Home > Kenedix Realty Investment > Core Strategies > External Growth
The increased globalization and securitization of real estate markets over the past few years has increased the importance of transparency in determining prices in real estate transactions. Against this backdrop, Kenedix Realty Investment Corporation (KRI) takes concrete steps to recognize distinct trends in the real estate investment market and construct a competitive portfolio through a dynamic and flexible investment stance that accurately reflects the latest market trends and anticipates future movements in the market. KRI invests in real estate and other assets including securities backed by real estate in order to secure stable earnings, sustainable investment asset growth and maximum cash distribution to investors. KRI has developed its diversified investment portfolio "KENEDIX Selection" through an approach based on three investment criteria: property type, location and size. In addition, KRI utilizes the expansive network of the Kenedix Group, a leader in real estate and financial markets, and an extensive proprietary database to enable a timely, constant and accurate flow of information combined with an equally prompt decision-making process to ensure successful real estate investments and minimize lost opportunities.
Competitive Portfolio
In developing the diversity and competitiveness of our "KENEDIX Selection" portfolio, KRI has selected investment properties that ensure an optimal balance between risk and return. This is done by studying each acquisition opportunity through a three-point approach considering the property's type, location and size. Our asset manager, Kenedix REIT Management, Inc., reassesses our portfolio development policy each April and also when economic and real estate market conditions, interest rate trends, population shifts, and other factors make such reassessment necessary.
In December 2006, KRI has decided to further consolidate its properties into mid-sized office buildings with a focus on the Tokyo Metropolitan Area. We also maintain portfolio diversity through a limited number of central urban retail properties in flourishing commercial districts, residential properties in areas with high population growth potential and properties in other regional areas to minimize risk related to changes in economic and real estate market conditions, natural disasters, and uneven population distribution among regions. This decision to focus on office buildings has enabled us to concentrate our information and management resources in this sector of the real estate market and capitalize on the expertise we have cultivated in identifying and managing profitable mid-sized office buildings.
In principle, KRI invests in assets for the medium- to long-term and does not seek to spin properties. Although we consider ourselves to be long-term investors in the properties we own, we do sell properties when their sale is deemed to benefit the overall development of the investment portfolio on a strategic medium- to long-term basis, when a purchaser offers to purchase an investment asset at a price that exceeds the average market price, or when the value of an investment asset and its earnings potential significantly deteriorate due to remarkable changes in economic conditions and recovery is deemed negligible.
Market Analysis and Information Sourcing
KRI actively pursues optimal investment opportunities in tune with real estate market trends to secure investment asset growth. KRI collects and analyzes information relating to real estate purchases and sales, tenant needs, as well as surrounding property developments by leveraging the long-standing expertise of our sponsor company, Kenedix, Inc., in the real estate liquidation market, and the competitive advantage of Kenedix, Inc. as an independent real estate management company to utilize a broad information network. KRI is well placed to accurately identify and take full advantage of opportunities when they arise by combining this timely collection of information with a flexible and prompt decision-making process.
KRI benefits from the diverse experience and specialized knowledge in real estate and finance of the staff at Kenedix REIT Management, Inc. when procuring funds and acquiring and managing investment properties. Executives and staff at Kenedix REIT Management, Inc. are comprised of former executives and employees of Kenedix, Inc. or major financial institutions, and have actively worked together in developing the Japanese real estate investment trust market and opening investment opportunities to a wide variety of investors. Kenedix REIT Management, Inc. is further guided by the vision of Kenedix, Inc., a company specializing in investment management, and accordingly strives to provide investor-oriented management services.
KRI collaborates with Kenedix, Inc. and Kenedix Advisors Co., Ltd. to maintain a property acquisition support line with the aim of ensuring a continuous flow of investment property acquisition opportunities and stable investment portfolio growth. This support line, established originally in May 2005 and revised in August 2010 through the Memorandum of Understanding with Kenedix, Inc. and Kenedix Advisors Co., Ltd. (MOU), utilizes the resources and expertise of all organizations involved through a multi-pipeline information network to share information on acquisition opportunities.
