Kenedix Office Investment : Notice Concerning Acquisition of Properties (River City 21 East Towers II and 2 Other Properties) and Disposition of Properties (Harajuku F.F. Building and 1 Other Property)

June 13, 2023

To All Concerned Parties

REIT Issuer:

Kenedix Office Investment Corporation

Hiroaki Momoi, Executive Director

(Securities Code: 8972)

REIT Issuer:

Kenedix Residential Next Investment Corporation

Tetsu Kawashima, Executive Director

(Securities Code: 3278)

REIT Issuer:

Kenedix Retail REIT Corporation

Moyuru Watanabe, Executive Director

(Securities Code: 3453)

Asset Management Company:

Kenedix Real Estate Fund Management, Inc.

Hikaru Teramoto, President & CEO

Inquiries:

Tomoya Shigaki

Head of Strategic Planning, Office REIT Department,

TEL: +81 3-5157-6010

Michiru Nagamata

Head of Strategic Planning, Residential REIT Department

TEL: +81 3-5157-6011

Isaharu Kikushima

Head of Strategic Planning, Retail REIT Department

TEL: +81 3-5157-6013

"Notice Concerning Acquisition of Properties (River City 21 East Towers II and 2 Other Properties) and

Disposition of Properties (Harajuku F.F. Building and 1 Other Property)"

This exchange offer or business combination is made for the securities of a Japanese company. The offer is subject to disclosure requirements of Japan that are different from those of the United States. Financial statements included in the document, if any, have been prepared in accordance with Japanese accounting standards that may not be comparable to the financial statements of United States companies.

It may be difficult for you to enforce your rights and any claim you may have arising under U.S. federal securities laws, since the issuer is located in Japan, and some or all of its officers and directors may be residents of Japan. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court's judgment.

You should be aware that the issuer may purchase securities otherwise than under the exchange offer, such as in open market or privately negotiated purchases.

Kenedix Office Investment Corporation, Kenedix Residential Next Investment Corporation and Kenedix Retail REIT Corporation (respectively, referred to as "KDO", "KDR" and "KRR", and collectively referred to as "Each REIT". Depending on the context, KDO after the Merger (defined below) may hereinafter be referred to as the "Investment Corporation".) announced today that Kenedix Real Estate Fund Management, Inc. (the "Asset Management Company"), the asset management company for Each REIT has decided to acquire and dispose of the following properties (respectively the "Acquisition" and the "Disposition", and collectively the "Transactions").

As described in the press release, "Notice Concerning Execution of the Merger Agreement by and among Kenedix Office Investment Corporation, Kenedix Residential Next Investment Corporation, and Kenedix Retail REIT

This document has been translated from the Japanese-language original for reference purposes only. While this English translation is believed to be generally accurate, it is subject to, and qualified by, in its entirety, the Japanese-language original. Such Japanese-language original shall be the controlling document for all purposes.

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Corporation" dated June 13, 2023, KDO, KDR and KRR resolved to carry out an absorption-type merger (hereinafter the "Merger") in which KDO is the surviving REIT and KDR and KRR are dissolving REITs in the meetings of their respective Boards of Directors Meeting held on June 13, 2023, and concluded a merger agreement (hereinafter the "Merger Agreement") that will be effective on November 1, 2023. The Transactions are subject to the effectiveness of the Merger.

1．Outline of the Transactions

(1) Outline of the Acquisition

1. Seller:Please refer to "4. Overview of Seller and Buyer" for details.
2. Acquisition funds: Borrowings(Note 3) and cash on hand
3. Settlement method: Payment in full at settlement

Note 1: "Anticipated acquisition price" indicates the purchase price designated in each sale and purchase agreement regarding each property to be acquired (excluding the acquisition costs, adjustment amount of property tax and city planning tax, consumption tax, and local consumption tax, etc.), rounded down to the nearest million yen. The same shall apply hereafter.

Note 2: "Appraisal NOI yield" is calculated by dividing the appraisal NOI of each property to be acquired as on the appraisal report as of May 1, 2023 by the anticipated acquisition price for each property to be acquired 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.

Note 3: Matters concerning new borrowings shall be announced upon determination.

(2) Outline of the Disposition

1. Settlement method: Payment in full on settlement
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Note 1:KDX Nagoya Sakae Building is owned as real estate as of today. However, KDO has agreed with the buyer that the KDO will entrust KDX Nagoya Sakae Building by the scheduled date of disposition and dispose the trust beneficiary interest. The same shall apply hereafter.

Note 2:The buyer may transfer the status and rights under the purchase agreement for the asset to be disposed of to a special purpose company formed by the buyer or an affiliate of the buyer that meets certain requirements such as financial resources to pay for the sale and purchase under the purchase agreement. Therefore, the ultimate acquirer may change from Kenedix, Inc. to a special purpose company formed by Kenedix, Inc. or an affiliate of Kenedix, Inc. The same shall apply hereafter.

2．Reasons for the Transactions

The Transactions are in line with the growth strategy described in the press release "Notice Concerning Execution of the Merger Agreement by and among Kenedix Office Investment Corporation, Kenedix Residential Next Investment Corporation and Kenedix Retail REIT Corporation" dated June 13, 2023. Each REIT believes that the Transactions will improve the quality of its portfolio and enhance unitholder value.

Regarding the Acquisition, along with the expansion of the investment universe, the Investment Corporation will acquire a hotel that is expected to continuously increase demand driven by government's promotion of tourism, and the land of logistics facility where demand is backed by continued growth of e-commerce. Moreover, in terms of active management, the Investment Corporation will acquire a residential property which we are expecting improvement in profitability through renovation, and a shopping center for daily needs(Note) which we expect stable cashflow. The above residential property is a high-rise condominium located in central Tokyo, and renovation to upgrade rooms is underway. The average contract unit rent for upgraded rooms has increased by 27%.

On the other hand, the Investment Corporation is disposing of two properties, including a single tenant office building that is 37 years old with a risk of decline in profitability, and an office building that has unrealized loss with low profitability. Furthermore, the anticipated disposal prices of the properties to be disposed of surpass each of the book value.

Note: In preparation for the Merger, the Asset Management Company has decided to acquire York Mart Higashi-Michinobe which will be acquired by KRR. Please refer to the press release, "Notice Concerning Acquisition of Property (York Mart Higashi-Michinobe)", dated today.

Furthermore, the following characteristics were evaluated in determining the Acquisition.

(1) River City 21 East Towers II

Residential property located in the center of Tokyo with high scarcity value and expected to gain the upside profit by increasing rents through sequential renovation of the property

(ⅰ) Location

This property has excellence in accessibility, since it is located approximately an 8-minute walk from "Tsukishima" station on the Tokyo Metro Yurakucho Line / Toei Subway Oedo Line, and the nearest station takes only 16 minutes from "Tokyo" station. It is located in an area where we can embrace the nature close from home, such as "Ishikawajima-park" which is famous for the cherry blossom road groomed alongside Sumida River where we can see the Tokyo-Skytree. Within walking distance of the property, convenience facilities are enriched, including supermarket Maruetsu and convenience stores, and post office. Therefore, this property has relatively superior site quality.

1. Building
   This property is a small family type skyscraper residence, composed of 642 units and the layout is mainly 1LDK and 2LDK. For the common area, there are lounge, which is opened 24hours, café, Japanese style room and play area on the first floor. Moreover, there is a theater room on the 27th floor and a party room on the 42nd floor, hence facilities for family is replete. There is a multi-story parking garage in the center of the building and a flat parking garage in the basement, which together provide 306 parking spaces, as well as 15 motorcycle parking spaces. The Investment Corporation (This refers to the investment corporation which is the contract entity. The same shall apply hereafter in the following sections: "2．Reasons for the Transactions", "4．Overview of Seller and Buyer", "5. Overview of Acquirer" and "8．Scheduled Date of the Transaction".) believes the property is a residential property that can expect stable rental demand from married couples and families commuting to the center of the city, as it has a favorable living environment given the proximity to the center of the city, abundant nature, and convenience of living.

1. remm roppongi building

Hotel located in the Roppongi area, a popular tourist spot for foreigners as well as being one of the central business districts; expected to attract tourism demand and stable demand for business use

(ⅰ) Location

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This property is located approximately a 1-minute walk from "Roppongi" station on Tokyo Metro Hibiya Line / Toei Subway Oedo Line. Within walking distance, large scaled commercial complex such as "Roppongi Hills" and "Tokyo Midtown" with luxury brand shops as tenants are located, and cultural facilities such as "The National Art Center Tokyo" are also scattered throughout the area. As such, the area surrounding the property is a popular location for tourists. Moreover, it is considered as an office concentrated area, since there is "Roppongi Hills Mori Tower" and there are numerous head quarter functions of leading domestic companies and Japanese offices of foreign companies.

1. Building
   This property is a relatively new hotel completed in February 2017, with a modern and luxury interior and exterior. The hotel, operated as "remm roppongi" by Hankyu-Hanshin Hotels Co., Ltd., has a concept of "good sleep" and offers several room types of 250 semi-doubled rooms, 70 tower viewable semi-doubled rooms and 80 twin rooms, making it a total of 400 rooms, including some rooms that can observe the Tokyo Tower. Moreover, this property has various safety features, such as the ladies floor and introduction of the automatic check-in system. In the retail sections of the basement floor, first floor and the third floor, restaurants, IT equipment sales and service stores are located. The Investment Corporation considers that since the property is located in a tourist spot popular among foreigners, it can capture tourism demand, and since it is also one of the central business districts, the property is an accommodation facility that can expect stable demand for business use as well.

1. Akishima Distribution Center (Land)

The land of a logistics facility located in an area with potential as the start and the end points for logistics of consumer and production goods, with its convenient access to traffic

(ⅰ) Location

This property is located in Akishima city in the central Tama area and is the underlying land of a logistics facility operating since October 2012 and serving as a food processing center. With a population of approximately 114,000 (2023) and a manufactured goods shipment value of approximately 415 billion yen (2020), Akishima is a district that, combined with its surrounding population clusters, has the potential to serve as an origin and destination for the flow of consumer goods and manufactured goods. This area has the potential for wide area, semi-wide area and local deliveries due to the convenient use of the Hachioji Interchange of the Central Expressway and National Route 16. The property is also within walking distance of "Akishima" Station on the JR Ome Line, and the location is in an area where it is easy to secure workers from a wide area despite concerns about labor shortages.

The reasons of the Disposition are as follows.

(1) Harajuku F.F. Building

This property is a mid-sized office building which is located approximately 1-minute walk from "Kitasandou" station on Tokyo Metro Fukutoshin Line, 10-minute walk from "Harajuku" Station and "Yoyogi" Station on JR Yamanote Line. 37 years have been passed since the construction of this property, and the office space is leased to one tenant, besides certain retail areas. In the future, if the office tenant decides to move out, lease up may take long time due to the fact that the rented space is not regular and it is difficult to lease by portion. Vacant period may be prolonged or the successor tenant may be limited.

On the premise of this merger coming into effect, the buyer intends to acquire the property at the price above the book value, and profits on sale of real estate is expected. Thus, Investment Corporation decided to dispose of this property considering several risks, including potential decline in profitability of the property in the future.

(2) KDX Nagoya Sakae Building

This property is a mid-sized office building located approximately a 3-minute walk from "Sakae" station on Nagoya Municipal Subway Higashiyama Line and Meijo Line. The land and building of this property was acquired in 2008 and in 2009, respectively. Since the acquisition, the book value has continued to exceed the appraisal value. Currently, the development of large-scale office buildings in the JR Nagoya Station area has made significant progress, and the central area of the office area in Nagoya city has changed. In light of this, the rent level has not reached the initially expected level and the occupancy rate by a specific company group in this building is high, and unrealized loss may increase when the risk of vacating by the tenant becomes apparent. On the assumption that the Merger will take effect, the buyer indicated its intention to acquire the property at a price that exceeds the book value. Thus, the Investment Corporation decided to dispose of this property, since it can improve the unrealized gains of the portfolio without posting a loss on the sale of the property.

3．Outline of the Properties regarding the Transactions

The table below shows the overview of each properties to be acquired and properties to be disposed of (the "Individual Asset Table"). In addition, the terms used in the Individual Asset Table are as follows. Please refer

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to the Individual Asset Table together with the explanation on the terms listed below. In principle, unless otherwise specified, the status as of April 30, 2023 is indicated.

• "Location" is the indication of the residential address. In case there is no indication of the residential address, it is the building address under the lot address or the building location indicated in the certificate of registered matters (if there are multiple buildings, the location of one of the buildings). If the building has not been completed as of today, the lot number of the land is indicated (if there is more than one lot, the lot number of one of them). The same shall apply hereafter.
• "Building coverage ratio" and "Floor area ratio" are the designated building-to-land ratio and designated floor- area ratio provided in the city plan. The same shall apply hereafter.
• "Type" is the classification of the principal residential unit in the residential facility of the properties to be

acquired, among the studio type, the small family type or family type as described below. The same shall apply hereafter.

• "Earthquake PML" indicates the figure described in the earthquake PML valuation report (level 2) prepared by Sompo Risk Management Inc. in May 2023. The same shall apply hereafter.
• "Total number of end tenants" indicates the total the number of end tenants. In the case that there will be a master lease agreement entered into with a master lease company after the acquisition of the property by the Investment Corporation, "Total number of tenants" is indicated as "1". The same shall apply hereafter.
• "Monthly rent and common area charge (excluding consumption tax, etc.)" is, in the case that the master lease type is "pass-through", the sum of the monthly rent according to the lease agreements actually executed with the end tenants (the sum of rent and common area charges, provided, however, that in case the adjunct facilities fee such as car parking space usage fees are included in the rent under the lease agreements, it includes such fees) and in the case that the master lease type is "rent guarantee", the monthly rent according to the master lease agreements with rent guarantee executed with the master lease company (the sum of rent and common area charges, provided, however, that in case the adjunct facilities fee such as car parking space usage fees are included in rent under the lease agreements, it includes such fees). Furthermore, the figures are rounded down to the nearest thousand yen. If the building has not been completed as of today, it is described with "-". The same shall apply hereafter.
• "Security and guarantee deposit" is, in the case that the master lease type is "pass-through", the sum of the security and guarantee deposits, etc. of each end tenant based on the lease agreement executed with each end tenant (the sum of security and guarantee deposit, provided, however, that in case the adjunct facilities fee such as car parking space usage fees are included in the security and guarantee deposits under the lease agreements, it includes such fees). However, in case there is any portion that is not required to be returned due to special provision of deduction of security deposits, amortization of security deposits, etc. in each lease agreement, it is the amount after such amount is deducted. In the case that the master lease type is "rent guarantee", it is the balance of the security and guarantee deposit, etc. based on the lease agreement with rent guarantee executed with the master lease company. However, in cases where agreements of different master lease types have been executed, it is the sum of "pass-through" security and guarantee deposits, etc. and "rent guarantee" security and guarantee deposits, etc., with the figures rounded down to the nearest thousand yen. If the building has not been completed as of today, it is described with "-". The same shall apply hereafter.
• "Total leased units" is the number of leased residential units, where the lease agreements are actually executed with end tenants. If the building has not been completed as of today, it is described with "-". The same shall apply hereafter.
• "Total leased area" is the leased floor area described in the lease agreements which are actually executed with end tenants. If the building has not been completed as of today, it is described with "-". The same shall apply hereafter.
• "Total leasable area" is the floor area described in the lease agreements that is leasable at the property (in case the property contains more than one building, the sum of the leasable floor area of such buildings). If the floor is not in operation, the leased floor area under the lease agreement at the most recent time when the floor was leased, or the floor area calculated based on the building completion diagram is indicated. The same shall apply hereafter.
• "Occupancy ratio" is the ratio of the "Total leased areas" (based on the lease agreements) to the "Total leasable area" of the property rounded to the first decimal place.
• "Property management company after the acquisition" is the property management company scheduled to execute the property management agreement for the to-be acquired asset. The same shall apply hereafter.
• "Master lease company after the acquisition" is the master lease company scheduled to execute the master lease agreement for the property. The same shall apply hereafter.
• "Type of master lease" is described as follows; "Pass through" for those with a master lease agreement without

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