Kenedix Retail REIT : Notice Concerning Acquisition of Property (Sun Street Hamakita (Additional Interest))

Translation of Japanese Original

March 24, 2022

To All Concerned Parties

REIT Issuer:

Kenedix Retail REIT Corporation

Representative: Moyuru Watanabe, Executive Director

(Securities Code: 3453)

As se t M an ag e r:

Kenedix Real Estate Fund Management, Inc.

Representative: Masahiko Tajima, President & CEO

Contact:Koichiro Nobata, Head of Strategic Planning,

Retail REIT Department

TEL:[phone]

Notice Concerning Acquisition of Property (Sun Street Hamakita (Additional Interest))

Kenedix Retail REIT Corporation ("KRR") announced today that Kenedix Real Estate Fund Management, Inc. ("the Asset Manager"), the asset manager for KRR, has decided to acquire the following property.

1. Outline of the acquisition

Property				Anticipated acquisition	Appraisal NOI
type	Property name		Location	price (million yen)	yield (%)	Brokerage
(Note 1)				(Note 2)	(Note 3)
	Sun Street Hamakita		Hamakita-ku,
NSC		Hamamatsu,	1,200	5.7	N/A
(10% quasi-co-ownership interest)
		Shizuoka
(1)	Contract date:	March 24, 2022
(2)	Acquisition date:	April 15, 2022
(3)	Seller:	Please refer to Item 4. Seller's profile for details
(4)	Acquisition funds:	Borrowings and cash on hand (Note 4)
(5)	Settlement method:	Payment in full at settlement

Notes:

1. Properties are categorized into the following six types of properties: NSC (Neighborhood Shopping Center), SM (Supermarket), CSC (Community Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping Center), SS (Specialty Store) and L (Logistics facility).
2. Excluding acquisition costs, adjustment amount of property tax and city-planning tax, consumption tax, etc.
3. "Appraisal NOI yield" is calculated by dividing the appraisal NOI of the anticipated property as on the appraisal report as of March 1, 2022 by the acquisition price for the property and rounded to the first decimal place.

"Appraisal NOI" refers to the net operating income before depreciation expenses, which is calculated by deducting the operating expenses from the operating revenues described in the appraisal report, and thus, differs from NCF (Net Cash Flow) which is calculated by adding the profit from the investment of tenant deposits to and deducting capital expenditures from NOI. The appraisal NOI here is the NOI calculated using the direct capitalization method.

4. Matters concerning the new borrowings shall be announced after details decided.

2. Reason for the acquisition

KRR makes focused investment in shopping centers for daily needs while it has expanded its investment targets to distribution centers. The acquisition is made to diversify and enhance the portfolio to realize the growth of asset size

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and secure stable revenues, in accordance with KRR's investment targets and policies as set forth in its Articles of Incorporation.

Furthermore, KRR already owns 90% quasi-co-ownership interest in Sun Street Hamakita, and after the acquisition, the total ownership will be 100%, making it a wholly owned property.

R-10 Sun Street Hamakita Acquisition highlight:

An NSC serving diverse customer needs, located in a residential area in central Hamamatsu where the population has been growing rapidly

1. Features of the property
2. • The property is a large NSC that opened in July 2007 and consists of a mall building that houses the core tenant Seiyu, specialty stores (including a clothing retailer and a discount retailer), a leading movie theater as its sub-core tenants, and a separate building that houses an automotive parts store, a car dealership and an internet cafe, among other retail stores.
   • With the reopening in April 2017, Seiyu subleased part of its leased area to Homecenter Valor, a home and garden store, which converted it into a supermarket specializing in grocery products.
   • The property consists of main building and other annex buildings, and provides flat parking areas on the ground, on the second floor and on the roof capable of holding 2,000 vehicles.
3. Overview of the trade area
4. 1. Location and access
   2. • The property is located in Hamakita in central Hamamatsu where the population has been growing rapidly and is also near "Kirari Town Hamakita," a popular residential district in Hamamatsu.
      • The property is easily accessible by car due to its location facing National Route 152 and Prefectural Route 391, which are both major roads. These two roads provide access to the property from the north, south, east and west.
      • Suzuki Motor Corporation's Hamamatsu Plant is located to the northwest and Yamaha Motor's Hamakita Plant to the east of the property. The workers in these plants and facilities are expected to stop by the property after work.
   3. Characteristics of the trade area
   4. • Based on the 2015 Population Census, the population in the catchment area was approximately 62,000 people in the 3km radius, approximately 164,000 people in the 5km radius, and 524,000 people in the 10km radius. Compared to population numbers in 2010, the population in 2015 within the 3km, 5km and 10km radius were 106.9%, 104.5% and 101.3%, respectively.
      • The area has many families with high income and with parents in their 30s and 40s.

3. Details of the property

Property name	Sun Street Hamakita
Type of specified asset	Trust beneficiary interest in real estate (10% quasi-co-ownership
		interest) (Note 1)
Trustee		Mitsubishi UFJ Trust and Banking Corporation
Trust period		March 28, 2008 to April 30, 2037 (planned)
Location		5695 Hirakuchi, Hamakita-ku, Hamamatsu, Shizuoka
	Form of ownership	Proprietary ownership and land leasehold interest
Land	Land area	96,832.21 m2
Zoning	-
(Note 2)
Building coverage ratio	60%
	Floor-area ratio	200%
Building	Form of ownership	Proprietary ownership
		2

(Note 2)		Gross floor area	A: 34,236.71 m2
(Note 3)			B: 23,181.39 m2
				C: 1,984.37 m2
				D: 686.44 m2
			Completion date	A: July 5, 2007
				B: July 5, 2007
				C: November 26, 2007
				D: August 8, 2009
			Usage	A: Retail store
				B: Retail store, movie theater
				C: Amusement place
				D: Retail store
			Structure/No. of floors	A: S-structure/3-story building with flat roof
				B: S-structure/4-story building with flat roof
				C: S-structure/1-story building with flat roof
				D: S-structure/1-story building galvanized steel sheet roof
Master lessee		Sojitz Commerce Development Corporation
Type of master lease	Pass-through type
PM		Kenedix Real Estate Fund Management, Inc.
Sub-PM		Sojitz Commerce Development Corporation
PML		Main building: 7.0%
				Mall building: 9.6%
				Colore building: 6.2%
				Wing building: 6.2%
Acquisition price	1,200 million yen
Appraisal value	1,210 million yen (as of March 1, 2022) (Note 4)
Real estate appraiser	Japan Real Estate Institute
Collateral		None
Description of tenancy	(as of January 31, 2022)
	Number of tenants	50
	Annual rent	943,956 thousand yen
	Tenant deposits	536,927 thousand yen
	Leased area	5,332.98 m2 (Note 4)
	Leasable area	5,410.81 m2 (Note 4)
	Occupancy rate	98.6%
				·	Upon acquiring 90% quasi-co-ownership interest in this property
					on April 27, 2017, KRR executed a quasi-co-ownership
					agreement with quasi-co-owner Sojitz Commerce Development
					Corporation. The agreement stipulated the method of decision
					making concerning the property such as the preferential offer to
					the other quasi-owner in the sale of quasi-co-ownership. The
					quasi-co-ownership agreement will expire with the completion of
Remarks			the acquisition by KRR.
				·	Of the entire land for the property, the trustee has leased 67,399.00
					m2 from a few individuals and five corporations.
				· Part of the land owned by the trustee (650.54 m2) carries an
					easement as servient land whereby a power transmission line can
					be installed in the land.
				·	Part of the river in the neighborhood of the property is used for a
					pathway for visitors and a drainage ditch based on the approval
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					by Hamamatsu City Government.
					Notes:
					1.	KRR owns 90% of the quasi-co-ownership interest of the trust
						beneficiary right in the property as of today, and will acquire
						10% interest from the quasi-co-owner.
					2.	Refer to the entire land and buildings of the property.
		Others			3. A refers to Main building, B refers to Mall building, C refers
						to Colore building and D refers to Wing building, respectively.
					4.	Represents the amounts corresponding to the trust beneficiary
						co-ownership interest to be acquired by KRR (10% of the trust
						beneficiary co-ownership interest).
4. Seller's profile
	Name	Sojitz Commerce Development Corporation
	Address	6-2-1 Ginza, Chuo-ku, Tokyo
	Name and title of	President and CEO, Tetsuo Kondo
	representative
	Description of business	1.	Planning, design, construction, ownership, operation, maintenance, security,
				and consulting services for commercial facilities
			2.	Ownership and operation of amusement facilities
			3.	Ownership and operation of spa facilities
			4.	Purchase, sale, lease, brokerage and management of real estate
			5.	Cleaning, maintenance, management and contracting of buildings
			6.	Management of parking lots
			7.	Leasing and management of halls, exhibitions, and conference rooms
			8.	Management of sports facilities, restaurants, coffee shops, and lease of
				facilities
			9.	Planning, operation and consignment of exhibitions and events
			10.	Non-life insurance agency business and insurance agency business covered
				by the Automobile Liability Security Law
			11.	Sales of food, soft drinks and liquors
			12.	Import, export, wholesale, and sale of cosmetics, clothing, accessories,
				groceries, daily necessities, and groceries
			13.	Sales of lottery tickets, cigarettes, stamps, stamps, newspapers, magazines,
				books, and office supplies
			14.	Sales and leasing of furniture, interior decorations, horticulture, and art
			15.	Sales of tickets and prepaid cards and gift certificates for performances,
				theatres, films, concerts, and stage performances
			16.	Handling of credit cards
			17.	Contracting and Agency for Advertising and Advertising
			18.	Design, construction, supervision and contracting of construction, pipe
				construction and interior finish work
			19.	Design, construction, supervision and consulting of interior decoration
			20.	Provision of information on telephone line use services
			21.	Computer-based information collection, information analysis, and
				information provision
			22.	Delivery of parcels and brokerage of parcels
			23.	Type II Financial Instruments Business
			24.	Purchase, sale, agency and brokerage of trust beneficiary rights
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		25. Any and all businesses incidental or related to the above
		26. Business other than those listed above
Capital	379 million yen
Incorporation	September 26, 2001
Net assets	1,904 million yen
Total assets	18,131 million yen
Relationship between KRR/the Asset Manager and the seller
	Capital relationship	No special capital relationship between KRR/the Asset Manager and the seller.
		Furthermore, no special capital relationship between the related parties/ affiliates
		of KRR/the Asset Manager and the related parties/affiliates of the seller.
	Personnel relationship	No special personnel relationship between KRR/the Asset Manager and the
		seller. Furthermore, no special personnel relationship between the related parties/
		affiliates of KRR/the Asset Manager and the related parties/affiliates of the
		seller.
	Business relationship	The seller executed a Sub-PM agreement with the Asset Manager.
	Related party	The seller is not deemed a related party under either the Investment Trust Law or
	transactions	the "Retail REIT Division's Internal Regulations on Related Party Transactions"
		of the Asset Manager.

1. Property acquirer and previous owner's profile
   Details are omitted since the seller of the property is not a special related party of KRR or the Asset Manager.
2. Brokerage
   Not applicable.
3. Acquisition schedule

Acquisition decision date / contract date	March 24, 2022
Payment date / delivery date	April 15, 2022 (planned)

8. Outlook

There are no changes to the forecasts of fiscal period ending September 30, 2022 (April 1, 2022 to September 30, 2022) as the impact of the acquisition on the financial results is minimal. In addition, there are no changes to the forecasts of fiscal period ending March 31, 2022 (October 1, 2021 to March 31, 2022) as the acquisition will be conducted during the fiscal period ending September 30, 2022.

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