Kenedix Residential Next Investment : Notice Concerning Acquisition of Assets (Silent Partnership Equity Interest)

August 24, 2021

To All Concerned Parties

REIT Issuer:

Kenedix Residential Next Investment Corporation

Representative: Shin Yamamoto, Executive Director

(Securities Code Number: 3278)

Asset Management Company

Kenedix Real Estate Fund Management, Inc.

Representative: Masahiko Tajima, President & CEO

Contact: Shin Yamamoto, Head of Planning Division,

Residential REIT Department

TEL:[phone]

Notice Concerning Acquisition of Assets (Silent Partnership Equity Interest)

Kenedix Residential Next Investment Corporation ("the Investment Corporation") announced today that Kenedix Real Estate Fund Management, Inc. ("the Asset Management Company"), the asset management company for the Investment Corporation, has decided to acquire the following asset consisting of a silent partnership equity interest ("the Acquisition"). Details are as follows.

1. Overview of the Acquisition

(1)	Type of asset	Equity interest of a silent partnership ("the Silent Partnership")
		investing in trust beneficiary interests in real estate
(2)	Asset name	Silent partnership equity interest of Godo Kaisha Trinity 1
(3)	Real estate in trust	Serenite Koshien Plie
		KDX Residence Umejima
		Excellent Takarazuka Garden Hills
		(respectively "the Property", and collectively "the Properties")
(4)	Investment amount	Total of ¥107,000 thousand (approx.7.6% of total amount of
		equity investment of the silent partnership) (note1)
(5)	Scheduled date of conclusion	August 24, 2021
	of the contract
(6)	Scheduled date of acquisition	August 26, 2021: ¥15,410 thousand
	and each amount of money	September 30, 2021: ¥43,870 thousand (note2)
	invested	November 30, 2021: ¥47,720 thousand (note2)
(7)	Funds for acquisition	Cash on hand
(8)	Settlement method	Payment in full at each scheduled date of acquisition

(Note1) Regarding the detail, please refer to "3. Overview of the Equity Interest of the Silent Partnership."

(Note2) The Acquisition falls under the forward commitments, etc.(refers to the postdated sales contract of the real estate, etc. signed by the Investment Corporation, under which payment and delivery shall be made at least one month after conclusion of the contract, or any other contract similar thereof.) by the Investment Corporation as specified in the Financial Services Agency "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc." Regarding the detail of cancellation clause, etc., please refer to "4. Financial Impact on the Investment Corporation in the Event of Failure to Fulfill the Forward Commitments, etc."

The above asset to be acquired shall hereinafter be referred to as "the Silent Partnership Equity Interest."

2. Reason for the Acquisition

The Investment Corporation made a decision on the Acquisition to secure flexible growth opportunities in the future as well as opportunities for additional revenues, in accordance with the Investment Corporation's investment targets and policies as set forth in its Articles of Incorporation. Of the Properties, "Serenite Koshien Plie" and "Excellent Takarazuka Garden Hills" are properties that the Asset Management Company searched for by gathering information through its own channels. Moreover, "KDX Residence Umejima" is a property

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which the Investment Corporation was able to secure an opportunity to acquire with property information provided by Jyukyo. Co, Ltd., the support company of the Investment Corporation.

The Investment Corporation aims to secure flexible investment opportunities in the future by originating the bridge fund with support from Kenedix, Inc. ("KDX") as the sponsor and its subsidiary, Kenedix Investment Partners, Inc. ("KIP")

With the Acquisition, the Investment Corporation will obtain preferential negotiation rights for the acquisition of the Properties. While the Investment Corporation is not obliged to acquire the Properties by obtaining these preferential negotiation rights, it believes that these will contribute to an expansion of its asset size and an increase in profitability from a mid- to long-term perspective as the execution of the preferential negotiation rights will secure opportunities for flexible acquisition of excellent properties.

Additionally, the Investment Corporation will receive profits in the form of dividends, backed by rents and other income from the Properties and therefore additional investment revenues are expected.

3. Overview of the Equity Interest of the Silent Partnership

Name of operator	Godo Kaisha. Trinity 1
Silent partnership	August 31, 2031
agreement effective
until
Total amount of	¥ 1,407 million
equity investment
of the silent
partnership
Overview of the
silent partnership	Godo Kaisha Trinity 1
agreement	(Asset)	(Liabilities)
	Trust beneficiary interests in real	Nonrecourse loan:
	estate, etc.(note1):		(To-be) ¥4,300 million
	(To-be) ¥5,707 million	(Equity	investments	of	silent
		partnership) (note2)
		Silent partnership equity interest:
			(To-be) ¥1,407 million
	（Note 1）Trust beneficiary interests in real estate, etc. includes setup costs and equivalent
	amount to consumption tax on building, etc. The total appraisal value of the
	Properties is ¥5,663 million.

（Note 2） The Investment Corporation is scheduled to invest ¥107 million (approx. 7.6%) of the total amount of equity investment of the silent partnership.

Calculation period:

Every three-month period of every year beginning from March 1 to the end of May, June 1 to the end of August, September 1 to the end of November and December 1 to the end of February of the following year. However, the first calculation period shall be from August 24, 2021 to the end of February, 2022 and the last date of the final calculation period shall be the day when the profit related to the silent partnership business is fixed after selling the Properties.

Distribution of profit and loss:

In each calculation period, the operator shall distribute the profits or losses which is generated from the silent partnership business in the relevant period in accordance with the profit and loss sharing ratio of the silent partners. However, the cumulative amount of losses borne by the silent partners shall be limited to the amount of the investment.

Asset management for Godo Kaisha Trinity 1 will be entrusted to KIP, which is a subsidiary of KDX on August 24, 2021. KIP is a "Interested Party, etc." defined in the Act on Investment Trusts and Investment Corporations ("the Investment Trust Act") as well as a "Related Party" defined in the Related-Party Transaction Rules of Residential REIT Division of the Asset Management Company.

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Overview of	Period:
preferential	From August 24, 2021 to August 31, 2023 ("the Preferential Negotiation Period")
negotiation rights
	Outline of preferential negotiation rights:
	The Investment Corporation may preferentially negotiate with the operator with
	regard to the acquisition of the Properties by notifying the operator its wishes to
	acquire the Properties in writing which states its desired date of execution, price for
	such acquisition and name of buyer (However, only in case purchasing all the
	properties at once.) During the Preferential Negotiation Period, the operator, in
	principle, will not sale, conclude sales agreements, negotiate sales or disclose
	information of the Properties to sell to parties other than the Investment Corporation
	or the Asset Management Company without prior written consent.
	The operator may sell the Properties to third parties until August 27, 2026 after the
	Preferential Negotiation Period has expired or when certain circumstances arise in
	the Preferential Negotiation Period. In these cases, the operator, in principle, shall
	notify such intent to the Investment Corporation and, when the Investment
	Corporation notified the operator that it wishes to acquire the Properties at a sales
	price and an execution date that satisfy the purchase condition (1)1. stated below
	within fifteen days after the receipt of such notice from the operator, the operator,
	in principle, shall sell the Properties to the Investment Corporation as long as the
	purchase condition (2) stated below will be satisfied.

Conditions for the purchase:

It is necessary to satisfy both conditions below to purchase the Properties under the preferential negotiation rights during the Preferential Negotiation Period:

(1)1. The date of execution is on or before the next month of last day of the Preferential Negotiation Period.

2. The desired price for purchase is reasonably anticipated to be a price that achieves the target internal rate of return (IRR) of the operator.

1. Must not be in violation of the terms and conditions defined in any loan-related agreements.

Other:

The preferential negotiation right is held by the Investment Corporation as a right and the Investment Corporation does not bear any obligation to acquire the Properties in the future. Furthermore, its consent with the operator shall be the condition for the acquisition of the Properties based on the preferential negotiation right.

1. Financial Impact on the Investment Corporation in the Event of Failure to Fulfill the Forward Commitments, etc.
   Of the Acquisition, investments scheduled on September 30, 2021 and November 30, 2021 fall under the forward commitments, etc. by the Investment Corporation as specified in the Financial Services Agency "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.".
   Under the silent partnership agreement which the Investment Corporation concluded with the operator ("the Agreement"), it is stipulated that in the event that the Investment Corporation fails to fully perform the investment, the Agreement will be terminated immediately upon notice from the operator and the Investment Corporation shall compensate for any damages incurred by the operator due to such default. However, we believe that there is little possibility that the Investment Corporation will not be able to fulfill its forward commitments, etc., as the Investment Corporation has sufficient cash on hand to fulfill its investment under the Agreement.
2. Details of the Property

Property name	Serenite Koshien Plie
Type of asset	Trust beneficiary interest in real estate
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Trustee		Mitsubishi UFJ Trust and Banking Corporation (Scheduled)
Trust term		August 27, 2021 through the end of August, 2041 (Scheduled)
Location (Address)（1）	5-2-6, Naruocho, Nishinomiya-shi, Hyogo
		Type of ownership	Proprietary ownership
		Site area	493.66 ㎡
Land	Use districts	Neighborhood commercial district
		Building coverage ratio (2)	80%
		Floor area ratio (2)	300%
		Type of ownership	Proprietary ownership
		Total floor area	1,705.51 ㎡
		Construction completion	July 2021
B u i l d i n g	Usage	Apartment building / Store
Type (3)	Small Family
		Structure / Number of	Reinforced concrete strucuture with flat roof / seventh-story
		stories	building
		Number of leasable units	49 units (Including Store)
Architect		Sunada Construction K.K.
Constructor		Sunada Construction K.K.
Building permit agency	Kenchikukensakiko K.K.
Probable maximum loss	3.93%(i)
Appraisal value	¥ 803,000 thousand(ii)
Appraiser		The Tanizawa Sōgō Appraisal Co., Ltd.
Details of tenant	(As of August 27, 2021)(iii)
		Total number of tenant (4)	1
		Total rental income (5)	¥ 4,116 thousand
		Security and guarantee	¥ 0
		deposit (6)
		Total leased unit (7)	49 units
		Total leased area (8)	1,438.36 ㎡
		Total leasable area (9)	1,438,36 ㎡
		Occupancy ratio (10)	100%
Property management company (11)	HASEKO LIVENET, Inc. (Scheduled)
Master lease company (12)	HASEKO LIVENET, Inc. (Scheduled)
Type of master lease (13)	Pass through structure
Contract period of master lease (14)	August 27, 2021 through the end of August, 2041 (Scheduled)
Other special considerations	None

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It is said that the name "Koshien (甲子園)" originated from the fact that the year 1924, when the baseball stadium, known as the mecca of high school baseball, was built here, was the year of "Kinoene (甲子)" in the Chinese zodiac, a lucky year that comes once every 60 years. It is said to be the origin of the name. The property is a newly built small family type property consisting of one retail space and 48 residential units of 1DK and 1LDK, located about a 4- minute walk from "Nakao/Mukogawa Women's University" station and about a 9-minute walk from "Koshien" station on the Hanshin Main Line. Nishinomiya City, where the property is located, is in

Characteristics of the propertythe middle of Osaka and Kobe, and from the nearest station, "Naruo/Mukogawa Women's University" station, it is about 22

minutes to "Osaka Umeda" station, the center of Osaka, and about 24 minutes to "Kobe Sannomiya" station, the center of Kobe, providing convenient access to business and commercial areas in the city center. In addition, the area around the property is full of convenient living facilities such as large shopping malls including "LaLaport Koshien" and "Corowa Koshien" and university hospitals, and is one of the most popular areas along the Hanshin Line. In addition to nearby commuters, stable demand is expected from single and married couples who commute to Osaka and Sannomiya.

1. The figure described in the earthquake PML valuation report (level 2) created by Sompo Risk Management Inc. in August 2021.
2. Appraisal date is July 31, 2021.

(iii)The tenant details are those of the lease agreement (fixed rent) scheduled to be executed between the master lease company and the seller of the property as of the acquisition date, for the purpose of leasing the entire property to the seller.

Property name		KDX Residence Umejima
Type of asset		Trust beneficiary interest in real estate
Trustee		Mitsubishi UFJ Trust and Banking Corporation (Scheduled)
Trust term		October 1, 2021 through the end of October, 2041 (Scheduled)
Location (Address)（1）	1-27-3, Umejima, Adachi-ku, Tokyo
		Type of ownership	Proprietary ownership
		Site area	1,564.44 ㎡
Land		Use districts	Semi-industrial / Neighborhood commercial district
		Building coverage ratio (2)	60% / 80%
		Floor area ratio (2)	200% / 400%
		Type of ownership	Proprietary ownership
		Total floor area	3,878.82 ㎡(i)
		Construction completion	September 2021(ii)
B u i l d i n g		Usage	Apartment building(i)
	Type (3)	Small Family(i)
		Structure / Number of	Reinforced concrete strucuture with flat roof / seventh-story
		stories	building(i)
		Number of leasable units	90 units(i)
Architect		Eruāsu Kenchikusekkeikōbō K.K.
Constructor		JYUKYO KENSETSU Co., Ltd.
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