Kenedix Retail REIT : FINANCIAL REPORT FOR THE FISCAL PERIOD ENDED MARCH 31, 2021 (REIT) (October 1, 2020 to March 31, 2021)

Kenedix Retail REIT Corporation (3453)

Translation of Japanese Original

FINANCIAL REPORT FOR THE FISCAL PERIOD ENDED MARCH 31, 2021 (REIT) (October 1, 2020 to March 31, 2021)

May 18, 2021

Kenedix Retail REIT Corporation ("KRR") is listed on the Tokyo Stock Exchange with the securities code number 3453. (URL https://www.krr-reit.com/en/)

Representative:	Moyuru Watanabe, Executive Director
Asset Management Company: Kenedix Real Estate Fund Management, Inc.
Representative:	Masahiko Tajima, President & CEO
Inquiries:	Koichiro Nobata, Head of Planning Division, Retail REIT Department
	TEL [phone]
Planned submission of semiannual securities report:	June 24, 2021
Planned start of distribution payments:	June 17, 2021
Preparing presentation material:		Yes
Hold a financial brief meeting:		No (Cancelled to prevent the spread of COVID-19 infection.
		Presentation video of financial results is scheduled to be webcasted.)

1．PERFORMANCE FOR THE FISCAL PERIOD ENDED MARCH 31, 2021 (October 1, 2020 to March 31, 2021)

(1) Business Results															(Amounts are rounded down to the nearest million yen)
																		(Percentages show period-on-period changes)
			Operating revenues			Operating income					Ordinary income			Net income
Fiscal period ended		Millions of yen		%		Millions of yen		%		Millions of yen		%	Millions of yen	%
March 31, 2021			8,717		3.8			4.379		7.3			3,799		8.4		3,798	8.4
September 30, 2020			8,398		1.3			4,082		-0.5			3,505		0.2		3,504	0.2
			Net income per unit			Return on net assets					Ordinary income to total assets	Ordinary income to operating
									revenues
Fiscal period ended					Yen					%						%				%
March 31, 2021			7,084					3.1						1.5				43.6
September 30, 2020			6,536					2.8						1.4				41.7
Note:	Net income per unit is calculated by dividing the net income by the weighted average number of units.
(2) Distribution
									Total
		Distributions per	Distributions per																Distribution ratio
		Distributions in	distributions			Total distributions		Total distributions		Payout ratio
		unit (including	unit (excluding
		excess of earnings	(including			(excluding excess		in excess of			to net assets
		excess of	excess of
		per unit		excess of					of earnings)		earnings
		earnings)	earnings)
					earnings)
Fiscal period ended		Yen		Yen			Yen	Millions of Yen		Millions of Yen		Millions of Yen		%			%
March 31, 2021					10	3,804			3,798				5		100.0			3.1
7,095	7,085
September 30, 2020					276	3,509			3,361				147		95.9			2.7
6,546	6,270

Note 1: Total distributions in excess of earnings account for the distributions in regard to the allowance for temporary adjustment. There is no distribution by decreasing unitholders' capital on taxation. Please refer to "iv) Results of Operations" on page 3 for the distribution in excess of earnings.

Note 2: The payout ratio is 100.1% for the fiscal period ended September 30, 2020 and 100.1% for the fiscal period ended March 31, 2021 when calculated as follows. Payout ratio = Total distributions (including excess of earnings) / Net income x 100

(3) Financial Position

	Total assets	Net assets	Net assets to total assets	Net asset per unit
As of	Millions of yen	Millions of yen	%	Yen
March 31, 2021	251,773	124,701		49.5	232,575
September 30, 2020		124,308			231,842
251,655		49.4

(4) Cash Flows

	Cash flows from	Cash flows from	Cash flows from	Cash and cash equivalents
	operating activities	investing activities	financing activities	at the end of the period
Fiscal period ended	Millions of yen	Millions of yen	Millions of yen	Millions of yen
March 31, 2021	7,047	-3,111		-3,510	22,230
September 30, 2020		-2,509			21,804
7,113		-1,608

This is an English-language translation of the original Japanese announcement on our website released on May 18, 2021. However, no assurance or warranties are given with respect to the accuracy or completeness of this English-language translation. The Japanese original shall prevail in the case of discrepancies between this translation and the Japanese original.

Kenedix Retail REIT Corporation (3453)

2．EARNINGS FORECASTS FOR THE FISCAL PERIODS ENDING SEPTEMBER 30, 2021 (April 1, 2021 to September 30, 2021) AND MARCH 31, 2022 (October 1, 2021 to March 31, 2022)

(Percentages show period-on-period changes)

												Distributions	Distributions	Distributions
	Operating		Operating							per unit	per unit
			Ordinary income	Net income		in excess of
	revenues		income			(excluding	(including
			(Millions of yen)	(Millions of yen)	earnings per
	(Millions of yen)	(Millions of yen)	excess of	excess of
						unit
												earnings)	earnings)
Fiscal period ending			%			%		%			%	Yen	Yen	Yen
September 30, 2021	9,459		8.9	4,790		9.4	4,158	9.5	4,157		9.5	7,141	9	7,150
March 31, 2022	9,129		-3.9	4,705		-1.8	4,071	-2.1	4,070		-2.1	6,991	9	7,000

Reference:	Forecasted net income per unit (Forecasted net income / Forecasted average number of investment units during the period)
	7,205 yen for the fiscal period ending September 30, 2021 and 6,991 yen for the fiscal period ending March 31, 2022
Note:	Distributions per unit are calculated based on the number of investment units issued and outstanding totaled 582,177 as of the date of this material.

*OTHERS

1. Changes in Accounting Policies/Changes in Accounting Estimate/Retrospective Restatement
2. 1. Changes in accounting policies accompanying revisions to accounting standards: None
   2. Changes in accounting policies other than (a): None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
3. Number of Investment Units Issued and Outstanding (including treasury investment units)

1. Number of investment units issued and outstanding at the end of the period (including treasury investment units) As of March 31, 2021: 536,177 units
   As of September 30, 2020: 536,177 units
2. Number of treasury investment units at the end of the period

As of September 30, 2020: 0 units

As of March 31, 2020: 0 units

Note: Please refer to "Notes to Per Unit Information" on page 27 for the number of investment units used as the basis for calculating net income per unit.

* Status of audit procedures

As of the time of disclosure of this financial report, audit procedures for the financial statements pursuant to the Financial Instruments and Exchange Act of Japan are incomplete.

* Remarks on appropriate use of forecasts of performance and other special notes

Forward-looking statements presented in this financial report, including forecasts of performance, are based on information currently available to KRR and on certain assumptions KRR deems to be reasonable. As such, actual operating and other results may differ materially from these forecasts as a consequence of numerous factors. The following are important factors that may affect the actual operation status. The above-mentioned forecasts are based on "Assumptions for the Earnings Forecasts of Financial Results for the Fiscal Periods Ending September 30, 2021 and March 31, 2022" on page 8 for calculation, and our judgment as of May 18, 2021. Actual operating revenues, operating income, ordinary income, net income, distributions per unit and distributions in excess of earnings per unit may vary according to changes in market conditions. These forecasts do not guarantee the distribution amount.

Decrease in rent revenues due to the further spread of COVID-19 and prolonged impact, and non-payment of rent or bankruptcy of tenants.

This is an English-language translation of the original Japanese announcement on our website released on May 18, 2021. However, no assurance or warranties are given with respect to the accuracy or completeness of this English-language translation. The Japanese original shall prevail in the case of discrepancies between this translation and the Japanese original.

Kenedix Retail REIT Corporation (3453)

Contents of Attachments

1. Status of Asset Management …………………………………………………….……………………………………………………. 2
2. 1. Status of Asset Management …………………………………………………………………………………………………… 2
   2. Investment Risks …………………………………………………………………………………………………………………10
3. Financial Statements
4. 1. Balance Sheets ...…………………………………………………………………………………………………………………11
   2. Statements of Income and Retained Earnings ……………………………………………………………………………………. 13
   3. Statements of Changes in Net Assets …………………………………………………………………………………………… 14
   4. Statements of Cash Distributions …………………………………………………………………………………………………16
   5. Statements of Cash Flows ……………………………………………………………………………………………………… 17
   6. Notes on Assumption of Going Concern ………………………………………………………………………………………… 18
   7. Summary of Significant Accounting Policies …………………………………………………………………………………… 18
   8. Notes to Financial Statements …………………………………………………………………………………………………… 19
   9. Changes in Investment Units Issued and Outstanding ……………………………………………………………………………. 28
5. Reference Information …………………………………………………………………………………………………………29
6. 1. Information on Price of the Managed Assets ……………………………………………………………………………………. 29
   2. Capital Expenditures on the Managed Assets…………………………………………………………………………………… 51
   3. Information Concerning Major Tenants ………………………………………………………………………………………… 52 (Reference) Earnings Performance of the Properties ………………………………………………………………………………… 54 (Reference) Borrowings …………………………………………………………………………………………………………… 60

Kenedix Retail REIT Corporation (3453)

1. Status of Asset Management

1. Status of Asset Management

(Overview of the Period ended March 31, 2020) i) Transition of KRR

KRR was established on October 3, 2014, under the Act on Investment Trusts and Investment Corporations of Japan (the "Investment Trust Act"). On October 30, 2014, KRR was registered with the Director-General of the Kanto Local Finance Bureau (registration number: Director-General of the Kanto Local Finance Bureau No. 97). KRR was listed on the Real Estate Investment Trust Securities ("J-REIT") Market of Tokyo Stock Exchange, Inc. (the "Tokyo Stock Exchange") (Securities code: 3453) on February 10, 2015. Subsequently, KRR raised funds through public offerings, including an international offering. As a result, the number of investment units issued at the end of the period ended March 31, 2021 was 536,177 units.

KRR seeks to invest primarily in neighborhood, community and other shopping centers that cater to the day-to-day needs of local area customers and have stable demand from retailers and customers, and also seeks to invest in distribution centers, which supplement shopping centers in providing goods to consumers, in order to provide stable investment returns over the long term. Sponsored by Kenedix, Inc., KRR entrusts its asset management and investment operations to Kenedix Real Estate Fund Management, Inc. ("KFM"), with the following strategies.

Note: For our management purposes and ease of classification, we define shopping centers for daily needs as retail properties that generally have the following characteristics: a. Retail trade area of approximately a one to ten km radius (and generally, a three to five km radius), with customers predominantly from local areas surrounding the

retail property

b. Operational capacity to accommodate certain daily local retail needs and strong customer traffic on both weekdays and weekends

c. Composed of various specialty stores to meet a range of day-to-day needs such as groceries, clothing and other daily goods and services

ii) Investment Environment

During the fiscal year ended March 31, 2021, the Japanese economy remained in a severe situation, with weakening employment and income environments and a slowdown in the recovery of consumer spending due to the spread of COVID-19. On the other hand, there were signs of recovery, such as increases in exports and production, as well as gradual improvement in corporate earnings and business confidence, which had deteriorated significantly.

Shopping centers for daily needs, in which KRR focuses its investment, sales of service-oriented tenants including restaurants and some apparel stores have been declining amid the COVID-19 pandemic, but specialty stores such as supermarkets, drug stores and home & garden stores that cater to the day-to-day needs of customers are expected to maintain steady demand.

In the real estate trading market, some investors initially took a cautious stance toward real estate investment due to the spread of the COVID-19. However, investors' willingness to invest in real estate has been recovering against the backdrop of monetary easing policies in Japan and overseas, and active transactions are taking place.

1. Management Performance

1. Acquisition of Assets

KRR acquired three assets (Chiba-Kita Distribution Center with acquisition price (Note 1) of 1,250 million yen, Sapporo Shiroishi Distribution Center with acquisition price of 800 million yen and Monenosato Mall (2 New Buildings) with acquisition price of 343 million yen). KRR disposed of one asset (Daikanyama Address Dixsept (40% trust beneficiary quasi co-ownership interests) with sale price (Note 2) of 2,657 million yen (acquisition price was 2,156 million yen)). KRR also completed additional acquisition through construction of a new building (property expansion) (total construction cost (Note 3) 9 million yen) at Yokohama Kamigo Distribution Center.

As a result, the portfolio at the end of the period under review (March 31, 2021) consists 64 properties with the total acquisition price of 226,725 million yen.

Note 1: "Acquisition price" represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of the various expenses (acquisition expenses, property tax, city planning tax, consumption tax, etc.) required in the acquisition of the asset.

Note 2: "Sale price" represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of the various expenses (sale expenses, property tax, etc.) required in the sale of the asset.

Note 3: "Total construction cost" is the sum of construction and design costs (consumption tax is not included), rounded down to the nearest million yen.

(B) Management and Operation of Assets

KFM provides property management services for all of the properties owned by KRR at the end of the period under review (March 31, 2021) (Note 1). By using the same company for both asset management and property management services, KRR aims to build stronger relationships with tenants and increase returns from its portfolio. Furthermore, by implementing retail property and distribution centers management that better reflects the needs of our tenants, KRR strives to accumulate know-how and improve tenant satisfaction.

KRR invests primarily in neighborhood and community shopping centers that cater to the day-to-day needs of customers. The portfolio is

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iv) Results of Operations

For this period, revenue was 8,717 million yen, operating income was 4,379 million yen, ordinary income was 3,799 million yen and net income was 3,798 million yen.

Furthermore, in accordance with the distribution policy in the KRR Articles of Incorporation, KRR made a distribution (excluding excess of earnings) of 3,798,814,045 yen which is almost equivalent to the earnings (as defined in Article 136-1of Act of Investment Trust and Investment Corporation) excluding the reversals of allowance for temporary adjustment (as defined in Article 2-2-30of the Ordinance on Accountings of Investment Corporations) for the fiscal period. The distribution per unit (excluding excess of earnings) was 7,085 yen. Cash distributions are paid in accordance with Article 67-15of the Special Taxation Measures Law (Law No. 26 of 1957, including subsequent amendments).

Furthermore, in accordance with the policy for "Distribution of Money in Excess of Profits" as stated in the KRR Articles of Incorporation, KRR made a distribution in excess of earnings for the 5,361,770 yen allowance for temporary adjustment (as defined in Article 2-2-30of

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Details of the ratings

Long-termissuer ratingA+ (Outlook: Positive)

Rating on bondsA+

Kenedix Retail REIT Corporation (3453)

diversified in terms of properties, tenants and other characteristics with a goal to generate consistent long-term cash flows. At the same time, KRR seeks to explore the upside potential (Note 2) for rental income by optimization of tenant composition and property expansion. By using these measures, KRR aims to pursue a portfolio that achieves both stability and growth.

As of the end of the period under review, portfolio as a whole performed well with an overall occupancy ratio of 99.8%. Furthermore, the portfolio is diversified in terms of tenants as there are 502 end-tenants (Note 3) in KRR's retail properties and distribution centers.

Note 1: On December 1, 2020, KRR disposed a quasi-co-ownership interest (40% equity interest) in the trust beneficiary interest of Daikanyama Address Dixsept, and accordingly, the PM businesses of the property have been entrusted to persons other than the Asset Manager.

Note 2: "Upside potential" represents feasibility of rental income or cash flow growth.

Note 3: The number of end-tenants is the sum of the number of end-tenants in a pass-through type master lease and the number of master lessees in a sublease type master lease.

(C) Financing

When financing to acquire properties, KRR seeks to achieve the proper balance between financial stability and the cost of the funds with the objectives to achieve stable medium- to long-term returns and consistent growth of assets under management.

(Debt Finance)

During the fiscal period under review, KRR borrowed 15,950 million yen for refinancing. Consequently, borrowings totaled 104,800 million yen and interest-bearing debt including investment corporation bonds (excluding interest-bearing tenant leasehold and security deposits) totaled 112,800 million yen at the end of the fiscal period under review (March 31, 2021).

When undertaking borrowings, KRR seeks to spread out repayment dates and lengthen borrowing periods. KRR may use swaps to fix the interest payments to hedge against the risk of a rise in interest rates.

As a result, the average maturity of debt is 4.4 years, the weighted average interest rate is 1.00%, the long-term debt ratio (Note 1) is 100.0% and the LTV ratio (Note 2) is 44.8%.

Note 1: Long-term debt ratio = (Long-term borrowings + Investment corporation bonds) / (Borrowings + Investment corporation bonds)

Note 2: LTV ratio = (Loans payable + Investment corporation bonds) / Total assets

(Credit Ratings)

The status of the credit ratings as of March 31, 2021 is as follows.

Credit rating agency

Japan Credit Rating Agency, Ltd. (JCR)

(Shelf Registration)

KRR filed a shelf registration statement for investment corporation bonds (excluding short-term investment corporation bonds) on October 1, 2020. Details are as follows.

Planned issue amount	100,000,000,000 yen
Planned issuance period	October 8, 2020 to October 8, 2022
	Acquisition funds for specified assets (as defined in Article 2, Paragraph 1 of the Investment
Use of proceeds	Trust Law), repayment funds for borrowings, repayment funds for investment corporation
bonds (including short-term investment corporation bonds), refund funds for lease and
	guarantee deposits, funds to pay for repairs and maintenance, working capital, etc.