increase assets under management and increase revenue and earnings.

2

1. First Half of 2009 Results Highlights

3

Summary of First Half of 2009

Return to profitability in the second quarter on a quarterly basis

In the first quarter, the Group reported a significant net loss due to the application of the lower-of-cost-or-market forinventory accounting. However, in the second quarter, the Group was profitable in terms of ordinary income and netincome. The main causes were consistent revenue from asset management fees and rental revenues and the gain on thesale of KDX Toyosu Grandsquare.

The Company deleted “Notice Concerning Precaution about the Going Concern Assumption” beginning with the secondquarter earnings release. This is expected to have a positive effect on business operations, including the establishmentof private funds and the increase of new asset management orders. Although the Company intends to increase sales andearnings, the forecast for 2009 has been reduced because of expenses for the adoption in the first quarter of the lower-of-cost-or-market for inventory accounting and because some properties were sold at prices that were less than planned.

Steady progress in downsizing the balance sheet

To reduce the size of balance sheet, the Company sold 15 properties (book value ¥7 billion) in the first quarter and 25properties (book value ¥32 billion) in the second quarter. These sales significantly streamlined the balance sheet.

Inventories were below ¥100 billion as of June 30, 2009. Furthermore, the reclassification of some properties frominventories to fixed assets clearly positions these reclassified assets as a source of consistent rental revenues.

Steady net increase in assets under management (AUM)

There has been a net increase of ¥35.1 billion in AUM since December 2008 because of an asset management contractat KDX Toyosu Grandsquare and the receipt of other new asset management contracts.

Maintained fund procurement channels with support from financial institutions

Kenedix in end-March 2009 entered into syndicated loan contracts amounting to ¥15.8 billion with Sumitomo MitsuiBanking Corporation and Bank of Tokyo-Mitsubishi UFJ acting as joint arrangers.

Kenedix is using proceeds from property sales to repay loans and is obtaining the support of financial institutions such asrefinancing concerning loans for some properties.

4

Consolidated Income Statements

1Q 2009

(Jan-Mar 09)

2Q 2009

(Apr-Jun 09)

1H 2009

(Jan-Jun 09)

A B A+B

Revenue ¥12,762 ¥47,572 ¥60,334

OperatingIncome(Operating Income

Margin)

1,228

(9.6%)

9,534

(20.0%)

10,762

(17.8%)

OrdinaryIncome(Recurring Profit

Margin)

-1,333

(-%)

7,886

(16.6%)

6,552

(10.9%)

Net Income(Net Income to Sales

Ratio)

-15,491

(-%)

6,651

(14.0%)

-8,840

(-%)

(Millions of yen)

12,780 12,762

5,088

1,314

7,886

2,558

136

-16,503

6,651

47,572

44,434

35,450

44,767

-1,333

-8,032

6,947

-15,491

2,959

-20,000

-10,000

0

10,000

20,000

30,000

40,000

2008/12 1Q 2008/12 2Q 2008/12 3Q 2008/12 4Q 2009/12 1Q 2009/12 2Q

Revenue

Ordinary income

Net income

40,000

50,000

Quarterly Performance(Millions of yen)

5

In the second quarter, ordinary income was ¥7.9 billion and net income was ¥6.7 billion. However, due to thesignificant net loss in the first quarter, there was a first half net loss of ¥8.8 billion.

Segment Information

(Millions of yen)Breakdown of Gross Operating Income

6,011

3,542

1,242

1,485

1,299312

8,367

664

-779

10,184

-5,000

0

5,000

10,000

15,000

20,000

25,000

1H 2008 1H 2009

Gain on Sales of Properties /Valuation Loss of Properties

Incentive Fee

Dividend Income from Investment in TK*

Other Fees*

Asset Management Fee

Rental Revenue

(Millions of yen)

19,105

13,296

Notes: “Other Fee” add up fee income of Real estate investment advisory business and fee income of NPL investment management business“Dividend Income from Investment in TK” add up Dividend Income from Investment in TK of Real Estate Investment Advisory Business and Gain on Collection Profit onNPL/Dividend Income from Investment in TK of NPL Investment Management Business

2Q 2008

(Jan-Jun 2008)

2Q 2009

(Jan-Jun 2009)

YoY change

Gross Operating Income ¥19,105 ¥13,296 -30.4%

Real Estate Investment Advisory Business 1,260 804 -36.2%

Fee Income 1,202 589 -51.0%

Dividend Income from Investment in TK 59 215 264.4%

Real Estate Investment Business 16,195 11,909 -26.5%

Rental Revenue 6,011 3,542 -41.1%

Gain on Sale of Properties 10,184 8,819 -13.4%

Valuation Loss of Properties - -452 -%

Asset Management Business 1,554 1,502 -3.3%

Asset Management Fees 1,242 1,485 19.6%

Incentive Fees 312 18 -94.2%

NPL Investment Management Business 96 -920 -%

Fee Income 97 75 -22.7%

Gain on Collection Profit on NPL -2 -994 -%

6

Even under the current difficult market conditions, Kenedix recorded gains on the sale of real estate through thesale of KDX Toyosu Grandsquare and other properties. Although property sales reduce rental revenue, there hasbeen steady growth in asset management fees as AUM increases.

Consolidated Balance Sheets

The net debt-equity ratio has improved since the end of the first quarter as total assets declined along with salesof properties and other actions.

Dec. 31, 2009 Mar. 31, 2009 Jun. 30, 2009

Total Assets ¥273,149 ¥248,938 ¥212,869

Inventories 209,255 124,307 93,866

Net Assets(of which Minority Interests)

57,558(10,819)

41,535(10,219)

42,427(4,500)

Equity Ratio 21.1% 16.7% 19.9%

Equity Ratio(excluding Minority Interests)

17.1% 12.6% 17.8%

Interest-bearing Debt(of which Non-recourse Loans)

¥202,806(78,528)

¥191,492(78,657)

¥160,441(57,767)

Cash and Deposits 11,872 8,860 10,818

Net Debt 112,404 103,974 91,854

Net Debt Equity Ratio( including minority interests)

2.40x(1.95x)

3.32x(2.50x)

2.42x(2.16x)

(Millions of yen, except net debt/equity ratio)

Note: Equity ratio = “Net Assets” / “Total Assets”Net Debt = “Interest-bearing Debt” – “Non-recourse Loans” – “Cash and Deposits“

(Millions of yen)

273,149

248,938

212,869

347,218

124,307

93,86695,171

57,55841,535 42,427

160,441

433,886

209,255

312,610

202,806

191,492

2.40 2.42

2.36

3.32

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2008/6 2008/12 2009/3 2009/6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Total assets Inventories

Net assets Interest-bearing debt

Net DE Ratio (right axis)

7

8

Summary of Inventories

OfficeBuildings

Rental CondosCommercial

FacilitiesSenior

HealthcareOthers

DevelopmentProjects

Total

Tokyo Metropolitan Area 19,396 4,759 8,037 - 2,263 - 34,454

Kansai Area 4,727 - 2,264 - 1,261 3,543 11,795

Chubu 1,124 3,411 - - - - 4,535

Kyushu - - - - - - -

Others 4,542 1,299 13,898 - 22,787 557 43,082

Total 29,789 9,468 24,199 - 26,310 4,100 93,866

NOI Yield (1) 7.4% 6.9% 6.0% -% -% 6.2% 6.7%(2)

Note: (1) NOI Yield= Appraised NOI/Book value x 100 (Approximately)(2) Weighted average based on book value

Inventory Breakdown (as of June 30, 2009)

Kenedix has reduced inventories to less than ¥100 billion, due in part to the sale of large-scale property KDX ToyosuGrandsquare.

The NOI yield remained at 6.7% after valuing inventories at the lower-of-cost-or-market. We plan to continue sellingproperties while monitoring market conditions.

(Millions of yen)

8

9Note: (1) NOI Yield= Appraised NOI/Book value x 100 (Approximately)(2) Weighted average based on book value

9

To establish a steady stream of revenue from leasing income, Kenedix reclassified some property held as inventories tofixed assets. Most of the reclassified properties are rental condominiums and senior healthcare facilities, which produceconsistent leasing income.

Book values of the properties included in fixed assets are after the application of the lower-of-cost-or-market method.

Shift of Inventories to Fixed Assets

OfficeBuildings

Rental CondosCommercial

FacilitiesSenior

HealthcareOthers

DevelopmentProjects

Total

Tokyo Metropolitan Area 8,269 - 4,804 8,882 5,031 1,073 28,059

Kansai Area - 11,638 412 8,757 - - 20,807

Chubu 2,811 2,677 - - - 747 6,235

Kyushu - 6,528 - 706 - - 7,234

Others 2,381 4,055 - 583 454 - 7,473

Total 13,461 24,898 5,217 18,928 5,485 1,820 69,808

NOI Yield (1) 6.3% 6.3% 4.4% 7.0% 5.9% 5.5% 6.3%(2)

Breakdown of Fixed Assets (as of June 30, 2009)(Millions of yen)

Sale of KDX Toyosu Grandsquare (June 30, 2009)

10

Outline of Property

Property name KDX Toyosu Grandsquare

Location 1-7-12 Shinonome, Koto-ku, Tokyo

Development area 20,448.87 m2

Construction area 7,046.46 m2

Gross floor space 63,892.86 m2

Usage Offices

StructureFlat-roofed, reinforced concrete structure; tenabove-ground floors

Completion date May 2008

10

Kenedix sold KDX Toyosu Grandsquare to a fund managed by The Carlyle Group on June 30, 2009. This largeoffice building is located in Shinonome, Koto-ku, Tokyo and booked as inventories. At the same time, KenedixGroup started to provide asset management services at this building.

Kenedix regards this transaction as the first step toward establishing real estate funds jointly with The CarlyleGroup and using this relationship to create other sources of profits.

Growth in Assets Under Management (AUM)

19 1969 84 106

240

5015

22

135

145

159

35

68.5 83.8105.9

240.4

385.7

544.4

734.9

844.3879.4

844

735

544

386

109

191

0

100

200

300

400

500

600

700

800

900

00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/06

(Billions of yen)

Net increase in AUM

11

Achieved net increase of ¥35.1 billion in AUM during the first half of 2009, growing AUM to ¥879.4 billion at the

end of June 2009, even under the current challenging business environment.

Gross AUM increased ¥54.7 billion but the net total declined ¥19.7 billion.

Diversification of AUM (1): Client Investors

190 369 332 396 448 564 557 632 8451,179306 392 439

1,133 958 819 444438

539

224

634 862 1,1351,238

1,622

1,626

1,070

2,2102,913

3,225

3,336

498

593

593

10 113

190

402

724

1,624

1,720

1,521

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/06

Principal account

A-LPT

J-REITs

Pension funds

Domestic institutional investors

Foreign investors

100%

54%

40% 37%

19%15%

10% 9% 10%13%

45%

47%

41%

47%

25%

15%

6% 5%

6%

21%

26%

22%

21%

17%19%

19%

28%

41%

40%38%

38%

7%7%

7%

2%

14%8%

10%13%

22% 20%17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/06

Growth in AUM Breakdown of AUM(100 millions of yen)

12

Diversification of AUM (2): Property Category

190 426 660 7421,348

1,9842,567

2,9743,374 3,424

121111 212

447

814

1,122

1,527

1,762 1,772

13967

67

308

408

919

1,097

1,4311,568

38

293

584

710

942

1,0041,166

9

67

126

809

872

863

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/06

Others

Logistics facilities

Commercial facilities

Rental condominiums

Off ice buildings

100%

62%

79%

70%

56%51%

47%

40% 40% 39%

18%

13%

20%

19%

21%

21%

21% 21%20%

20%

8%6%

13%11%

17%

15% 17% 18%

4%

12%15% 13%

13% 12% 13%

0% 2% 2%

11% 10% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/06

Growth in AUM Breakdown of AUM(100 millions of yen)

13

Diversification of AUM (3): Geographic Coverage

190497 627 827

1,616

2,869

3,792

4,827

5,640 5,809

139209

222

484

512

790

1,124

1,1621,259

38

56

134

289

438432

88

459

384

364337

11

332

269

725

840956

39

249

227

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/06

Others

Kyushu

Chubu

Kansai area

Tokyo metropolitan area

100%

73% 75%78%

67%

74%70%

66% 67% 66%

20%

25%21%

20%

13%

15%

15% 14% 14%

2% 2%3%

4% 5% 5%

2% 2% 8%

5% 4% 4%

7%

0% 1%

10% 9%5%

10% 10% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/06

Growth in AUM Breakdown of AUM(100 millions of yen)

14

Revision to the Outlook for 2009

137,431

105,700

5,316

8,800

-8,000-10,850

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

2008 2009 (Forecast)

Revenue

Ordinary income

Net income

(Millions of yen)

(Millions of yen)

2008 2009 (Forecast)

Initial

forecast

Revised

forecastChange

YoY

change

A B C (C-B)/B (C-A)/A

Revenue ¥137,431 ¥108,400 ¥105,700 -2.5% -23.1%

Operating

income16,267 18,000 14,900 -17.2% -8.4%

Ordinary

income5,316 13,200 8,800 -33.3% 65.5%

Net income -10,850 200 -8,000 -% -%

100,000

110,000

120,000

130,000

140,000

15

Kenedix has reduced the 2009 initial forecasts for revenue and earnings. One reason is that sales proceeds andgains on sales at some properties sold were less than expected. Another cause is an unexpected equity-methodloss because of the poor performance of some affiliates. In addition, Kenedix increased an extra-ordinary loss dueto the application of the lower-of-cost-or-market method for inventories accounting.

2. Business Environment

16

2

3

4

5

6

7

8

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Cap Rates

Source: Prepared by Kenedix, based on market reports 17

Cap Rate at Tokyo Class A Office Buildings

(%)

Long recovery period Shorter recoveryperiod due to

correction in therisk premium?

Although there are still concerns about fundamentals of Japan’s real estate market,the recent rapid increase of cap rate is now being adjusted.

Source: Prepared by Kenedix, based on TSE REIT Index (Japan), Bloomberg REIT Index (U. S.), FTSE EPRA/NAREIT UK Index (U. K.), S&P ASX2020 Index (Australia) 18

Comparative REIT Yield Spreads(%)

18

-4.0

0.0

4.0

8.0

12.0

16.0

05/2 05/5 05/8 05/11 06/2 06/5 06/8 06/11 07/2 07/5 07/8 07/11 08/2 08/5 08/8 08/11 09/2 09/5

Japan USA UK AustraliaJapan U. S. U. K. Australia

REIT Yield Spreads

REIT yield spreads are narrowing worldwide.

Equity Investors

19

Property Buyer Location Land area (m2) Floor area (m2) Price Date

Leased site of Shibaura Water Reuse Center NTT UD, Hulic , and other Minato-ku, Tokyo Approx. 11,000 - Approx. ¥86.4bn March 2009

Investment in owner of Akihabara UDX NTT UD Chiyoda-ku, Tokyo 11,547 161,482 Approx. ¥8.8bn March 2009

Otemachi-Kita Tokyu Building Keihan Dentetsu Realestate Chiyoda-ku, Tokyo 635 5,111 - March 2009

Equity interest in Shinjuku Sanei Building Odakyu Electric Railway Shinjyuku-ku, Tokyo 3,062 31,136 ¥11.0bn March 2009

Source: Prepared by Kenedix, based on real estate market reports

Selected Transactions with Japanese Real Estate Companies

19

Opportunistic investors

No change in stance of seeking investments at the lowest possible prices (under pressure to absolutely avoid losses).

Cap rate target is around 7% even for central Tokyo office buildings (too aggressive to buy under the current market, butopportunistic investors continue to make aggressive bids).

Core/Core-plus investors

A few Japanese insurance companies and very small number of other investors in this category are making purchases(Japanese pension funds are still waiting and seeing).

Overseas investors such as Singapore and Germany, who were active in 2008, have slowed making investments. Unableto confirm any activity among core overseas investors.

Other investors

Wealthy individuals are emerging as buyers of relatively small properties (under ¥1 billion) with a cap rate of around 8%.

Japanese real estate companies, primarily those engaged in leasing (NTT Urban Development, Hulic, train companies, etc.),are making active bottom fishing.

With no market consensus for the level of new investments,the transaction volume is still limited.

Lenders

20Source: Prepared by Kenedix, based on BOJ data

Loans to the Real Estate Industry Stance of Financial Institutions for Real Estate Loans

40

45

50

55

60

65

2000 2003 2006 2009

（兆円）

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

(%)

不動産業向貸出残高

全業種貸出に占める不動産業向けの比率

-40

-30

-20

-10

0

10

20

30

40

04/3 05/3 06/3 07/3 08/3 09/3

不動産/大企業

不動産/中堅企業

不動産/中小企業

全規模/全産業

(Pct. points)

20

Loans to the real estate industry

Pct. of loans to all industries

Real estate/large companiesReal estate/middle-market companiesReal estate/small and midsized companiesTotal/all industries

(Trillion yen)

Current stance of lenders

Since April, lenders have started providing loans to income-producing properties with consistent cash flows; some

financial institutions are increasing real estate loans while remaining highly selective.

Foreign financial institutions are still extremely cautious about providing loans.

A full-scale rebound in loans volume will not happen until lenders’ valuations are adjusted. Restart of J-REITs’

acquisition activities may lead to a correction in cap rates for lenders’ valuation.

Financial institutions are still cautious about real estate loans,but positive signs are starting to appear.

0.0

0.5

1.0

1.5

2.0

2.5

2009 2010 2011 2012

償還期限別残高

0.0

0.5

1.0

1.5

2.0

2.5

2004 2005 2006 2007 2008

年度別発行残高

21Source: Prepared by Kenedix, based on Japan Securities Dealers Association and Moody’s data

Annual Volume of CMBS Issues(Trillion yen)

Annual CMBS Maturities

Redemptions total¥3.4 trillion over this

four-year period

21

Amount issuedAmount reaching maturity

Redemption of CMBS

Total CMBS redemptions are expected to be more than ¥700 billion every year between 2009 and 2012. These redemptionsmay have an impact on the real estate investment market.

Risk of default is probably particularly high for CMBS originated in 2006 and 2007, a period when many transactions arrangedunder aggressive terms.

Currently, even when there are defaults, there is no material impact on real estate supply/demand because creditors don’tmake fire sales in some cases.

Upcoming CMBS redemptions may affect the real estate investment market.

CMBS

(Trillion yen)

J-REITs

Country REIT Date Amount Method

United States ProLogis April 2009 $1,003 mil Public offering

United States Simon Property Group March, May 2009 $1,473 mil Public offering

United Kingdom Land Securities February, March 2009 $1,327 mil Allocation to shareholders

United Kingdom Liberty International April 2009 $1,017 mil Public and private offerings

Australia Westfield Group February 2009 $2,332 mil Private placement

Australia Stockland May 2009 $1,594 mil Private placement, shareholder allocation

Representative Equity Financing by Overseas REITs

Source: Prepared by Kenedix based on market reports; foreign currency conversions at US$1.640=1 pound and A$1=US$0.804 2222

J-REIT overview

Weakening fundamentals are a source of concern, however the risk premium is rapidly narrowing due to expectations forgovernment/private sector fund and other forms of government support; J-REIT unit prices are recovering as a result.

Expectations for J-REIT reorganization progress such as merger between Advance Residence Investment Corporationand Nippon Residential Investment Corporation.

Windows for equity financing are about to open?

Overseas REITs

“Equitization” is proceeding at REITs in U.S., Australia and other countries, shown by the rush to equity finances.

“Simple Structure”, “Transparent Operation” and “Large Size” are key words of REITs in the capital markets.

Overseas REITs are recovering quickly due to progress in Equitization.

Expansion of Government’s Role

Regulations related to J-REITs and real estate market

23Source：Kenedix Reality Investment Corporation’s Presentation Material

Outline of related regulations Announced by Announced on Item

“Implementation of measures forfinancial crisis response"

Start of loan supply as a designated financial institution. *financial crisis response activities are activities that arebased on the Japan Finance Corporation Law to provide financing backed by credit lines from Japan FinanceCorporation to companies suffering from the financial crisis. Loans are provided by financial institutions designatedby the Japanese government (“designated financial institutions”) in times of financial disorders in the Japaneseand international economy or outbreak of specific crisis such as large-scale distress

DBJ 2008/12/11 Finance

“Emergency measures forstimulating residential and realestate markets"

Financing support provided to residential and real estate companies through Japan Finance Corporation’scorporate loans (Crisis Response Facilitating Operations); improvement of the general environment for mergers ofJ-REITs

MLIT 2008/12/15 Finance /Consolidation

“Emergency measures to defendpeople’s daily lives"

Countermeasures on the financial markets and against cash-flow problems ; Cash-flow support to large andmedium-sized corporations through corporate loans backed by Japan Finance Corporation (financial crisisresponse activities) (Ministerial Meeting on Economic Measures） →<budget of FY2009 passed on 2009/3/27>

(Government) 2008/12/19 General

Amendments to “Guidelines onEligible Collateral "

Investment corporation bonds (investment corporation bonds that are rated AA or higher and Loans on Deeds etc )will be accepted as eligible collateral for BOJ’s provision of credit. BOJ also adds CPs issued by REITs to the listof CP purchased with repurchase agreements.

Bank of Japan 2009/1/22 Finance

Comprehensive guideline forregulating Financial instrumenttraders

Points of concern when merging investment corporations：when paying out money accrued due to the merger,check Investment Law Article 147 –(1)-2 which includes statements on the amount payable due to a merger

FSA 2009/1/30 Consolidation

“Changes to the policy forfinancial crisis response activities"

- targets covered by the Crisis Response Facilitating Operations (receivers of loans): Medium-sized companiesexperiencing temporary business / cash-flow difficulties but are expected to improve business in the long term withmanagement expected to become more stable

Japan FinanceCorporation

2009/1/30 Finance

Inquiries on tax treatment oftransactions

Answers to FSA’s inquiries on “judgment about appropriateness of a merger by investment corporations for jointbusiness operation"

National TaxAgency

2009/3/19 Consolidation

Partial amendments to SpecialTaxation Measures Law

Revision of Conduit Rules （accounting profit accrued due to negative goodwill shall be deducted from the amountof distributable profits）, enacted in 2009/4

(Government) 2009/3/31 Consolidation

“Countermeasures to Address theEconomic Crisis"

Joint meeting by the government, the ruling parties and the Ministerial Meeting on Economic Measures•Facilitate residential / land financing （establishment of a government/private sector fund and/or increase fundssupply to J-REITs by institutions including the Development Bank of Japan）

(Government) 2009/4/10 General

“Forum for establishment of aproperty investment market to betrusted by investors"（5th meeting）

The “report on the working group’s examination process” included statements on following matters for J-REITs :1.need for consolidation, 2.corporate governance, 3.finance

(Secretariat:ARES)

2009/6/2 Finance/Consolidation

23

The bubble burst (1990s) The financial crisis (Today)

Real estate

investment

market

Real estate market deteriorated only in Japan

Recovery required many years due to limited market flexibility

Real estate market deteriorated worldwide

Globalization of markets impacted on real estate investments

in worldwide by the financial crisis and market correction was

fast, but increasing market flexibility indicates that the

recovery may require a shorter time

Equity

investors

Only a few U.S. investors with much real estate investment

expertise and high risk tolerance earned profits

A much greater diversity of investors, including investors not

only in Europe and the U.S. but in Asia

Lenders

Massive volume of non-performing loans prevented Japanese

financial institutions, the only source of loans, from providing

real estate loans

Fund procurement methods and names of loan providers are

diversified (Corporate loans as well as non-recourse loans,

CMBS and other debt instruments)

Investment

infrastructure

1990s was a period of experiments and rule creation (no

infrastructure)

SPC Law and Asset Liquidation Law enacted (1998); J-REIT

market started (2001); Financial Instruments and Exchange

Law enacted (2007); investment infrastructure established

and real estate securitization market advances to a mature

stage

Other

information

Non-performing loans totaled about ¥90 trillion (Based on

losses resulting from these loans)

Non-performing loans total about ¥17 trillion (Based on

disclosure according to Financial Revitalization Law)

The Market in the 1990s and Today

24Source: Prepared by Kenedix based on Financial Services Agency statistics 24

Current market is more global and diversified than 1990s;a rebound may eliminate the excessive downward correction at an early date.

3. Kenedix Strategic Objectives

25

The Priorities of Real Estate Asset Managers

Investment opportunities based on mutual understanding withinvestors

Transparency1

3 Stability2 Expertise

Funds with a clear investment policy rather than complexand unclear policies

Higher quality of asset management reports and furtherenhancement of conflict management

Information network in real estate market, fundprocurement arrangements and asset managementskills such as lease-up and value-up

Speed and flexibility to respond quickly to changesin investors’ needs

Sufficient expertise as a real estate asset manager

Stable operations backed by a sound financialposition and profit structure

A corporate brand backed by a reputation for strictcompliance and a proven track record

A stable business partner with investors’ comfort

26

(1) Transparency: Establish new funds andexpand asset management business

Enhance a clear management policy and investment criteria in order to provide more comfort to investors.

Due to the subprime loan crisis, investors avoid investments with poor transparency.

Expected shift from global large-size funds to local small-mid-size funds.

Through further improvement of asset management reporting quality and conflict management, aiming toexpand the solid client base and achieve steady growth of AUM.

Targeting overseas investors who want to start investing in Japanese real estate or increase their positions (Japanese investors arenot making new investments at this moment). Also, taking asset manager roles for the real estate funds originated by othercompanies.

Current Projects*

Project Key elements

1. Real estate fund ofThe Carlyle Group

The Carlyle Groups Japanese real estate fund holding assets totaling about ¥24 billion

Joint project with The Carlyle Group following KDX Toyosu Grandsquare

Assigned as an asset manager role by the Carlyle Group in association with sales of aoffice building other than KDX Toyosu Grandsquare and this fund

2. Commercial propertyfund for overseasinvestors

Preparing to establish a new fund specializing in commercial property for overseasinvestors

Joint project with an overseas business partner

Conducting marketing activities to investors in Europe, Asia and Australia

1

*Projects now under way may be suspended, postponed or revised depending on changes in market conditions and other factors. 27

(2) Expertise: Asset management business opportunitiesassociated with restructuring

The recent financial turmoil has created a growing number of problems and issues involving real estate.Kenedix will use its specialized expertise as a real estate asset manager to provide clients with solutions andcreate more opportunities to increase fee income.

Deletion of “Notice Concerning Precaution about the Going Concern Assumption” will open the way to even moreopportunities.

CMBS/Non-recourse loanrestructuring

Real estate developments(projects under way or idle)

Funds/properties managed by realestate asset managers inbankruptcy or withdrawal

Issues Associated with Real Estate (examples)

For loans already packaged asCMBS and non-recourse loans onthe balance sheets of banks/leasingfirms, cases where restructuring isrequired for the funds/propertiesfunded by the loans.

For development projects underway, cases where the initiallyplanned exit (buyer) is no longerpossible due to shifts in marketconditions or other events.

Case where a real estate assetmanagement company that wasmanaging the fund or holding theproperty was forced out of thisbusiness or into bankruptcy.

2

Capture business opportunities by using real estate industry networks,financial institution relationships and other channels

Track record at restructured projects

Received asset management contract from the lender associated with the restructuring of CMBS.

Received asset management contract for a part of the properties managed by a real estate asset management company thatdeclared bankruptcy.

28

134,958 127,147

78,529 78,65757,768

119,541

104,095

75,09462,006

57,609

10,967

7,035

4,4008,255

3,407

47,144

45,034

44,78442,574

41,657

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2008/6 2008/9 2008/12 2009/3 2009/6

Corporate Loan （Bond）

Corporate Loan （Without Collateral）

Corporate Loan （On Security）

Non-recourse Loan

(3) Stability: Debt Management

Lenders as of June 30, 2009

3

Interest-bearing Debts Reduction

29Note: Loan composition by borrower category includes loans totaling ¥117.3 billion and

excludes convertible bonds, ordinary bonds, commercial paper and banksparticipating only in loan syndicates.

Large Japanesebanks65%

Leasingcompanies, etc.

20%

Regional banks11%

Overseas financialinstitutions

4%

（Millions of yen）

Reviewing the capital structure with the aim of quickly establishing a sound financial position that can adapt torapid changes in the financial enviroment.

Debt decreased from ¥312.6 billion at the end of June ’08 to ¥160.4 billion at the end of June ’09.

Planning to continue reducing debt by selling properties while monitoring market conditions; with the support ofthe correspondent banks, also aiming to refinance debt and obtain new loans.

30

AUM Comparison

Assets under management is a key performance indicator for the real estate management industry.Kenedix Group ranks high in this industry in terms of its AUM and plans to continue growing.

Notes:Prepared by Kenedix, based on the most recent data provided by each companydaVinci AUM is for the first half of 2008 and excludes 6th period AUM for DA Office Investments.Bankruptcy proceedings began at Pacific Holdings on March 10, 2009 and at Creed on January 1, 2009.

1,667

12,285

9,099

2,056

3,580

4,280

5,213

8,794

daVinci

Pacific Holdings

Kenedix

Secured Capital Japan

Creed

Asset Managers

Risa Partners

Tosei

(100 millions of yen)

30

Assets Under Management Comparison (Listed Independent Real Estate AM Comps)

Appendices

31

Outlook for 2009: Consolidated Income Statements

(Millions of yen)

2008 (Actual) 2009 (Projection)

YoY change

Revenue ¥137,431 ¥105,700 -23.1%

Real Estate Investment Advisory Business 2,333 2,220 -4.8%

Real Estate Investment Business 131,561 98,150 -25.4%

Asset Management Business 3,226 3,360 +4.2%

NPL Investment Management Business 312 1,970 +531.4%

Cost of Revenue (115,018) (85,500) -25.7%

Gross Profit 22,413 20,200 -9.9%

Selling, General & Administration Expenses (6,145) (5,300) -13.8%

Operating Income ¥16,267 ¥14,900 -8.4%

Non-operating Income 446 400 -10.3%

Non-operating Expenses (11,397) (6,500) -43.0%

Ordinary Income ¥5,316 ¥8,800 +65.5%

Extra-ordinary Income (10,644) (14,120) +32.7%

Profit Distribution to TK (74) 5 -%

Income Taxes / Minority Interests in Income (5,448) (2,685) -%

Net Income (¥10,850) (¥8,000) -%

32

Revenue by Business Segment

1H 2008 1H 2009

YoY change

Real Estate Investment Advisory Business ¥1,281 ¥854 -33.3%

Fee Income 1,223 638 -47.8%

Dividend Income from Investment in TK 59 215 +264.4%

Real Estate Investment Business ¥76,974 ¥55,987 -27.3%

Rental Revenue 10,072 7,802 -22.5%

Gain on Sale of Properties 66,902 48,185 -28.0%

Asset Management Business ¥1,720 ¥1,697 -1.3%

Asset Management Fees 1,305 1,667 +27.7%

Incentive Fees 415 32 -92.3%

NPL Investment Management Business ¥243 ¥1,796 +639.1%

Fee Income 235 168 -28.5%

Gain on Collection Profit on NPL / Dividend Income fromInvestment in TK

7 1,629 -%

(Millions of yen)

33

Balance Sheets and Commentary(as of June 30, 2009)

Dec. 31, 2008 Jun. 30, 2009

Current Assets ¥245,041 ¥119,247

(of which Inventories) (209,255) (93,866)

Tangible/IntangibleAssets

1,694 70,880

Investment and OtherAssets

26,412 22,742

Total Assets 273,149 212,869

Current Liabilities ¥101,582 ¥92,921

Long-term Liabilities 114,009 77,521

Net Assets 57,558 42,427

Interest-bearing Debt ¥202,806 ¥160,441

(of which Non-recourseLoans)

(78,528) (57,767)

Net Debt (excluding Cashand Deposits and Non-recourse Loans)

112,404 91,854

(Millions of yen)

Change is due tosales ofproperties andthereclassification ofsome inventoriesas property andequipment

Loansdeclined asinventoriesdecreased

26,412

22,742

119,247

245,041

70,880

0

100,000

200,000

300,000

Dec. 31, 2008 Jun. 30, 2009

Current Assets Investment and Other AssetsTangible/Intangible Assets

57,558 42,427

114,009

77,521

101,582

92,921

0

100,000

200,000

300,000

Dec. 31, 2009 June 30, 2009

Net Assets Fixed Assets Current Liabilities

(Millions of yen)

(Millions of yen)

34

Correlation Diagram between Consolidated Balance Sheetsand Nonconsolidated Balance Sheets

35

Investment and Other Assets(a part of)［¥84,146］

Inventory & Fixed Assets［¥90,104］

Kenedix Equity［¥90,104］

【Consolidated Balance Sheets】

【Unconsolidated SPC etc.】

【NonconsolidatedBalance Sheets】

Non-recourse Loan［¥57,767］

Properties withCorporate Loan

Inventory & Fixed Assets［¥73,570］

Properties withNon-recourse Loan

Minority Equity［¥4,500］

Kenedix Equity［¥11,303］

Investments for Propertyon Sale

［¥36,183］

（Millions of yen）

Standards for Calculating Assets Under Management

Kenedix Group uses the following standards for calculating the balance of assets undermanagement (AUM).

AUM includes real estate properties where Kenedix Group performs assetmanagement services, but does not include development projects prior to completion.

AUM uses the acquisition cost of a property (net of taxes). Costs associated withacquisitions, capital expenditures to raise a property’s value and other related itemsare included in the book value of a property for accounting purposes. However, theseitems are not included in AUM.

AUM includes properties that Kenedix Group holds itself for a short period of time.AUM also includes properties held by J-REITs (Kenedix Realty Investment and JapanLogistics Fund) and LPT (Challenger Kenedix Japan Trust) that are managed byKenedix affiliates.

36

本資料の取り扱いに関して

The contents of this document, including summary notes, quotes, data and other information,are provided solely for informational purpose and not intended for the purpose of solicitinginvestment 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 priornotice of any kind. This document contains forward-looking statements, includinganticipations of future results, based on current assumptions and beliefs in the light ofcurrently available information and resources. Risks and uncertainties, both known andunknown, including those relating to interest rate fluctuations, competitive scenarios, andchanging regulations or taxations, may cause Kenedix, Inc. actual results, performance,achievements and financial performance to be materially different from those as explicitly orimplicitly expressed in this document.

With respect to any and all terms in this document, the information provided is intended to bethorough. However, no absolute assurance or warranties are given with respect to theaccuracy or completeness thereof.

Kenedix, Inc. shall not be liable for any errors, inaccuracies, losses or damages, or for anyactions taken in reliance thereon, or undertake any obligation to publicly update theinformation contained in this document after the date of this document.

Disclaimer

37