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Kenedix REIT Management, Inc. (KRM), asset manager of Kenedix Realty Investment Corporation (KRI), executes a proprietary investment strategy based on a three-point investment criteria system incorporating key data on property type, area and size to ensure the optimal portfolio balance between risk and return. KRM reevaluates and amends KRI's portfolio development policy on a periodic basis.

Through in-depth analysis, KRM identified mid-sized office real estate in the Tokyo Metropolitan Area and other core Japanese urban areas as a sector with stable tenant demand, sustainable long-term growth and significant investment liquidity. KRI then adjusted its investment strategy in December 2006 to exclusively target acquisition of mid-sized office buildings but also maintains a limited number of high-profile, retail properties in flourishing districts. As of February 18, 2010, KRI owned a total of 69 properties, primarily consisting of mid-sized office buildings.

(as of February 18, 2010)

Property Type

Office Buildings by Area

Office Buildings by Acquisition Price

Note:

Percentage figures in the above pie charts represent the proportion of each category as a percentage of the total calculated on the basis of property acquisition price. Percentage figures are rounded down to the first decimal place.

In 2006, Kenedix REIT Management has applied in-depth analysis of real estate trends and related demographic studies supported by KRI's information and resource sharing agreement with Kenedix, Inc. and its affiliated companies to adopt a strategy of exclusively investing in the acquisition of mid-sized office properties in core urban areas with a particular focus on the Tokyo Metropolitan Area to reinforce our advantage over competitors in this core area hereafter. We have also selected to maintain for the time being a limited number of our high-profile, retail properties in flourishing districts and residential properties in areas that show significant potential for population growth as these properties make a stable contribution to our bottom line and may represent advantageous selling opportunities in the future. KRI will continue to enhance our mid-sized office portfolio through the acquisition of office properties serving a varied tenant base (companies, diverse institutions and entities). Focusing on mid-sized office properties in general has enabled us to more effectively utilize our expertise and resources in this core area.

KRI and Kenedix REIT Management have decided to focus on these areas for three significant reasons among others: 1) the diversified tenant base, 2) the ability to take advantage of the Kenedix Group's track record and expertise in this area, and 3) the fact that more than 90% of offices in Tokyo hold one to 29 people, a size only mid-sized office buildings can serve.

Potential Tenant Size for Mid-sized Office Buildings

Office Size by Number of Employees (Tokyo)

Source:

Prepared by Kenedix REIT Management, Inc. based on the Tokyo Office statistics report as of 2006 compiled by the Tokyo Metropolitan Government, Bureau of General Affairs, Statistics Division

Size of Mid-sized Office Buildings

Office Buildings by Total Area

Source:	The "Macro Market Survey of Tokyo's Central 5 Wards" as of the end of March 2007 conducted by K.K. Ikoma Data Service System based on Kenedix Realty Investment Corporation requests
Note:	The above data includes leased office buildings in Tokyo's central five wards that K.K. Ikoma Data Service System collected for its survey and does not necessarily include all such properties in Tokyo's central five wards.