Kenedix Residential Next Investment : FINANCIAL REPORT FOR THE FISCAL PERIOD ENDED JULY 31, 2020(REIT)

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

Translation of Japanese Original

FINANCIAL REPORT FOR THE FISCAL PERIOD ENDED JULY 31, 2020(REIT) ( February 1, 2020 to July 31, 2020)

September 14, 2020

Kenedix Residential Next Investment Corporation is listed on the Tokyo Stock Exchange with the securities code number

3278.

(URL https://www.kdr-reit.com/en/)

Representative:

Keisuke Sato, Executive Director

Asset Management Company:Kenedix Real Estate Fund Management, Inc.

Representative:

Masahiko Tajima, CEO and President

Inquiries:

Shin Yamamoto, Head of Planning Division, Residential REIT Department

TEL[phone]

Planned submission of semiannual securities report: October 29, 2020

Planned start of distribution payments:

October 12, 2020

Preparing presentation material:

Yes

Hold a financial brief meeting:

No (Cancelled due to preventing the spread of coronavirus infection.

Scheduled financial results presentation webcast (Japanese

version) . )

(Amounts are rounded down to the nearest ¥million)

1. PERFORMANCE FOR THE FISCAL PERIOD ENDED JULY 31, 2020 (17TH FISCAL PERIOD)

(1) Business Results

(Percentages show period-on-period changes)

Operating Revenues

Operating Income

Ordinary Income

Net Income

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

The 17th fiscal period ended July 31, 2020

8,374

(3.8%)

4,469

（4.9%)

3,808

(5.4%)

3,808

(5.4%)

The 16th fiscal period ended January 31, 2020

8,066

(-0.9%)

4,260

(-2.3%)

3,614

(-3.4%)

3,613

(-3.4%)

Net Income per Unit

Return on

Ordinary Income

Ordinary Income to

(Yen)

Unitholders' Equity

to Total Assets

Operating Revenues

The 17th fiscal period ended July 31, 2020

4,028

3.1%

1.4%

45.5%

The 16th fiscal period ended January 31, 2020

3,981

3.0%

1.4%

44.8%

(2) Distribution

Distribution per

Total Distributions

Total Distributions

Unit (Excluding

Distribution in

Distribution Ratio

(Excluding Excess

in Excess of

Excess of

Excess of Earnings

Payout Ratio

to Unitholders'

of Earnings)

Earnings

Earnings )

per Unit (Yen)

Equity

(Millions of Yen)

(Millions of Yen)

(Yen)

The 17th fiscal period ended

4,065

3,866

-

-

101.5%

3.1%

July 31, 2020

The 16th fiscal period ended

4,064

3,687

-

-

102.1%

3.1%

January 31, 2020

(Note 1) Total Distributions for the 16th and 17th fiscal periods is not the same amount as Net Income because of adding reversal of reserve for temporary difference adjustments and a part of Retained earnings brought forward.

(Note 2) Due to issuance of new investment units in the 17th period, Payout Ratio for each fiscal period is calculated as follows. Payout Ratio = Total Distributions (Excluding Excess of Earnings) /Net income × 100

This is an English-language translation of the key financials in the original Japanese announcement on our Web site released on September 14, 2020. However, no assurance or warranties are given with respect to the accuracy or completeness of this English-language translation. The Japanese original shall prevail in the case of discrepancies between this translation and the Japanese original.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(3) Financial Position

	Total Assets	Unitholders' Equity	Unitholders' Equity to Total	Unitholders' Equity per Share
	(Millions of Yen)	(Millions of Yen)	Assets	of Common Stock (Yen)
As of July 31, 2020	272,960	127,457	46.7%	133,988
As of January 31, 2020	256,665	118,500	46.2%	130,584

(4) Cash Flow Position

		Cash Flow from Operating		Cash Flow from Investing		Cash Flow from Financing		Cash and Cash Equivalents at
		Activities		Activities		Activities		the End of the Period
		(Millions of Yen)		(Millions of Yen)		(Millions of Yen)		(Millions of Yen)
	The 17th fiscal period ended	5,565		-15,828		12,481		23,384
	July 31, 2020
	The 16th fiscal period ended	5,685		-2,764		-1,955		21,165
	January 31, 2020

2. FORECAST OF RESULTS FOR THE FISCAL PERIOD ENDING JANUARY 31,2021 (August 1, 2020 to January 31, 2021) AND JULY 31, 2021 (February 1, 2021 to July 31, 2021)

(Percentages show period-on-period changes)

			Operating Revenues			Operating Income			Ordinary Income			Net Income			Distribution per		Distribution in
											Unit Excluding		Excess of Earnings
			(Millions of Yen)			(Millions of Yen))			(Millions of Yen)			(Millions of Yen)
											Excess of Earning		per Unit
	The 18th fiscal period	8,369			4,348		3,649		3,649		4,066	-
	ending January 31, 2021	(-0.1%)			(-2.7%)		(-4.2%)		(-4.2%)
	The 19th fiscal period	8,477			4,413		3,732		3,731		4,067	-
	ending July 31, 2021	(1.3%)			(1.5%)		(2.3%)		(2.3%)
(Reference) Estimated net income per unit (Estimated Net Income / Estimated weighted average number of units)
	The 18th fiscal period ending January 31, 2021	¥3,836 The 19th fiscal period ending July 31, 2021 ¥3,923

Total Distributions for the 18th and 19th fiscal periods are not the same amount as Net Income because of adding reversal of reserve for temporary difference adjustments and a part of Retained earnings brought forward.

(Note) Distribution per unit is calculated based on the number of investment units issued and outstanding totaled 951,258 as of today.

3. OTHER

1. Changes in Accounting Policies/Changes in Accounting Estimate/Retrospective Restatement
2. 1. Changes concerning accounting policy accompanying amendments to accounting standards: No
   2. Changes other than (a): No
   3. Changes in accounting estimate: No
   4. Retrospective restatement: No
3. Number of Investment Unit Issued and Outstanding (including treasury units)
4. 1. Number of investment units issued and outstanding at the end of the period (including treasury units)

As of January 31, 2020: 907,458 units	As of July 31, 2020: 951,258 units
(b) Number of treasury units at the end of the period
As of January 31, 2020: 0 units	As of July 31, 2020: 0 units

[Provisional Translation Only]

English translation of the original Japanese document is provided solely for information purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

This is an English-language translation of the key financials in the original Japanese announcement on our Web site released on September 14, 2020. However, no assurance or warranties are given with respect to the accuracy or completeness of this English-language translation. The Japanese original shall prevail in the case of discrepancies between this translation and the Japanese original.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

1. Financial Statements

(1) Balance Sheets

			(in thousands of yen)
		16th Fiscal Period	17th Fiscal Period
		(As of January 31, 2020)	(As of July 31, 2020)
Assets
Current assets
Cash and deposits	10,978,807	13,212,337
Cash and deposits in trust	10,187,104	10,171,729
Operating accounts receivable	37,373	31,793
Prepaid expenses	8,640	14,671
Consumption taxes receivable	-	35,339
Other	589	9,032
Total current assets	21,212,515	23,474,905
Noncurrent assets
Property, plant and equipment
Land	1,798,041	1,798,041
Buildings in trust	100,799,661	104,694,136
Accumulated depreciation	-11,698,397	-13,024,172
Buildings in trust, net	89,101,264	91,669,964
Structures in trust	1,089,011	1,127,421
Accumulated depreciation	-223,450	-252,221
Structures in trust, net	865,561	875,199
Machinery and equipment in trust	1,448,282	1,468,718
Accumulated depreciation	-353,874	-386,760
Machinery and equipment in trust, net	1,094,407	1,081,958
Tools, furniture and fixtures in trust	570,610	693,103
Accumulated depreciation	-81,223	-99,834
Tools, furniture and fixtures in trust, net	489,387	593,268
Land in trust	139,731,924	150,985,849
Total property, plant and equipment, net	233,080,586	247,004,281
Intangible assets
Leasehold right in trust	1,227,187	1,225,462
Other	4,787	4,010
Total intangible assets	1,231,974	1,229,473
Investments and other assets
Lease and guarantee deposits	89,097	89,210
Long-term prepaid expenses	945,375	1,014,382
Other	338	19,719
Total investments and other assets	1,034,810	1,123,311
Total noncurrent assets	235,347,371	249,357,066
Deferred assets
Investment corporation bond issuance costs	49,303	45,185
Investment unit issuance costs	56,620	83,246
Total deferred assets	105,924	128,431
Total assets	256,665,810	272,960,403

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

					(in thousands of yen)
		16th Fiscal Period	17th Fiscal Period
		(As of January 31, 2020)	(As of July 31, 2020)
Liabilities
Current liabilities
Operating accounts payable		595,433		626,063
Short-term loans payable		3,300,000		2,800,000
Current portion of long-term loans payable		10,100,000		10,850,000
Accounts payable-other		294,697		353,107
Accrued expenses		35,152		38,676
Income taxes payable		605		605
Accrued consumption taxes		53,827		10,812
Advances received		1,173,813		1,179,888
Deposits received		59,879		82,406
Other		4,090		1,704
Total current liabilities		15,617,497		15,943,264
Noncurrent liabilities
Investment corporation bonds		7,000,000		7,000,000
Long-term loans payable		107,250,000		114,400,000
Tenant leasehold and security deposits in trust		3,059,671		3,132,139
Tenant lump sum deposits in trust		4,689,541		4,485,740
Asset retirement obligations		67,522		67,707
Other		481,213		473,947
Total noncurrent liabilities		122,547,949		129,559,535
Total liabilities		138,165,447		145,502,799
Net assets
Unitholders' equity
Unitholders' capital		99,731,514		108,550,294
Surplus
Capital surplus		13,187,100		13,187,100
Voluntary retained earnings
Reserve for temporary difference adjustments	*2	1,960,000	*2	1,940,000
Total voluntary retained earnings		1,960,000		1,940,000
Unappropriated retained earnings (undisposed loss)		4,072,277		4,212,398
Total surplus
	19,219,377		19,339,498
Total unitholders' equity		118,950,891		127,889,792
Valuation and translation adjustments
Deferred gains or losses on hedges		-450,527		-432,188
Total valuation and translation adjustments		-450,527		-432,188
Total net assets
*1	118,500,363	*1	127,457,603
Total liabilities and net assets			256,665,810		272,960,403

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(2) Statements of Income and Retained Earnings

(in thousands of yen）

		16th Fiscal Period	17th Fiscal Period
		August 1, 2019 to	February 1, 2020 to
		January 31, 2020	July 31, 2020
Operating revenues
Rent revenue-real estate	*1	7,472,039	*1	7,704,582
Other lease business revenue	*1	555,566	*1	585,197
Gain on sale of real estate property	*2	39,013	*2	84,437
Total operating revenues		8,066,618		8,374,217
Operating expenses
Expenses related to rent business	*1	2,911,303	*1	3,005,600
Asset management fees		576,676		604,986
Asset custody fees		13,836		13,908
Administrative service fees		46,625		46,472
Directors' compensation		8,100		8,100
Other operating expenses		249,665		225,746
Total operating expenses		3,806,207		3,904,813
Operating income		4,260,411		4,469,404
Non-operating income
Interest income		41		41
Dividends and redemption-prescription		1,394		1,240
Total non-operating income		1,435		1,282
Non-operating expenses
Interest expenses		498,295		498,083
Interest expenses on investment corporation bonds		15,857		21,322
Borrowing expenses		112,332		115,280
Amortization of investment corporation bond issuance costs		3,534		4,118
Amortization of investment unit issuance costs		16,324		23,245
Other		1,500		-
Total non-operating expenses		647,845		662,051
Ordinary income		3,614,002		3,808,635
Income before income taxes		3,614,002		3,808,635
Income taxes
Current		605		605
Total income taxes		605		605
Net income		3,613,397		3,808,030
Retained earnings brought forward		458,879		404,367
Unappropriated retained earnings (undisposed loss)			4,072,277		4,212,398

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(3) Statements of Changes in Net Assets

16th Fiscal Period	August 1, 2019 to January 31, 2020					（in thousands of yen）
					Unitholders' equity
					Surplus
				Voluntary reserve
		Unitholders'		Reserve for	Total	Unappropriated	Total	Total
		Capital surplus	temporary	retained earnings	unitholders'
		capital	voluntary	surplus
			difference	(undisposed loss)	equity
				reserve
				adjustments
Balance at the beginning of current period	99,731,514	13,187,100	1,980,000	1,980,000	4,125,881	19,292,981	119,024,495
Changes of items during the period
Reversal of reserve for temporary			-20,000	-20,000	20,000	-	-
difference adjustments
Dividends from surplus					-3,687,001	-3,687,001	-3,687,001
Net income						3,613,397	3,613,397	3,613,397
Net changes of items other than
unitholders' equity
Total changes of items during the period	-	-	-20,000	-20,000	-53,604	-73,604	-73,604
Balance at the end of current period	* 1 99,731,514	13,187,100	1,960,000	1,960,000	4,072,277	19,219,377	118,950,891
		Valuation and translation
		adjustments
		Deferred gains	Total valuation	Total net
		assets
		and losses on	and translation
		hedges	adjustments
Balance at the beginning of current period	-483,092	-483,092	118,541,403
Changes of items during the period
Provision for reserve for temporary			-
difference adjustments
Dividends from surplus			-3,687,001
Net income				3,613,397
Net changes of items other than	32,564	32,564	32,564
unitholders' equity
Total changes of items during the period	32,564	32,564	-41,039
Balance at the end of current period	-450,527	-450,527	118,500,363

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

17th Fiscal Period	February 1, 2020 to July 31, 2020						（in thousands of yen）
					Unitholders' equity
					Surplus
				Voluntary reserve
							Unappropriated		Total
		Unitholders'		Reserve for			Total
		Capital surplus	temporary	Total voluntary		retained earnings	unitholders'
		capital		surplus
			difference	reserve		(undisposed loss)	equity
				adjustments
Balance at the beginning of current period	99,731,514	13,187,100	1,960,000	1,960,000		4,072,277	19,219,377	118,950,891
Changes of items during the period
Issuance of new investment units	8,818,779							8,818,779
Reversal of reserve for temporary			-20,000	-20,000		20,000	-	-
difference adjustments
Dividends from surplus						-3,687,909	-3,687,909	-3,687,909
Net income							3,808,030	3,808,030	3,808,030
Net changes of items other than
unitholders' equity
Total changes of items during the period	8,818,779	-	-20,000	-20,000		140,121	120,121	8,938,900
Balance at the end of current period	* 1 108,550,294	13,187,100	1,940,000	1,940,000		4,212,398	19,339,498	127,889,792
		Valuation and translation
		adjustments
		Deferred gains	Total valuation	Total net
		assets
		and losses on	and translation
		hedges	adjustments
Balance at the beginning of current period	-450,527	-450,527	118,500,363
Changes of items during the period
Issuance of new investment units			8,818,779
Provision for reserve for temporary			-
difference adjustments
Dividends from surplus			-3,687,909
Net income				3,808,030
Net changes of items other than	18,339	18,339	18,339
unitholders' equity
Total changes of items during the period	18,339	18,339	8,957,239
Balance at the end of current period	-432,188	-432,188	127,457,603

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(4) Distributions

	16th Fiscal Period	17th Fiscal Period
	(From August 1, 2019 to January 31, 2020)	(From February 1, 2020 to July 31, 2020)
I. Retained earnings at the end of period	¥4,072,277,167	¥4,212,398,326
II. Revesal of voluntary reserve
Reversal of reserve for temporary	¥20,000,000	¥20,000,000
difference adjustments *1
III. Total distributions	¥3,687,909,312	¥3,866,863,770
Distribution per unit	¥4,064	¥4,065
Ⅳ. Retained earnings brought forward to	¥404,367,855	¥365,534,556
the next period
Method of calculating distribution amount	In accordance with the policy described in Article 38-1 of	In accordance with the policy described in Article 38-1 of
	its Articles of Incorporation, the Investment Corporation	its Articles of Incorporation, the Investment Corporation
	determines that the amount of distribution shall exceed the	determines that the amount of distribution shall exceed the
	amount equivalent to 90% of its distributable profit as	amount equivalent to 90% of its distributable profit as
	stipulated in Article 67-15 of the Special Taxation	stipulated in Article 67-15 of the Special Taxation
	Measures Law, and shall not exceed its accounting profits	Measures Law, and shall not exceed its accounting profits
	as the maximum amount. Following this policy, the	as the maximum amount. Following this policy, the
	Investment Corporation has decided that it shall distribute	Investment Corporation has decided that it shall distribute
	¥3,687,909,312, which is the amount of ¥3,613,397,493 in	¥3,866,863,770, which is the amount of ¥3,808,030,471
	net income and ¥54,511,819 from retained earnings	in net income and ¥38,833,299 from retained earnings
	brought forward and reversal of reserve for temporary	brought forward and reversal of reserve for temporary
	difference adjustments, as the distribution of earnings.	difference adjustments, as the distribution of earnings.
	Procedures for the distribution of amounts exceeding	Procedures for the distribution of amounts exceeding
	distributable income are outlined in Article 38-2 of the	distributable income are outlined in Article 38-2 of the
	Investment Corporation's Articles of Incorporation. In the	Investment Corporation's Articles of Incorporation. In the
	16th fiscal period, the Investment Corporation has	17th fiscal period, the Investment Corporation has decided
	decided not to distribute cash in excess of distributable	not to distribute cash in excess of distributable profit.
	profit.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(5) Statements of Cash Flows

				(in thousands of yen)
		16th Fiscal Period	17th Fiscal Period
		August 1, 2019 to	February 1, 2020 to
		January 31, 2020	July 31, 2020
Net cash provided by (used in) operating activities
Income before income taxes		3,614,002		3,808,635
Depreciation and amortization		1,429,641		1,467,881
Amortization of investment corporation bond issuance expenses		3,534		4,118
Amortization of investment unit issuance costs		16,324		23,245
Interest income		-41		-41
Interest expenses		514,152		519,406
Decrease (increase) in operating accounts receivable		-1,368		5,580
Decrease (increase) in consumption taxes refund receivable		-		-35,339
Decrease (increase) in prepaid expenses		4,175		-6,031
Increase (decrease) in operating accounts payable		82,398		-112,093
Increase (decrease) in accounts payable-other		-9,042		58,913
Increase (decrease) in accrued consumption taxes		32,352		-43,015
Increase (decrease) in advances received		25,159		6,075
Decrease (increase) in long-term prepaid expenses		69,352		-69,007
Decrease in net property, plant and equipment held in trust due to sale		420,922		451,169
Other, net		4,194		12,738
Subtotal		6,205,759		6,092,236
Interest income received		41		41
Interest expenses paid		-519,985		-526,470
Income taxes (paid) refund		135		-604
Net cash provided by (used in) operating activities		5,685,950		5,565,201
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust		-2,922,615		-15,697,335
Proceeds from investment securities		2,276		-
Payments of lease and guarantee deposits		-72		-112
Proceeds from lease and guarantee deposits		72		-
Repayments of tenant leasehold and security deposits in trust		-160,351		-134,722
Proceeds from tenant leasehold and security deposits in trust		120,380		207,190
Repayments of tenant lump sum deposits in trust		-72,386		-364,510
Proceeds from tenant lump sum deposits in trust		268,174		160,709
Net cash provided by (used in) investing activities		-2,764,521		-15,828,780
Net cash provided by (used in) financing activities
Increase in short-term loans payable		800,000		2,000,000
Decrease in short-term loans payable		-		-2,500,000
Proceeds from long-term loans payable		6,150,000		13,900,000
Repayments of long-term loans payable		-7,200,000		-6,000,000
Proceeds from issuance of investment corporation bond		1,982,489		-
Proceeds from issuance of investment units		-		8,768,907
Dividends paid		-3,687,673		-3,687,172
Net cash provided by (used in) financing activities		-1,955,184		12,481,735
Net increase (decrease) in cash and cash equivalents		966,243		2,218,156
Cash and cash equivalents at the beginning of period		20,199,667		21,165,911
Cash and cash equivalents at the end of period		*1	21,165,911	*1	23,384,067

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(6) Notes to the Going Concern

Not applicable

(7) Important Accounting Standards

1. Depreciation of fixed assets	(1) Property, plant and equipment (includes trust assets)
	The straight-line method is applied.
	Useful lives of the assets ranging are as follows:
	Buildings: 2 to 69 years
	Structures: 3 to 65 years
	Machinery and equipment: 8 to 40 years
	Tools, furniture and fixtures: 2 to 30 years
	(2) Intangible assets(includes trust assets)
	The straight-line method is applied.
	Land leasehold: Fixed term land leaseholds is amortized over a contractual period under the straight-line method.
	(3) Long-term prepaid expenses
	The straight-line method is applied.
2. Accounting policies for	(1) Unit issuance costs
deferred assets	Unit issuance costs are amortized over a period of 3 years under the straight-line method.
	(2) Investment corporation bond issuance costs
	Bond issuance costs are amortized by applying the straight-line method for the entire redemption period.
3. Accounting standards for	Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on
revenues and expenses	properties on a calendar year basis. These taxes are generally charged to operating expenses for the period, for the portion
	of such taxes corresponding to said period. Under Japanese tax regulations, the seller of the property is liable for these taxes
	on the property from the date of disposal to the end of the calendar year in which the property is disposed. The seller,
	however, is reimbursed by the purchaser for these accrued property-related tax liabilities.
	When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes
	related to the period following the purchase date of each property through the end of the calendar year. The amounts of
	those allocated portions of the property-related taxes are capitalized as part of the acquisition costs of the related
	properties. Capitalized property-related taxes amounted to ¥31,734 thousand and ¥1,263 thousand as of July 31, 2020 and
	January 31, 2020, respectively.
4. Accounting for hedges	(1) Hedge accounting method
	The deferred hedge method is applied. However, the special treatment is applied for the interest-rate swap agreements
	that meet the criteria.
	(2) Hedging instruments and risks hedged
	Hedge instruments
	The Investment Corporation enters into interest-rate swap transactions.
	Risks hedged
	Interest rates on debt.
	(3) Hedging policy
	The Investment Corporation enters into derivative transactions based on its risk management policies with the
	objective of hedging risks in accordance with its Articles of Incorporation.
	(4) Method of evaluating the effectiveness of hedging
	As for the method of assessment of the effectiveness of the hedge in the period from the inception of the hedge to the
	time of judgment of its effectiveness, the cumulative changes in cash flow of the hedged items and hedging instruments
	are compared and a judgment is made based on changed amount, etc. However, an assessment of the effectiveness of
	hedging activities is omitted in the case of interest rate swaps that meet the requirements for special treatment.
5. The scope of cash and cash	Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly
equivalents on statements of	liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or
cash flows	less from the date of purchase.
6. Other significant accounting	(1) Accounting method for trust beneficiary interests in real estate and other assets
policies utilized in the	The assets and liabilities as well as revenues and expenses of financial assets held in the form of trust beneficiary
preparation of financial	interests in real estate and other assets are recorded in full in the Investment Corporation's balance sheets and
statements	statements of income.
	Important line items included in accounting for financial assets and liabilities in the Investment Corporation's balance
	sheet are as follows:
	1. Cash and deposits in trust
	2. Buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, land
	in trust, leasehold right in trust
	3. Tenant leasehold and security deposits in trust, tenant lump sum deposits in trust
	(2) Accounting method for consumption tax
	Consumption taxes are separately recorded. Non-deductible consumption taxes applicable to the acquisition of assets
	are included in the cost of acquisition for each asset.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Accounting standards issued but not yet effective)

• "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on March 31, 2020)
• "Implementation Guidance on Accounting Standard for Revenue Recognition" (ASBJ Guidance No. 30 issued on March 31, 2020)

(1) Overview

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States have jointly developed comprehensive accounting standards for revenue recognition and issued "Revenue from Contracts with Customers" (IFRS 15 (IASB) and Topic 606 (FASB)) in May 2014. Given the situation where IFRS 15 will be applied from fiscal years beginning on or after January 1, 2018 and that Topic 606 will be applied from fiscal years beginning after December 15, 2017, the ASBJ has developed comprehensive accounting standards for revenue recognition and issued them together with the implementation guidance.

The basic policy of the ASBJ when it developed the accounting standards for revenue recognition was to specify the accounting standards, incorporating the basic principles of IFRS 15 as a starting point, from the perspective of comparability between financial statements, which is one of the benefits of maintaining compatibility with IFRS 15. The basic policy also stipulates that if there is an item to which consideration should be given, such as practices that have been conducted thus far in Japan, alternative treatments will be added to the extent to which comparability is not impaired.

(2) Scheduled date of application

The accounting standards will be applied from the beginning of the fiscal period ending January 31, 2022.

(3) Impact of applying the accounting standards

The impact of applying "Accounting Standard for Revenue Recognition" and its guidance on The financial statements is currently under evaluation.

• "Accounting Standard for Fair Value Measurement" (ASBJ Statement No. 30 issued on July 4, 2019)
• "Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No. 31 issued on July 4, 2019)
• "Implementation Guidance on Disclosures about Fair Value of Financial Instruments" (ASBJ Guidance No. 19 issued on March 31, 2020)

(1) Overview

The IASB and the FASB have established detailed guidance regarding fair value measurement (IFRS 13 "Fair Value Measurement" (IASB) and Topic 820 "Fair Value Measurement" (FASB)). The ASBJ repeatedly considered the guidance regarding fair value of financial instruments and disclosure in order to improve the comparability with such international accounting standards, and issued "Accounting Standard for Fair Value Measurement" and "Implementation Guidance on Accounting Standard for Fair Value Measurement."

(2) Scheduled date of application

The accounting standards will be applied from the beginning of the fiscal period ending January 31, 2022.

(3) Impact of applying the accounting standards

The impact of applying the "Accounting Standard for Fair Value Measurement" and its guidance on The financial statements is currently under evaluation.

・"Accounting Standard for Disclosure of Accounting Estimates" (ASBJ Statement No. 31 issued on March 31, 2020)

(1) Overview

Paragraph 125 of International Accounting Standard 1 (IAS 1), "Presentation of Financial Statements," (issued by the IASB in 2003) requires disclosure of information about the "assumptions the entity makes about the future, and other major sources of estimation uncertainty." In this regard, there has been a request that the major sources of estimation uncertainty should be disclosed in the notes to financial statements under Japanese GAAP to provide useful information to users of financial statements. In response to this request, the ASBJ developed and issued "Accounting Standard for Disclosure of Accounting Estimates."

(2) Scheduled date of application

The accounting standard will be applied from the end of the fiscal period ending July 31, 2021.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

・"Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections" (ASBJ Statement No. 24 issued on March 31, 2020)

(1) Overview

The ASBJ's Standards Advisory Council recommended that the ASBJ consider enhancing disclosures for notes relating to "accounting policies and methods adopted in the cases where the relevant accounting standards were not clear." In response to such recommendations, the ASBJ issued the revised "Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections."

(2) Scheduled date of application

The accounting standard will be applied from the end of the fiscal period ending July 31, 2021.

(8) Notes to the Financial Statements

(Notes to the Balance Sheets)

• 1. Minimum unitholders' equity pursuant to Article 67-4 of the Law Concerning Investment Trusts and Investment Corporations Law (in thousands of yen)

		As of January 31, 2020		As of July 31, 2020
			50,000				50,000
*2. Reserve for temporary difference adjustments
16th Fiscal Period (As of January 31, 2020)
		The following summarizes reserve for temporary difference adjustments.						(in thousands of yen)
				Balance at	Reserve		Reversal	Balance at	Reason for reserve
		Initial amount	the beginning	during the		during the	the end of
			and reversal
				of the period	period		period	the period
		Gain on negative good will*	2,000,000	1,980,000		-	20,000	1,960,000	Appropriate for
			distribution

• The Investment Corporation has reserved a part of gain on negative goodwill in the 13th fiscal period as reserve for temporary difference adjustments. At least 1% of the initial amount in equal installments over 50 years (100 fiscal periods) will be reversed every fiscal period starting from the next fiscal period after the period, in which the initial amount was reserved.

17th Fiscal Period (As of July 31, 2020)
	The following summarizes reserve for temporary difference adjustments.					(in thousands of yen)
			Balance at	Reserve		Reversal	Balance at	Reason for reserve
		Initial amount	the beginning	during the		during the	the end of
			and reversal
			of the period	period		period	the period
	Gain on negative good will*	2,000,000	1,960,000		-	20,000	1,940,000	Appropriate for
		distribution

• The Investment Corporation has reserved a part of gain on negative goodwill in the 13th fiscal period as reserve for temporary difference adjustments. At least 1% of the initial amount in equal installments over 50 years (100 fiscal periods) will be reversed every fiscal period starting from the next fiscal period after the period, in which the initial amount was reserved.

3. Commitment line contracts

KDR has commitment line contracts with the banks with which it does business.

As of January 31, 2020		As of July 31, 2020
Total amount of commitment line contracts	4,500,000	4,500,000
Balance of loans payable outstanding	-	-
Remaining amount	4,500,000	4,500,000

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Notes to the Statements of Income and Retained Earnings)
* 1. Breakdown of real estate rental business profit and loss
			(in	thousands of yen)
	From August 1, 2019		From February 1, 2020
	to January 31, 2020		to July 31, 2020
	A. Rental and other operating revenues:
	Rental revenues	7,089,789	7,315,802
	Rental revenues from limited proprietary rights of land	43,749	43,750
	Common area charges	338,499	345,030
	Subtotal	7,472,039	7,704,582
	Others:
	Parking space rental revenues	206,829	205,439
	Miscellaneous	348,736	379,757
	Subtotal	555,566	585,197
	Total rental and other operating revenues	8,027,605	8,289,780
	B. Property-related expenses:
	Property management fees and facility management fees	409,507	433,235
	Utilities	95,299	89,588
	Taxes	475,323	498,996
	Repairs and maintenance	281,724	288,648
	Insurance	12,023	12,101
	Trust fees	55,272	55,499
	Depreciation	1,428,865	1,467,105
	Others	153,286	160,424
	Total property-related expenses	2,911,303	3,005,600
	C. Net operating income (A-B)	5,116,301	5,284,179
*2. Gain and Loss on sale of real estate property
16th Fiscal Period (August 1, 2019 to January 31, 2020)
	(in thousands of yen)
	Melody Heim Gotenyama
	Revenue from sale of the investment property	480,000
	Costs of the investment property	420,922
	Other sales expenses	20,063
	Gain on sale of real estate property	39,013
17th Fiscal Period (February 1, 2020 to July 31, 2020)
	(in thousands of yen)
	KDX Residence Izumi Chuo
	Revenue from sale of the investment property	540,000
	Costs of the investment property	451,169
	Other sales expenses	4,392
	Gain on sale of real estate property	84,437

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Notes to the Statements of Changes in Net Assets)

• 1. Total number of authorized investment units and total number of investment units issued and outstanding are as follows:

	From August 1, 2019	From February 1, 2020
	to January 31, 2020		to July 31, 2020
Total number of authorized investment units	10,000,000	units	10,000,000	units
Total number of investment units issued and outstanding	907,458	units	951,258	units

(Notes to Distributions)

16th Fiscal Period (August 1, 2019 to January 31, 2020) *1. Reserve for temporary difference adjustments

The Investment Corporation has reserved ¥2,000,000,000 as reserve for temporary difference adjustments from gain on negative goodwill in the 13th fiscal period. At least 1% of the initial amount in equal installments over 50 years (100 fiscal periods) will be reversed every fiscal period applied to distribution starting from the 14th fiscal period distribution. It has been decided that ¥20,000,000 shall be reversed and applied to distribution in the 16th fiscal period distribution.

17th Fiscal Period (February 1, 2020 to July 31, 2020)

*1. Reserve for temporary difference adjustments

The Investment Corporation has reserved ¥2,000,000,000 as reserve for temporary difference adjustments from gain on negative goodwill in the 13th fiscal period. At least 1% of the initial amount in equal installments over 50 years (100 fiscal periods) will be reversed every fiscal period applied to distribution starting from the 14th fiscal period distribution. It has been decided that ¥20,000,000 shall be reversed and applied to distribution in the 17th fiscal period distribution.

(Notes to the Statements of Cash Flow)

* 1. Reconciliation of balance sheet items to cash and cash equivalents at end of period in the cash flows statements

			(in thousands of yen)
		As of January 31, 2020	As of July 31, 2020
	Cash and deposits	10,978,807	13,212,337
	Cash and deposits in trust	10,187,104	10,171,729
	Cash and cash equivalents	21,165,911	23,384,067
(Notes to the Lease Transactions)
Operating lease transactions (Lessee)
Unearned lease payments
			(in thousands of yen)
		As of January 31, 2020	As of July 31, 2020
	Due in 1 year	12,000	12,000
	Due after 1 year	545,000	539,000
	Total	557,000	551,000
Operating lease transactions (Lessor)
Unearned lease payments
			(in thousands of yen)
		As of January 31, 2020	As of July 31, 2020
	Due in 1 year	3,238,403	3,639,213
	Due after 1 year	19,714,966	20,383,265
	Total	22,953,370	24,022,478

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Notes to the Financial Instruments)

(A). Overview

(1) Policy for financial instruments

The Investment Corporation procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc. through loans from financial institutions, issuance of investment corporation bonds, issuance of investment units and other means. With regard to the procurement of interest-bearing debts, the Investment Corporation ensures that it can effectively combine stable long-term funds with flexible short-term funds. Management of surplus funds is undertaken through various bank deposits focusing on safety, liquidity and effectiveness. The Investment Corporation uses derivatives for the purpose of hedging its exposure to changes in interest rates and other risks and does not enter into derivative transactions for speculative or trading purposes.

(2) Types of financial instruments and related risk

Bank deposits are for managing the Investment Corporation's surplus funds and are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited. Borrowings and investment corporation bonds are made primarily for the purpose of procuring funds for the acquisition of real estate and trust beneficiary interests in real estate and have a repayment date of a maximum of 9 years and 5 months as of July 31, 2020, the end of the 17th fiscal period, are exposed to liquidity risk where alternative funds may not be procured by the repayment date. Also, borrowings with floating interest rates are exposed to interest rate fluctuation risk. Derivatives are used for the purpose of hedging interest rate fluctuation risk for a certain portion of the borrowings.

(3) Risk management for financial instruments

1. Credit risk

While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, such risk is monitored by deposits in non- interest bearing ordinary savings accounts or with financial institutions with credit ratings above a certain level. To manage this credit risk, the Investment Corporation regularly evaluates the results of operations and the financial condition of the issuer, etc. In utilizing derivatives, the Investment Corporation aims to mitigate counterparty risk such as by transacting with financial institutions with favorable ratings.

1. Market risk

While borrowings with floating rates are exposed to interest rate volatility risk, such risk is monitored by adjusting the rate of the balance of borrowings with floating rates against the total borrowings according to the financial environment, interest rate forecasts by continuous monitoring, etc. and by using derivatives, etc. A risk management policy is established with regard to the execution and management of derivatives and such transactions are conducted based on this policy.

1. Liquidity risk

Though borrowings are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates and by diversifying financial institutions. Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.

(4) Supplementary explanation of the estimated fair value of financial instruments

The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in a different fair value.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(B). Estimated Fair Value of Financial Instruments

The carrying value of financial instruments on the balance sheet and estimated fair value are shown in the following table.

As of January 31, 2020

			(in thousands of yen)
	Carrying amount	Estimated fair value	Difference
(1) Cash and deposits	10,978,807	10,978,807	-
(2) Cash and deposits in trust	10,187,104	10,187,104	-
Total	21,165,911	21,165,911	-
(1) Short-term loans payable	3,300,000	3,300,000	-
(2) Current portion of long-term loans payable	10,100,000	10,112,003	12,003
(3) Investment corporation bonds	7,000,000	7,024,300	24,300
(4) Long-term loans payable	107,250,000	107,913,233	663,233
Total	127,650,000	128,349,537	699,537
Derivative transactions	-450,527	-450,527	-

• Figures indicate net amount of derivative assets/liabilities derived from derivative transactions, with minus representing net liabilities.
  As of July 31, 2020

			(in thousands of yen)
	Carrying amount	Estimated fair value	Difference
(1) Cash and deposits	13,212,337	13,212,337	-
(2) Cash and deposits in trust	10,171,729	10,171,729	-
Total	23,384,067	23,384,067	-
(1) Short-term loans payable	2,800,000	2,800,000	-
(2) Current portion of long-term loans payable	10,850,000	10,863,234	13,234
(3) Investment corporation bonds	7,000,000	6,963,600	-36,400
(4) Long-term loans payable	114,400,000	114,986,963	586,963
Total	135,050,000	135,613,797	563,797
Derivative transactions	-432,188	-432,188	-

* Figures indicate net amount of derivative assets/liabilities derived from derivative transactions, with minus representing net liabilities.

Note 1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions

Assets

(1) Cash and deposits and (2) Cash and deposits in trust

Since these items are settled in a short period of time, their carrying amount approximates fair value.

Liabilities

(1) Short-term loans payable

Since these items are settled in a short period of time with floating interest rates, their carrying amount approximates fair value.

1. Current portion of long-term loans payable and (4) Long-term loans payable

Among these items, the fair value of loans payable with fixed interest rates is calculated based on the present value, which is the total amount of principal and interest discounted by the estimated interest rate to be applied in the event that the Investment Corporation conducts new borrowings of the same type. As for the fair value of loans payable with floating interest rates, it is based on the carrying amount since market interest rates are reflected in the short term and the fair value is believed to approximate the carrying amount as the credit standing of the Investment Corporation has not changed significantly since the loans were made. (However, the fair value of long-term loans payable subject to the special treatment for interest-rate swaps is based on the present value of the total of principal and interest, accounted for together with the applicable interest-rate swaps, discounted by the estimated interest rate to be applied in the event that the Investment Corporation conducts new borrowings of the same type.)

(3) Investment corporation bonds

The fair value of investment corporation bonds is based on market prices.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

Derivative transactions

Please refer to "Notes to the Derivative Transactions".

Note 2: Redemption schedule for financial assets with maturities

As of January 31, 2020

											(in thousands of yen)
	Due in 1 year or		Due after 1 year		Due after 2 years		Due after 3 years		Due after 4 years		Due after 5 years
	less		through 2 years		through 3 years		through 4 years		through 5 years
Cash and deposits	10,978,807	-	-	-	-	-
Cash and deposits in trust	10,187,104	-	-	-	-	-
Total	21,165,911	-	-	-	-	-
As of July 31, 2020
											(in thousands of yen)
	Due in 1 year or		Due after 1 year		Due after 2 years		Due after 3 years		Due after 4 years		Due after 5 years
	less		through 2 years		through 3 years		through 4 years		through 5 years
Cash and deposits	13,212,337	-	-	-	-	-
Cash and deposits in trust	10,171,729	-	-	-	-	-
Total	23,384,067	-	-	-	-	-
Note 3: Redemption schedule for loans payable and investment corporation bonds
As of January 31, 2020
									(in		thousands of yen)
	Due in 1 year or		Due after 1 year		Due after 2 years		Due after 3 years		Due after 4 years		Due after 5 years
	less		through 2 years		through 3 years		through 4 years		through 5 years
Short-term loans payable	3,300,000		-		-		-		-		-
Investment corporation bonds	-		1,000,000		-		1,000,000		-		5,000,000
Long-term loans payable	10,100,000		14,400,000		18,250,000		14,400,000		12,000,000		48,200,000
Total	13,400,000		15,400,000		18,250,000		15,400,000		12,000,000		53,200,000
As of July 31, 2020
									(in		thousands of yen)
	Due in 1 year or		Due after 1 year		Due after 2 years		Due after 3 years		Due after 4 years		Due after 5 years
	less		through 2 years		through 3 years		through 4 years		through 5 years
Short-term loans payable	2,800,000		-		-		-		-		-
Investment corporation bonds	-		1,000,000		-		1,000,000		-		5,000,000
Long-term loans payable	10,850,000		19,650,000		13,350,000		14,850,000		13,550,000		53,000,000
Total	13,650,000		20,650,000		13,350,000		15,850,000		13,550,000		58,000,000

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Notes to the Derivative Transactions)

(1) Transactions not subject to hedge accounting

As of January 31, 2020 and as of July 31, 2020: Not applicable

1. Transactions subject to hedge accounting As of January 31, 2020

			Contract amount
Hedge accounting	Type of derivative transactions	Hedged items	(in thousands of yen)	Fair value	Calculation method
method		Maturing	(in thousands of yen)	for applicable fair value
				after 1 year
Accounting method,	Interest rate swap transaction:	Long-term loans				Based on the amount
60,950,000	53,450,000	-450,527	provided by counterparty
in principle	Receive/floating and pay/fixed	payable
			financial institutions
Special treatment of	Interest rate swap transaction:	Long-term loans	36,800,000	33,200,000	*	-
interest-rate swaps	Receive/floating and pay/fixed	payable
		Total	97,750,000	86,650,000	-450,527

*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value is included in the fair

value of the hedged long-term debt.

As of July 31, 2020

			Contract amount
Hedge accounting	Type of derivative transactions	Hedged items	(in thousands of yen)	Fair value	Calculation method
method		Maturing	(in thousands of yen)	for applicable fair value
				after 1 year
Accounting method,	Interest rate swap transaction:	Long-term loans				Based on the amount
66,650,000	63,650,000	-432,188	provided by counterparty
in principle	Receive/floating and pay/fixed	payable
			financial institutions
Special treatment of	Interest rate swap transaction:	Long-term loans	36,800,000	30,850,000	*	-
interest-rate swaps	Receive/floating and pay/fixed	payable
		Total	103,450,000	94,500,000	-432,188

*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value is included in the fair value of the hedged long-term debt.

(Notes to the Related-Party Transactions)

1．Parent Company, major corporate unitholders and other

16th Fiscal Period (August 1, 2019 to January 31, 2020) and 17th Fiscal Period (February 1, 2020 to July 31, 2020): Not applicable

2．Affiliated companies and other

16th Fiscal Period (August 1, 2019 to January 31, 2020) and 17th Fiscal Period (February 1, 2020 to July 31, 2020): Not applicable

3．Fellow subsidiary companies and other

16th Fiscal Period (August 1, 2019 to January 31, 2020) and 17th Fiscal Period (February 1, 2020 to July 31, 2020): Not applicable

4．Directors, major individual unitholders and other

16th Fiscal Period (August 1, 2019 to January 31, 2020) and 17th Fiscal Period (February 1, 2020 to July 31, 2020): Not applicable

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Notes to the Tax-Effect Accounting)

The significant components of deferred tax assets and liabilities:

				(in thousands of yen)
			As of January 31, 2020	As of July 31, 2020
		Deferred tax assets:
		Valuation difference on other assets acquired by merger	697,994	678,375
		Deferred gains or losses on hedges	141,875	142,170
		Asset retirement obligations	21,242	21,300
		Amortization of leasehold right in trust	723	1,266
		Other	20	-
		Subtotal deferred tax assets	861,856	843,112
		Valuation allowance	-861,856	-843,112
		Total deferred tax assets	-	-
		Net deferred tax assets	-	-
The significant differences between the statutory tax rate and the effective tax rate:
			From August 1, 2019	From February 1, 2020
			to January 31, 2020	to July 31, 2020
	Statutory tax rate	31.51%	31.46%
	Deductible cash distributions	-30.94%	-30.98%
	Others	-0.55%	-0.46%
	Effective tax rate	0.02%	0.02%

(Notes to Asset Retirement Obligations)

Asset retirement obligations reported on balance sheets 1. Summary of the asset retirement obligations

KDR has recognized the original state restoration obligations assumed under the general fixed-term land leasehold agreement as the asset retirement obligations in connection with Arute Ishiyagawa on June 3, 2019.

2. Method of calculating asset retirement obligations

Asset retirement obligations are calculated based on a discount rate of 0.54711% after the useful life has been estimated to be 47 years and one month based on the time period from the date of acquisition to the expiration of the agreement.

3. Changes in the amount of applicable asset retirement obligations consisted of the following

		(in thousands of yen)
	From August 1, 2019	From February 1, 2020
	to January 31, 2020	to July 31, 2020
Balance at the beginning of period	67,338	67,522
Accretion adjustment	184	184
Balance at the end of period	67,522	67,707

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Notes to the Investment and Rental Properties)

The Investment Corporation owns real estate for rental purposes in the Tokyo Metropolitan Area and other regional areas for the purpose of generating rental revenues. The book value and fair value concerning the above real estate for rental purposes are as follows.

			(in thousands of yen)
		From August 1, 2019	From February 1, 2020
		to January 31, 2020	to July 31, 2020
Book value
	Balance at the beginning of period	233,496,342	234,307,773
	Changes during the period	811,431	13,921,970
	Balance at the end of period	234,307,773	248,229,744
Fair value at the end of period	279,986,000	295,688,000

Note 1: Book value excludes accumulated depreciation from acquisition costs.

Note 2: Among changes in the amount of real estate for rental purposes that occurred during the 16th fiscal period, the principal increase was the acquisition of real estate

trust beneficiary interests in 2 properties totaling ¥2,006,136 thousand, and the principal decrease was the sales of real estate trust beneficiary interests in 1 property totaling ¥420,922 thousand and depreciation of ¥1,428,681 thousand and during the 17th fiscal period, the principal increase was the acquisition of real estate trust beneficiary interests in 8 properties totaling ¥15,324,167 thousand, and the principal decrease was the sales of real estate trust beneficiary interests in 1 property totaling ¥451,169 thousand and depreciation of ¥1,466,920 thousand.

Income and loss for real estate rental business in the fiscal periods ended January 31, 2020 and July 31, 2020 for real estate for rental purposes is listed in "Notes to the Statements of Income and Retained Earnings".

(Notes to the Segment Information)

Segment information for the periods from August 1, 2019 to January 31, 2020 and from February 1, 2020 to July 31, 2020 is as follows:

(A) Segment information

Disclosure is omitted because the real estate leasing business is the Investment Corporation's sole business and it has no reportable segment subject to disclosure.

(B) Related information

(1) Information about each product and service

Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue on the statement of income and retained earnings.

1. Information about each geographic area
   (a) Net sales
   Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement of income and retained earnings.
   (b) Property, plant and equipment
   Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plant and equipment on the balance sheet.
2. Information about each major customer

Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statement of income and retained earnings.

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION (3278)

(Notes to Per Unit Information)

	From August 1, 2019	From February 1, 2020
	to January 31, 2020	to July 31, 2020
Net asset value per unit	¥130,584	¥133,988
Net income per unit	¥3,981	¥4,028

Note 1: The weighted average number of units outstanding of 945,242 and 907,458 were used for the computation of the amount of net income per unit as of July 31, 2020

and January 31, 2020, respectively. Net income per unit after adjusting for residual units is not included because there were no residual investment units.

Note 2: The basis for calculating net income per unit is as follows:

	From August 1, 2019	From February 1, 2020
	to January 31, 2020	to July 31, 2020
Net income (in thousands of yen)	3,613,397	3,808,030
Net income not available to ordinary unitholders (in thousands of yen)	-	-
Net income available to ordinary unitholders (in thousands of yen)	3,613,397	3,808,030
Weighted average number of units during the period (units)	907,458	945,242

(Notes to Important Subsequent Events) Not applicable