Kenedix Retail REIT Corporation

Securities Code:3453

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To Our Unitholders

Moyuru Watanabe, Executive DirectorKenedix Retail REIT Corporation became the first J-REIT (real estate investment trust) to focus primarily on neighborhood, community and other shopping centers that cater to the day-to-day needs of local area customers when it was listed on the Tokyo Stock Exchange in February 2015. Since our IPO, we have steadily accumulated our assets under management, building a stable portfolio of over 220 billion yen in five years.
Japanese consumers tend to shop frequently, often daily, for day-to-day necessities, and purchase smaller amounts on each trip. This reflects longstanding consumer tastes in Japan for eating fresh or convenience foods prepared daily and storing less at home. Moreover, Japan is undergoing unprecedented demographic changes that, we believe, are influencing the nature of local retail markets. In particular, the aging of the Japanese population and the increased concentration of populations in urban areas has resulted in shrinkage of retail trade areas for shopping centers. We have also observed an increase in market share of specialty stores as consumer tastes change. Accordingly, we seek to invest in local shopping centers for daily needs with specialty stores or supermarkets as their main tenants, in order to provide stable investment returns over the long term.
On the other hand, backed by advances in information technology, orders placed via the Internet and delivered to homes from logistics facilities have been increasing. From the standpoint of supplying merchandise to consumers, similarities in functions of retail and logistics facilities are becoming more evident. In June 2018, we changed our investment guidelines and added logistics facilities to our investment targets in order to adapt to changes in the retail environment and achieve sustainable growth.
Moreover, we have positioned initiatives on ESG (Environmental, Social and Governance) awareness as an important business management issue. We aim to help achieve a sustainable society by promoting such initiatives, enlivening local communities and enhancing social infrastructure, while working to contribute to society through our investment in shopping centers for daily needs, utilizing the centers for local communities.
With strong support from our Sponsor, Kenedix, Inc. and our Alliance Companies, we dedicate ourselves to the growth of our portfolio and the maximization of unitholder value.
We respectfully look forward to your continued support.

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