Kenedix Office Investment : Notice Concerning Acquisition of Property (Shibuya 1717 Building)

Translation of Japanese Original

To All Concerned Parties

July 28, 2017

REIT Issuer: Kenedix Office Investment Corporation Naokatsu Uchida, Executive Director

(Securities Code: 8972)

Asset Management Company: Kenedix Real Estate Fund Management, Inc. Masahiko Tajima, President & CEO

Inquiries: Jiro Takeda

Head of Planning Division Office REIT Department TEL: [phone]

Notice Concerning Acquisition of Property (Shibuya 1717 Building)

Kenedix Office Investment Corporation ("the Investment Corporation") has announced today, that Kenedix Real Estate Fund Management, Inc. ("the Asset Management Company"), the asset management company for the Investment Corporation, decided to acquire the following property ("the Acquisition").

1. Outline of the Acquisition

   (1)	Property Name	:	Shibuya 1717 Building
   (2)	Type of Property to be Acquired	:	Trust beneficiary interest in real estate
   (3)	Anticipated Acquisition Price	:	3,500 million yen
   (Acquisition costs, adjustment of property tax and city-planning tax, and consumption tax, etc. are excluded.)
   (4)	Seller	:	Godo Kaisha Southhills Investment
   Please refer to "4. Seller's Profile" for the details.
   (5)	Date of Contract	:	July 28, 2017
   (6)	Scheduled Date of Acquisition	:	August 10, 2017
   (7)	Acquisition Funds	:	Debt financing (Note) and cash on hand
   (8)	Settlement Method	:	Payment in full on settlement

   The aforementioned Shibuya 1717 Building shall hereinafter be referred to as "the Property".

   Note: For details of the debt financing, please refer to the press release, "Notice Concerning Debt Financing (Series 142)" dated July 28, 2017.

2. Reason for the Acquisition

   The decision on the Acquisition was made to further enhance the Investment Corporation's investment portfolio, while comprehensively considering the Investment Corporation's portfolio development policy, real estate market trends, the characteristics of the Property and other factors.

   In the decision to acquire the Property, which is mid-sized office building that the Investment Corporation has focused on as main investment target, the following characteristics of the Property were evaluated.

3. Area

   The Shibuya area is recognized as one of Tokyo's best known commercial districts with a high concentration of IT-related companies. Due to several redevelopment projects planned in the area, the area is expected to continuously develop in the future.

   The Property is located in Nanpeidaicho, Shibuya-ku with approximately 12 minutes on foot from Shibuya Station on 9 lines including JR Yamanote Line, Tokyo Metro Ginza Line, Tokyu Den-en-toshi Line and other lines, and approximately 8 minutes from Shinsen Station on Keio Inokashira Line. The Nanpeidaicho area in which the Property is located has grown as high-end residential area and maintains quiet and high-class landscape despite within walking distance from Shibuya Station, and is in demand from apparel and IT-related companies that prefer such environment.

4. Building

The Property has leasable floor areas of about 623 m2 (about 188 tsubos) on the standard floors with ceiling height of 2.7 m, and is equipped with individual air conditioners, OA floors (100 mm), automated security system and plane parking spaces (7 spaces).

The Property is relatively small as the total floor area of the entire building is about 2,832 m2 (about 856 tsubo).

Accordingly, in addition to the demand for each leasing floor, the Property can also meet the needs of the tenant using the entire building.

Through the Acquisition, the portfolio of the Investment Corporation will expand to 99 properties (total: 398.7 billion yen). The investment ratio of office buildings in the portfolio will be 92.3%, and the investment ratio of the Tokyo Metropolitan Area (Note) in the portfolio will be 80.6% (The figures are based on acquisition price.).

Note: Tokyo Metropolitan Area refers to major cities in Tokyo Metropolitan, Kanagawa, Saitama, and Chiba Prefectures.

5. Details of the Property

   Property Name		Shibuya 1717 Building
   Type of Specified Asset		Trust beneficiary interest in real estate
   Trustee		Mitsubishi UFJ Trust and Banking Corporation
   Trust Term		April 14, 2014 to April 30, 2024 (Note 1)
   Current Owner (Current Beneficiary)		Godo Kaisha Southhills Investment
   Location (Address)		17-17 Nanpeidaicho, Shibuya-ku, Tokyo
   Usage		Office
   Type of Structure		Flat-roofed, Steel-framed structure; 4 above-ground floors
   Site Area	Land	1,276.02 m2
   	Building (Total Floor Area)	2,832.58 m2
   Type of Ownership	Land	Proprietary ownership
   	Building	Proprietary ownership
   Completion Date		December 22, 2003
   Architect		JT Real Estate Co., Ltd.
   Construction Company		JT Real Estate Co., Ltd.
   Construction Confirmation Authority		Shibuya-ku, Tokyo
   Probable Maximum Loss		7.64% (Sompo Risk Management & Health Care Inc.)
   Anticipated Acquisition Price		3,500 million yen
   Appraisal	Appraisal Value	3,710 million yen
   	Base Date for Appraisal	July 1, 2017
   	Appraiser	Daiwa Real Estate Appraisal Co.,Ltd.
   	Details	Please refer to "10. Summary of Appraisal Report" below.
   Existence of Secured Interests after Acquisition		None

   Master Lease Company after Acquisition		The Investment Corporation
   Property Management Company after Acquisition		Kenedix Property Management, Inc.
   Details of Tenant		As of July 28, 2017
   Number of End Tenants	1
   Total Leasable Area	2,205.16 m2
   Total Leased Area	2,205.16 m2
   Occupancy Rate	100.0%
   Monthly Rent and Common Area Charge (Excluding Consumption Tax, etc.)	Not disclosed (Note 2)
   Security and Guarantee Deposit	Not disclosed (Note 2)
   Forecast income and expenditure (annual amount)		Please refer to "Reference Material 1" for details.
   Forecast Net Operating Income	126 million yen
   Forecast Net Operating Income after Depreciation	111 million yen
   Special Considerations		Not applicable
   Other		(Note 1) The Investment Corporation plans to change the trust term to till August 1, 2025 at the date of acquisition. (Note 2) It is not disclosed due to the tenant's disapproval.

6. Seller's Profile

   Company Name		Godo Kaisha Southhills Investment
   Location		2-1-3 Nihombashi, Chuo-ku, Tokyo
   Name and Title of Representative		Ippan Shadan Hojin Daikokuten Capital, Representative Partner Takaaki Fukunaga, Administrator
   Description of Business
   Amount of Capital		100,000 yen
   Date of Incorporation		November 27, 2013
   Net Assets		Not disclosed due to the seller's disapproval
   Total Assets		Not disclosed due to the seller's disapproval
   Relationship with the Investment Corporation/the Asset Management Company
   Capital Relationship	There is no special capital relationship between the Investment Corporation or the Asset Management Company.
   Personnel Relationship	There is no special personnel relationship between the Investment Corporation or the Asset Management Company.
   Business Relationship	There is no special business relationship between the Investment Corporation or the Asset Management Company.
   Applicability of Related Party Relationships	The seller is not a related party, etc. as defined in the Act on Investment Trusts and Investment Corporations ("the Investment Trust Act") and not a related party as defined in the Office REIT Department Related-party Transaction Rules of the Asset Management Company.

7. Purchase, holding and sale of real estate

8. Leasing and management of real estate

9. Purchase, holding and sale of trust beneficiary interest in real estate

10. Purchase, holding and sale of securities (including securities equivalents), other equity interest, monetary claim and other assets for investment of various corporations and partnerships conducting the businesses listed in the preceding items

11. Other businesses incidental or relating to the preceding items

12. Acquirer's (Previous Owners of Current Owner) Profile

    It is omitted because the seller (the current owner) of the Property is not special related party of the Investment Corporation or the Asset Management Company.

13. Details of Brokerage

    The details of the brokerage firm and the brokerage fee involved in the Acquisition are as follows.

    Name of Brokerage Firm	Nomura Real Estate Development Co., Ltd.
    Location	1-26-2, Nishi-shinjuku, Shinjuku-ku, Tokyo
    Title and Name of Representative	Seiichi Miyajima, President and Representative Director
    Brokerage Fee	Not disclosed due to the brokerage firm's disapproval
    Relationship with the Investment Corporation or the Asset Management Company	The brokerage firm is not a related party, etc. as defined in the Investment Trust Act and not a related party as defined in the Office REIT Department Related-party Transaction Rules of the Asset Management Company. In addition, there is no special capital, personnel or business relationship between the brokerage firm and the Investment Corporation or the Asset Management Company.

14. Related Party Transaction

The Acquisition results in transactions between the Investment Corporation and the related party, falling under the following categories of transactions.

The Asset Management Company, pursuant to the Office REIT Department Related-party Transaction Rules, worked to ensure strict compliance with statutory and other regulatory requirements and submitted the Acquisition for deliberation and approval by the Compliance Committee. Through the approval, the Acquisition was then submitted to the Office REIT Department Asset Management Committee for resolution and approved by the committee.

Furthermore, in accordance with the Investment Trust Act, the Asset Management Company shall provide a report to the Investment Corporation relating to the related party transaction concerning the Acquisition.

Appointment of a Property Management Company

The Investment Corporation plans to execute a property management agreement for the Property with Kenedix Property Management, Inc. on the scheduled date of acquisition for the Property.

Fees relating to property management remain at the same level as the properties owned by the Investment Corporation.