Kenedix : Notice of Initiatives of Single-Family Rental Investment Fund

News Release

August 31, 2021

Kenedix, Inc.

Notice of Initiatives of Single-Family Rental Investment Fund

Kenedix has announced today its launch of an investment fund that invests in Single-Family Rental properties (hereinafter referred to as "the Project") as a new Asset Management Business strategy. As the first initiative related to the Project, Kenedix has acquired 91 newly built houses from Open House Co., Ltd. and its subsidiaries (hereinafter "Open House Group") and Sanei Architectural Design Co., Ltd. today. As part of the initiative, Kenedix has also entered into a basic agreement separately with Iida Group Holdings Co., Ltd., Open House Co., Ltd., and Sanei Architectural Design Co., Ltd. to cooperate on creating and expanding the Single-Family Rental properties market.

1. Project Outline

As an initiative to entering a new area of the Asset Management Business, Kenedix launched a fund that invests in Single-Family Rental properties by buying newly built houses located in the Tokyo metropolitan area and converting them into rental properties. Kenedix aims to develop and expand institutional-gradeSingle-Family Rental properties market by introducing a new living option that is more flexible, sustainable, and smart for families.

~Introducing "the Fourth" living option in the Japanese housing market, other than renting an apartment, buying a condominium, or buying a house~

With the spread of COVID-19, how we work and live in our homes is evolving at an accelerated pace. The new sense of the value of utilizing remote work without being bound by the proximity to the workplace and living in a residence with a larger space and extra rooms is expected to continue with/after-COVID world. Under such circumstances, Kenedix believes that there is sufficient potential demand for Single-Family Rental properties from a wide range of groups, including not only child-rearing households but also DINKS, and co-living singles.

In the current rental housing stock of the Tokyo and neighboring Three Prefectures (Chiba, Kanagawa, and Saitama), the percentage of rental housing with a floor area of 70 ㎡ or above occupies only 11.9%, and the percentage of newly supplied rental housing with a floor area of 71

㎡ or above is only about 5.2% of the total, which is primarily rental apartments for singles. For child-rearing households and families looking for more spacious housing, it is not an easy environment to find ideal rental housing in the current Japanese residential market.

By enhancing supplies of Single-Family Rental Properties backed by capital provided by fund investors, Kenedix will maximize the potential of Single-Family Rental properties and open up a new rental housing market segment. Thereby, Kenedix intends to contribute not only by providing new opportunities to investors but also to potential renters by addressing unmet demand for more comfortable, spacious housing.

2. Characteristics of the Project

The Project will be a fund that invests in Single-Family Rental properties, which is still uncommon in Japan. Until now, there have been few cases of Single-Family Rental properties with direct investment by institutional investors due to factors such as the small scale of investment per property, difficulty in building to a business scale, high operational cost due to fragmented locations, and low investment liquidity. On the other hand, in the US, there are real estate investment trusts (REIT) that specifically invest in Single-Family Rental properties, and thus the Single-Family Rental properties are recognized as one of the institutional-grade real estate markets. In addition, there is a trend toward remote working and moving out to the suburbs to avoid dense, excessive living conditions in the US. As a result, attention has increased again in the COVID19 era, and there has been an increase in investment cases from major institutional investors in privately placed funds for Single-Family Rental properties and developers focused in this area. Aiming to develop a new rental housing market in Japan, Kenedix will appeal to the Project's potential renters base by promoting the following distinctive initiatives, as well as stimulate financing demand from fund investors and financial institutions, to expand the Single-Family Rental market and creating stable investment structures investable for institutions.

① Introduction of "Kolet" brand

To establish new segments of the rental housing market in Japan, with the aim of establishing and disseminating new and unique lifestyles, the brand name "Kolet" will be applied to the Single-Family Rental properties (hereinafter referred to as "Kolet") to be supplied by Kenedix.

"IF" and "What-IF" in your life. "IF" I have a new addition to my family, "IF" I get relocated, "IF" I don't fit in the community I live in, I need to move, but to where? "What-IF" there is more spacious houses you crave for, "What-IF" you can contribute to decarbonization by living in a

home using renewable energy with EV charging port, "What-IF" you can spend time with pets you wanted but never had the chance in the small apartments, are you not interested? "What-IF" you can easily rent and move to such house? Because we all live in uncertain times, Kenedix wants to provide more flexible, diverse living options to anyone who wants to change their circumstance and try new lifestyles. Why not Kolet? More flexible, spacious, sustainable, and intelligent IoT-connected life for you.

• Collaboration with Major Homebuilder / Housing Developer
  To promote the Project, Kenedix aims to create and expand a market for Single-Family Rental properties with Iida Group Holdings Co., Ltd. (Head Office: Musashino-shi, Tokyo; President and Representative Director: Masashi Kanei; Annual home sales: 46,620 units (FY ended March 2021), Open House Co., Ltd. (Head Office: Chiyoda-ku, Tokyo; President and CEO: Masaaki Arai; Annual home sales: 7,046 units (FY ended September 2020), and Sanei Architectural Planning Co., Ltd. (Head Office: Shinjuku-ku, Tokyo; President and Representative Director: Shinzo Koike; Annual home sales: 1,696 units (FY ended August 2020).
  As a first initiative, Kenedix acquired 91 newly-built houses from Open House Group and Sanei Architectural Planning Co., Ltd. today intending to convert them to rental properties. As of today, Kenedix has also concluded a purchase and sales agreement with Iida Group Holdings Co., Ltd. for 43 newly built houses, and the transaction is expected to be concluded soon.

• SDGs approaches
  By and large, Kenedix plans to install solar panels on the rooftops of all the possible houses. Kenedix will procure electricity from renewable energy with non-fossil certificates (designated for renewable energy) from Shizen Energy Inc. (Head Office: Fukuoka-shi, Fukuoka; Representative Director: Ken Isono, Kenji Kawado, and Masaya Hasegawa)to supplement the electricity usage that the panels cannot cover. In this way, Kenedix will realize rental housing that effectively uses 100% renewable energy-derived electricity while promoting the supply of "homes that not only use renewable energy but also create."
  In addition, in principle, Kolet is a wooden building with two to three stories. In addition to providing more comfortable living environments with spacious floor plans more than 3 bedrooms, it can also contribute to measures against climate change through carbon sequestration using timber. Research indicates that CO2 emissions during the production of wooden houses when constructing a single home of the same size are less than approximately 40% compared to steel structures and reinforced concrete structures. On the other hand,

non-wooden rental houses account for about 76.9% of the entire Japanese rental housing market stock. Through this Project, Kenedix will contribute to the realization of a carbon-free society by working to supply more sustainable wooden rental housing and expanding the market in a more environmentally conscious way.

• Smart Home
  To promote DX (Digital Transformation) and improve renters' UX (User Experience), the Project will introduce SpaceCore, a smart home service platform provided by ACCEL LAB Ltd. (Head Office: Shibuya-ku, Tokyo, Representative Director: Manabu Kogure). Kenedix will realize convenient daily life through IoT housing facilities and smart home appliances, such as smart locks and smart IoT delivery boxes. This intelligent platform can also monitor children and pets remotely by using in-home cameras and enhancing security by IoT Human sensors.
  By introducing IoT-connected homes that can be customized to various forms of family lifestyles, such as with children, pets, and older families, Kenedix aims to increase the comfort and improve the living experience for all families. In addition, Kenedix will provide one-stop facility management services for renters by utilizing online relationship/communication functions equipped with the SpaceCore together with the project's designated property manager, Tokyu Housing Lease Corporation (Head Office: Shinjuku-ku, Tokyo, President, and Representative Director, President and Executive Officer: Katsushi Miki), and provide professionally managed repairs and maintenance at renters' service.

Smart Home IoT Equipment to be Installed

※The devices installed may vary from property to property.

About Kenedix

Kenedix was established in 1995 and has been developing its business since entering the real estate asset management business in 1999. Our asset management business, which began with the management of private real estate funds, has broadened to include the management of a number of J-REITs, and various strategies including core, core-plus,value-add, and opportunistic funds, boasting AUM of ¥2 trillion+. In addition, in recent years Kenedix has been actively pursuing initiatives in new areas created by technological innovations such as crowdfunding and real estate security tokens. Kenedix is dedicated to realizing the full potential of real estate, and connect investors with real estate and contribute to stakeholders by creating value from real estate.

Please note that this document is a translation of the official announcement that was released in Tokyo. The translation is prepared and provided for the purpose of the readers' convenience only. All readers are strongly recommended to refer to the original Japanese version of the news release for complete and accurate information.

[Contact for inquiries regarding this matter]

Pubric Relations & Sustainability Department, Kenedix, Inc. Mail：kdx_prs @kenedix.com