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Kenedix REIT Management, Inc. (KRM), the asset manager, has always had a strong mandate to ensure proper corporate governance for both Kenedix Realty Investment Corporation (KRI) and itself. With the many recent regulatory changes affecting the J-REIT market including the Financial Instruments and Exchange Law (FIEL) being added to the Investment Trusts and Investment Corporation Law, it is imperative that KRM maintains a system that ensures strict compliance with these laws and an effective and prompt decision-making process to identify any potential risk of non-compliance in the future.

KRM has appointed a dedicated Compliance Officer on staff to carry out this monitoring process to ensure that proper compliance is carried out through all aspects of the business. The Compliance Committee functions as the governing and decision-making body concerning all compliance-related issues including interested party transactions, conflicts of interest, and approval of investments in accordance with the management policy. The Committee also conducts a periodic review of the overall compliance program.

Compliance Officer

The Compliance Officer (CO) supervises and drafts the compliance program and the compliance manual. The CO is also charged with creating, changing and verifying observance of various internal rules and regulations, including general business laws and regulations. The CO also supervises the handling of claims, important information related to KRI, matters concerning insider transactions, internal audits, risk management, and risk associated with legal compliance and everyday business, etc.

Asset Management Committee

The asset management committee consists of the president of the Asset Manager (acting as chairman of the committee), the general manager of the investment management division, the general manager of the property management division, the general manager of the financial planning division and the compliance officer. The asset management committee discusses and passes resolutions relating to investment policies, acquisition and sale of investment assets, investment budgets and results of operations, financing, management of assets and liabilities management, disclosure, risk management and any other related matters.

A meeting is held with a quorum of two-thirds of the committee members and mandatory attendance of the president and the compliance officer. Resolutions require the consent of two-thirds or more of the attendees, including the president. The compliance officer may send a proposal back to the division from which it originated, even while an asset management committee meeting is in session, when the compliance officer finds any material compliance issue in the proposal.

Compliance Committee

The compliance committee consists of the president of the Asset Manager, the compliance officer (acting as chairman of the committee), full-time directors, and outside members (currently one outside legal counsel). The compliance committee discusses and passes resolutions relating to transactions involving related parties, property acquisition and disposition transactions not involving related parties but that meet certain conditions prescribed in the compliance committee rules, or alternatively, fail to meet such conditions, investment policies in connection with our asset management business, transactions exceeding the thresholds allotted in annual plans, internal compliance and compliance procedures, establishment, revision and abolishment of internal rules, acquisition of investment units by any of our directors and officers as defined in our prevention of insider trading rules, compliance with any rules the compliance officer sets, and any other related matters.

A meeting is held with a quorum of two-thirds of the committee members and mandatory attendance of the compliance officer and the outside member. A resolution must be passed unanimously (with exceptions in limited circumstances where a matter may be submitted to the board of directors by the compliance officer), or the compliance officer sends the matter being considered back to the division from which it originated.

Board of Directors (KRM)

KRM's Board of Directors is a fully-functioning, decision-making body managing the execution of business for KRI. KRM's Board of Directors meetings are held at least once every three months and the agenda includes: 1) Transactions with interested parties related to the management of KRI's assets, 2) Transactions which don't conform to the rules concerning transaction and management guidelines, 3) Management policy related to asset management (determination of and changes to Management Guidelines, the Asset Administration Plan, medium-term and fiscal year business plans, etc.), and 4) Transactions which exceed the ceiling for acquisition funds as set in the fiscal year business plan. In addition, the Board determines the basic compliance policy concerning legal and other matters and discusses and approves periodic amendments to this policy.

Supervision of Asset Manager

Management guidelines are created to determine standards by which KRM follows the commitment agreements concluded between KRI and KRM for management of assets, and duties are appointed in accordance with KRM's internal rules and regulations as well as the provisions of the Investment Trusts and Investment Corporation Law, other related laws, regulations, agreements and management guidelines. In addition, KRM seeks the approval of KRI's Board of Directors for KRM's asset management plan and manages KRI's investment risk including reporting requirements.

Insider Transactions

KRM established management rules regarding insider transactions and maintains efforts to prevent conflicts of interest as a result of insider transactions by directors and other personnel. In cases where KRI's executive director or KRM personnel conduct trading of investment units, these transactions are conducted in strict accordance with the management rules concerning insider transactions and with any regulatory laws concerning such transactions.

Asset Manager

KRM works to fully execute compliance with laws and accurately identify the existence and extent of risks related to management of KRI's assets.

As a KRI's asset manager, KRM draws up management guidelines and determines the basic line of thinking regarding the investment policy, rules concerning transactions with related parties, distribution allocation policy, disclosure policy, etc. KRM strives to manage related asset management risks in compliance with the management guidelines.

With regard to determining important matters concerning transactions with related parties, etc., KRM requires that a strict procedure be observed based on the findings of the CO and the reviews and resolutions of the Compliance Committee as well as the resolutions of KRM. KRM is able to sufficiently ascertain the existence and extent of risk through these multiple meeting bodies.

Decision-making Flow Chart

Please contact our transfer agent at the following location for inquiries regarding the unitholder register and the handling of other related matters:

The Transfer Agent Division of Sumitomo Mitsui Trust Bank, Limited
Address	2-8-4 Izumi, Suginami-ku, Tokyo 168-0063 Japan
Telephone	0120-782-031 (Japanese only)
Business Hours	9:00 to 17:00 Japan Standard Time (Closed on weekends and national holidays)

Note:

KRI may amend its declarations regarding the protection of personal information for various reasons including revisions to related laws and ordinances.