Provisional translation only

October 9, 2008

EARNINGS BRIEFING
FOR THE PERIOD ENDED AUGUST 2008
(March 1, 2008 to August 31, 2008)
Name of real estate
investment trust

Fukuoka REIT Corporation (FRC)

Listed Stock
Exchanges

Code number

8968

(URL:
http://www.fukuoka-reit.jp/eng/)

Representative
Name of asset manager
Representative
Contact

Operating Officer
Masayasu Saki
Fukuoka Realty Co., Ltd.
President and CEO Masayasu SakiManaging
Hidekazu Tanaka
Director, General
Phone: +81-92-272-3900
Manager ofFinance Division
November 25, 2008

Expected date forsubmitting securities
reportExpected commencement
date of dividendTokyo Stock
Exchange, Fukuoka
Stock Exchange

November 17, 2008

(Figures rounded off to nearest million yen.)

1. PERFORMANCE AND SITUATION OF ASSETS FOR THE PERIOD ENDED AUGUST 2008
(March 1, 2008 to August 31, 2008)(1) Performance

Period ended August 2008
Period ended February
2008

Operating revenues
Millions of
%
yen
5,483
5.9
5,179

(1.0)

Net income per
unit

Period ended August 2008
Period ended February 2008(% shows percentage difference from previous period.)
Operating income
Ordinary income
Net income
Millions of% Millions of% Millions of
%
yen
yen
yen
2,441
2.5
1,968
(0.6)
1,966
(0.7)
2,382

0.8

Return on net
assetsYen
18,373
18,498

%
3.2
3.2

1,981

0.7

Ratio of ordinary
income to total
liabilities and net
assets
%
1.6
1.7

1,980

0.8

Ratio of ordinary
income tooperating revenue
%
35.9
38.3

(2) Dividends(Total dividends are rounded off to the nearest million yen.)
Dividend perunit (excl.
dividend inexcess of
earnings)

Total
dividend

Dividend inexcess of
earnings per
unit

Total dividendin excess ofearnings

Payout ratio

Period ended
1,966
18,373 yen
0 yen
0 million yen
August 2008
million yen
Period ended
1,980
February
18,499 yen
0 yen
0 million yen
million yen
2008(Note) Concerning payout ratio, all numbers after the first decimal place are disregarded.

Ratio ofdividend toperiod-end
net assets

99.9%

3.2%

100.0%

3.2%

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

(3) Financial condition
Total assets

Net assets

Ratio of net assets tototal assets

Period ended August
125,954 million yen
62,231 million yen
2008
Period ended
121,654 million yen
62,100 million yen
February 2008
(Reference) Net assets: (Period ended August 2008) 62,231 million yen;
(Period ended February 2008) 62,100 million yen

Net assets per unit

49.4%

581,328 yen

51.0%

580,104 yen(4) Cash flows condition

Period ended August
2008
Period ended
February 2008

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of cash andcash equivalents atperiod end

3,157 million yen(4,452) million yen

1,920 million yen

5,822 million yen

2,476 million yen(5,073) million yen

1,933 million yen

5,195 million yen

2. FORECAST OF PERFORMANCE FOR THE PERIOD ENDING FEBRUARY 2009
(September 1, 2008 to February 28, 2009) AND THE PERIOD ENDING AUGUST 2009
(March 1, 2009 to August 31, 2009)

Operatingrevenue
Millionsof yen5,486

Operatingincome%Millionsof yen2,394%(% shows percentage difference from previous period.)
Dividend per
Dividend
unit (excl.
Ordinaryin excess of
Net income
dividend inincomeearnings per
excess ofunit
earnings)
Millions% Millions
%
yen
yen
of yenof yen
1,907
(3.1)
1,906
(3.1)
17,8000

Period0.0(2.0)
endingFebruary
2009
Period
5,453
(0.6)
2,323
(3.0)
1,822
(4.5)
1,820
(4.5)
endingAugust2009(Reference) Forecast net income per unit: (Period ending February 2009) 17,800 yen;
(Period ending August 2009) 17,000 yen

2

17,0000Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

3. Others(1) Differences in accounting policies:(i) Differences due to revisions of accounting standards, etc.:
No(ii) Differences other than above (i):Yes
(Note) For details, please refer to “Differences in accounting policies,” on page 15.
(2) Number of investment units issued and outstanding(i) Number of investment units issued and outstanding at the end of period (including treasury
investment units):
107,050 units at end of Aug 2008; 107,050 units at end of Feb 2008(ii) Treasury investment units at the end of period:— units at end of Aug 2008; — units at end of Feb 2008
(Note) Regarding the number of investment units, a basis for calculating net income per unit, pleaserefer to “Per unit information,” on page 15.
* On the adequate use of performance forecasts and other items warranting special mention
Forecast figures are calculated based on information available on the date of release of the forecast andcontain uncertain factors to a large extent. Actual operating revenue, operating income, ordinary
income, net income, and dividend per unit may differ due to change in the business environment.
Forecasts should not be construed as a guarantee of actual dividend. Concerning details of thepreconditions for the above forecast figures please refer to “2. Portfolio management policy andmanagement situation, (2) Management situation – Preconditions for the performance forecast for theperiod ending February 2009 (September 1, 2008 to February 28, 2009) and the period ending August
2009 (March 1, 2009 to August 31, 2009),” on page 7.

3

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

Concerning the contents hereinafter, items that FRC judges that “can be omitted from the disclosure fromthe standpoint of importance” are not shown in conformity with “Guidance for Preparation of Earnings
Briefing and Interim Earnings Briefing (for Public Traded Investment Corporations)” (March 2007)
released by Tokyo Stock Exchange Group, Inc.

1. Investment Corporation-related Organizations
The disclosure is omitted since there are no significant differences from the “Structure of the Investment
Corporation” disclosed by the latest Securities Report (submitted on May 27, 2008).

2. Portfolio management policy and management situation(1) Portfolio management policy“Investment Target” is partially revised in accordance with a partial revision of FRC’s Articles ofIncorporation at the General Meeting of Shareholders on May 29, 2008. For details, please refer to “5.
Reference Information (3) Investment Target,” on page 19.
The disclosure of “portfolio management policy” and “dividend policy” is omitted since there are no
significant differences from the contents disclosed by the latest Securities Report (submitted on May
27, 2008).
(2) Management situation(i) Summary of current fiscal period(a) Brief history of the investment corporation
FRC was established on July 2, 2004 based on the “Investment Trust and Investment
Corporation Law of Japan” (Law No. 198 in 1951 including later revisions, hereinafter the“Investment Trust Law”) and listed on the Tokyo Stock Exchange and Fukuoka Stock
Exchange on June 21, 2005 as the nation’s first real estate investment trust specializing inregional properties (code number: 8968). FRC invests in real estates throughout all of
Kyushu (including Okinawa Prefecture), with a central focus on Fukuoka City, and in
Yamaguchi Prefecture by turning regionality, characteristics in the real estate industry, into astrength.
FRC started asset management activities on November 9, 2004 after acquisition of four
properties such as commercial facilities in Canal City Hakata (excluding some areas of
specialty shops, hotels, offices and common space), a commercial complex where specialty
shops, cinema complex, theaters, amusement facilities, hotels and offices are integrally
developed (hereinafter “Canal City Hakata”). As of the end of the previous fiscal period(February 29, 2008), FRC has 14 properties (excluding silent partnership interests). FRC
acquired one community-type shopping center (SC) in the current fiscal period.
As a result, FRC now has 15 properties (excluding silent partnership interests), ninecommercial facilities, four office buildings, and two residential properties in its portfolio asof the end of the current fiscal period (August 31, 2008).
(b) Investment environment and portfolio performance
Clear signs for domestic economic stagnation were evident in the current fiscal period, suchas a series of bankruptcies of real estate and construction-related companies or slower
housing sales and sluggish consumer spending, on the back of turmoil in global financial
markets triggered by U.S. subprime loan problems and skyrocketing energy and raw
material prices. In the Kyushu area, a primary area of FRC’s investment target area, theeconomy is weakening since the growth of exports, which had helped drive the regional
economy, began slowing down amid further deceleration of the global economy.
According to the Land Price Survey by Prefectural Governments in 2008 (by the Ministry ofLand, Infrastructure, Transport and Tourism), average national land prices declined over theprevious year. Dark signs have begun to emerge in the recovery of land prices, with a rise in4

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

land prices greatly shrinking even in the three largest urban areas. In Fukuoka City, a core of
FRC’s investment target area, commercial and residential lands rose by 4.5% and 0.3% overthe previous year, respectively, but the land price rise was smaller.
In such a business environment, on March 27, 2008 FRC acquired a community-type
shopping center, “K’s Denki Kagoshima,” located close to one of the largest commercial
facilities in Kagoshima City, Kagoshima Prefecture (acquisition amount: 3,550 million yen).
Meanwhile, FRC strived to revitalize existing facilities to enhance their value, including
expansion of floor space in “Park Place Oita.”
When analyzing FRC’s portfolio (on an acquisition value basis) by geographic location,
properties in the Fukuoka urban area occupy 68.6% of its portfolio; when analyzing byproperty type, commercial facilities, office buildings, and residential properties account for
64.9%, 32.3% and 2.8%, respectively.
The occupancy rate of properties FRC owns stands at 99.4% as of the end of the current
fiscal period, thanks to our continuous efforts including operations placed on enhancing
competitiveness and customer drawing power in major commercial facilities such as Canal
City Hakata.
(c) Summary of fundraising
In the current fiscal period, FRC borrowed 3,900 million yen for acquisition of a newproperty and expansion of floor space in existing properties. The Company also refinanced
long- term debt and a part of short-term debt that came due this fiscal period into long-term
debt. As a result, at the end of the current fiscal period outstanding debt totaled 51,900
million yen with the loan-to-value ratio at 41.2%. To reduce refinancing risks in future debt,
FRC will continue to disperse the repayment date and increase the average length of time
until maturity.
(d) Summary of performance and dividend
As results of these management efforts, operating revenue totaled 5,483 million yen andoperating income after excluding operating expenses such as rental business expenses andasset management fees totaled 2,441 million yen. Ordinary income and net income reached1,968 million yen and 1,966 million yen, respectively.
Management decided to make a dividend of 18,373 yen per investment unit to meet therequirements of special tax measures for an investment corporation (as stipulated in Article
67-15 of the Special Taxation Measures Law of Japan). Under this law, an investment
corporation is allowed to deduct dividends paid to investors from its taxable income if mostof the unappropriated earnings as of the end of the current fiscal period are distributed.
(ii) Forecast for the next fiscal year(a) Portfolio management policy
FRC will invest based on the basic policy stipulated in its Articles of Incorporation and its
basic philosophy: focusing on “high growth potential markets in which FRC candemonstrate its competitive edge.”
By geographic location, FRC invests 60% to 90% of its assets in the Fukuoka urban area.
Fukuoka City, a core city in the Fukuoka urban area, is especially a promising area withhigh growth potential since in the future the city is expected to have the greatest population
growth of any urban area in Japan. Moreover, management has decided to actively acquire
properties in major cities in Kyushu and in Yamaguchi Prefecture besides the Fukuoka urban
area, if FRC can generate sufficient investment merits from community-oriented viewpoints.
By property type, FRC invests 60% to 80% of its assets in commercial facilities, 20% to
40% in office buildings, and 0% to 20% in other properties. Management continues to invest
in commercial facilities mainly to expand its portfolio. Among commercial facilities, FRC

5

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

plans to invest in various types of facilities, not only relatively larger facilities such as urban
type (midtown type) and regional type (large suburban type), but also community-type
facilities (neighborhood type).
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable
fundraising and try to maintain a solid financial structure.
FRC will acquire high quality properties for further expansion of its portfolio by avoiding
competition as much as possible with adequate use of its advantages, such as information
gathering ability in the areas, good knowledge of regional properties and close relations withthe local business community and governments, so that investors can continue to invest in
FRC with assurance.
(b) Performance forecast for the next fiscal period
FRC aims to achieve the following performance goals for the period ending February 2009
(September 1, 2008 to February 28, 2009) and the period ending August 2009 (March 1,
2009 to August 31, 2009). Concerning preconditions for the forecast, please refer to“Preconditions for the performance forecast for the period ending February 2009
(September 1, 2008 to February 28, 2009) and the period ending August 2009 (March 1,
2009 to August 31, 2009),” on page 7.
Period ending February 2009
Operating revenue
Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

5,486 million yen
1,907 million yen
1,906 million yen
17,800 yen
0 yen

Period ending August 2009
Operating revenue
Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

5,453 million yen
1,822 million yen
1,820 million yen
17,000 yen
0 yen(Note) The above forecast figures are calculated based on certain assumptions. The forecast
should not be construed as a guarantee of actual performance since actual operating
revenue, ordinary income, net income, dividend per unit and dividend in excess ofearnings per unit may differ due to changes in the business environment.

6

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

Preconditions for the performance forecast for the period ending February 2009 (September 1, 2008 to
February 28, 2009) and for the period ending August 2009 (March 1, 2009 to August 31, 2009)
Item
Calculation period
Assets under management
Number of investment units
issued and outstanding
Interest-bearing debt

Operating revenues

Operating expenses

Dividend per unit

Dividend in excess ofearnings per unit
Other

Preconditions
9th fiscal period, from September 1, 2008 to February 28, 2009 (181 days)
10th fiscal period, from March 1, 2009 to August 31, 2009 (184 days)• It is assumed that 15 properties and silent partnership interests FRC owns as ofAugust 31, 2008.
• In practice, they may fluctuate due to changes in assets under management.
• It is assumed that there will be no issuance of new investment units until August
31, 2009.
• Outstanding interest bearing debt on August 31, 2009 are expected to total 51,900
million yen, the same as at the end of the current period (August 31, 2008). The
loan-to-value ratio (Interest-bearing debt ÷ total assets × 100) is expected to standat around 41.6% (as of August 31, 2008 the loan-to-value ratio stands at 41.2%).
• Of revenues from the real estate rental business, revenues from properties FRC has
already acquired are calculated based on tenancy agreements that are valid as oftoday by taking into account the competitiveness of the properties and the market
environment.
Of revenues from the real estate rental business, revenues from the percentage
lease contracts are calculated based on past results by taking into account sales
fluctuation factors of the relevant tenants.
• Concerning revenues from the real estate rental business, vacancies are taken into
account to a certain extent. It is assumed that there will be no rent arrears or
non-payments by tenants.
• Concerning interests in silent partnerships, dividends from silent partnerships arecalculated based on the conditions stipulated in each silent partnership contract.
• When acquiring assets under management, the fixed property tax and city planningtax for the assets will be proportionally calculated according to the holding period
and adjusted with the former owner. FRC will not write them off since theCompany will include the relevant adjusted amount in the acquisition cost.
• FRC writes off estimated repair costs for buildings for the calculation periods, theperiods ending February 2009 and August 2009. Actual repair costs may differ
significantly from the estimated amounts since there is the possibility that repair
costs are incurred urgently due to damages to buildings caused by unforeseeable
factors; repair costs generally differ largely from period to period; repair costs are
not regularly incurred.
• Concerning depreciation and amortization expenses, FRC anticipates 859 million
yen for the period ending February 28, 2009 and 872 million yen for the period
ending August 31, 2009.
• Dividend (dividend per unit) is calculated based on the dividend policy stipulated
in FRC’s Articles of Incorporation.
• Dividend per unit may fluctuate due to fluctuations in rent revenues caused bydifferences in assets under management and tenants or various factors including
unexpected occurrences of repair.
• The dividends of excess earnings are not planned at the moment.
• It is assumed that there will be no significant revisions to laws and regulations, thetax system, and accounting standards that may influence the forecast figures.
• It is also assumed that there will be no significant unexpected changes in general
economic conditions and the real estate market.

(c) Significant facts after the closing of accounts
No relevant items(3) Investment risks
The disclosure of such risks is omitted since there are no significant changes from the “Investment
risks” disclosed in the latest Securities Report (submitted on May 27, 2008).

7

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

3. Financial statements(1) Balance sheets
7th fiscal period(as of February 29, 2008)
Account

Amount(thousands of yen)

8th fiscal period(as of August 31, 2008)
Amount(thousands of yen)%

Difference%

Amount(thousandsof yen)AssetsI. Current assets
Cash andequivalents
Cash and depositin trust
Operatingreceivable
Prepaid expenses
Deferred tax
assetsConsumer taxes
receivables
Other current
assetsTotal current assets
II. Fixed assets
1. Tangible fixed
assetsConstruction inprogress
Buildings in trust
Aggregate ofaccumulated
depreciation
Structures in trust
Aggregate ofaccumulated
depreciation
Machinery andequipment intrust
Aggregate ofaccumulated
depreciation
Tools and fixturesin trust
Aggregate ofaccumulated
depreciation
Lands in trust
Total tangible fixed
assets
2. Investment andother assets
Investment
securities
Guarantee
deposits
Long-term
prepaid expenses
Total investment
and other assets
Total fixed assets

1,649,844

1,931,769

281,924

4,034,804

4,378,955

344,151

232,783

302,233

69,450—165,581

165,581

18

61

43

50,608—(50,608)

127,375
6,095,433

33,531
5.0

6,812,132

483,728
47,614,818
3,879,974

43,734,843

4,647,080

493,273

93,683—(483,728)

45,399,125

1,664,282

664,284

171,011276,230(7,715)410,286

71,01068,810,414

2,143,873

11.8

338,209

283,946

61,978466,263
126,986

716,699

757,968

335,919

51,973(93,843)
5.4

50,046,206

559,864
66,591

PeriodonPeriod%

578,558
339,276

168,271

66,666,541
112,001,609

92.1

115,560,343

91.8

3,558,733

3,421,633

3,421,633—

10,00010,000—89,809127,759

37,9503.2

3,521,443

2.9

3,559,393

2.8

37,9501.1

115,523,052

95.0

119,119,736

94.6

3,596,683

3.1

8

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

III. Deferred assets
Establishment
expenses
Expenses for
issuing newinvestment units
Total deferredassetsTotal assets

11,1905,595(5,595)25,237

16,825(8,412)36,4280.0

22,4200.0(14,007)(38.5)

121,654,914

100.0

125,954,289

100.0

4,299,375

3.5

7th fiscal period(as of February 29, 2008)
Account

Amount(thousands of yen)

8th fiscal period(as of August 31, 2008)
Amount(thousands of yen)%

Difference%

Amount(thousandsof yen)Liabilities
I. Current liabilities
Accounts payable
Short-term debt
Current maturities oflong-term debt
Accrued liabilities
Accrued expenses
payableAccrued income
taxes
Accruedconsumption taxes
Advances received
Deposits received
Total current liabilities
II. Fixed liabilities
Long-term debt
Security deposits andguarantee money
Security deposits andguarantee money intrust
Derivative liabilities
Total fixed liabilities
Total liabilities
Net assets
I. Net Assets
1. Shareholders’ capital
2. Retained earnings
Unappropriatedretained earnings
Total retained earnings
Total Net Assets
II. Differences fromvaluation and translation
1. Deferred hedge profit
or loss
Total differencesfrom valuation andtranslation
Total net assets
Total liabilities and net
assets282,9102,900,000

320,244
3,400,000

37,334500,000

6,600,000

12,000,000

5,400,000

22,45814,720(7,737)306,176

327,108

20,931

287

572

285

—

40,85440,854

657,928
489,977
11,259,739

708,189
803,691
17,615,381

50,260313,713
6,355,641

9.3

14.0

PeriodonPeriod
%

56.4

5.0
38,500,000

36,500,000(2,000,000)

80,288—(80,288)9,570,159

9,607,644

37,485

144,515
48,294,963
59,554,702—
46,107,644
63,723,025

39.7
49.0

36.6
50.6

(144,515)(2,187,318)
4,168,323

60,264,380

60,264,380—

1,980,347

1,966,884(13,463)

1,980,347
62,244,727

1,966,884
62,231,264

51.1(144,515)

49.4—(13,463)(13,463)

(4.5)
7.0

(0.0)

144,515(144,515)

(0.1)

—

—

144,515—

62,100,212

51.0

62,231,264

49.4

131,0510.2

121,654,914

100.0

125,954,289

100.0

4,299,375

3.5

9

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

(2) Statements of Income

Account

7th fiscal period(September 1, 2007
to February 29, 2008)
Amount(thousands of yen)

1. Operating revenues
Real estateleasing revenues
Other revenues
from real estateleasing
Silent partnership
dividend
2. Operating expenses
Real estateleasing expenses
Assetmanagement fees
Asset custodian
fees
Generaladministration
fees
Directors
compensation
Other operating
expenses
Operating income
3. Non-operating
revenues
Interest received
Other
non-operating
revenue
4. Non-operating
expenses
Interest payment
Amortization of
establishment
cost
Investment unit
issuance fee write
offExpenses related
to debt financing
Other
non-operating
expenses
Ordinary income
Net income before
tax
Corporation,
inhabitant andbusiness tax
Adjustment toincome tax
Net income
Retained earnings
brought forward

8th fiscal period(March 1, 2008 to August 31, 2008)
Amount(thousands of yen)%

4,871,952

5,169,535

171,225

177,472

136,000

5,179,178

100.0

136,000

2,365,097

2,597,412

321,104

336,502

10,252

10,70233,82833,724

9,510

9,600

56,594

2,796,387

54.0

2,382,791

46.0

7,149
—

53,564

7,149

0.1

861

410,487

5,595

5,595

8,412

8,412

46,56452,600408,594

7.9

PeriodonPeriod%

5,483,008

100.0

303,830

5.9

3,041,506

55.5

245,1198.8

2,441,502

44.5

58,711

2.5

8,724

0.2

1,574

22.0

4,542

481,637

8.8

73,04317.9

1,981,346

38.2

1,968,589

35.9(12,757)(0.6)

1,981,346

38.2

1,968,589

35.9(12,757)

(0.6)

1,029
19

Amount(thousandsof yen)7,863

345,043

2,978%

Difference

1,778
1,049

0.0

1,980,297

38.2

49

(43)

1,734

0.0

685

65.4

1,966,854

35.9(13,443)

(0.7)

29

10

(20)

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

from previous
periodUnappropriatedretained earnings
for the period

1,980,347

1,966,884

11(13,463)

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008(3) Statement of changes in net assets
7th Fiscal Period (September 1, 2007 to February 29, 2008)(thousands of yen)
Net Assets
Item

Balance as ofAugust 31, 2007
Differences in thecurrent fiscal
periodDividend ofretainedearnings
Net income forthe current
fiscal period
Deferredhedge profit orloss
Total ofdifferences in thecurrent fiscal
periodBalance as ofFebruary 29,
2008

Differences from valuation andtranslation
Total difference
Deferred hedge
from valuation
profit or loss
and translation

Total net assets

Shareholders’capitalRetained earnings
Unappropriatedretained earnings

60,264,380

1,965,487

62,229,867(90,405)(90,405)

62,139,462—(1,965,438)(1,965,438)——(1,965,438)—

1,980,297

1,980,297——

1,980,297———(54,109)(54,109)(54,109)—

14,85914,859(54,109)(54,109)(39,249)

60,264,380

1,980,347

62,244,727(144,515)(144,515)

62,100,212

Total Net
Assets

8th Fiscal Period (March 1, 2008 to August 31, 2008)(thousands of yen)
Net Assets
Item

Balance as ofFebruary 29,
2008
Differences in thecurrent fiscal
periodDividend ofretainedearnings
Net income forthe current
fiscal period
Deferredhedge profit orloss
Total ofdifferences in thecurrent fiscal
periodBalance as ofAugust 31, 2008

Differences from valuation andtranslation
Total difference
Deferred hedge
from valuation
profit or loss
and translation

Total net assets

Shareholders’capitalRetained earnings
Unappropriatedretained earnings

60,264,380

1,980,347

62,244,727(144,515)(144,515)

62,100,212—(1,980,317)(1,980,317)——(1,980,317)—

1,966,854

1,966,854——

1,966,854———

144,515

144,515

144,515—(13,463)(13,463)

144,515

144,515

131,051

60,264,380

1,966,884

62,231,264——

62,231,264

Total Net
Assets12

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

(4) Dividend Statement
Account
I. Unappropriated retained earnings
II. Total(Dividend per unit)
III. Retained earnings brought forward

7th fiscal period (September 1,
2007 to February 29, 2008)
1,980,347 thousand yen
1,980,317 thousand yen(18,499 yen)
29 thousand yen

Method for calculating dividends

8th fiscal period (March 1, 2008
to August 31, 2008)
1,966,884 thousand yen
1,966,829 thousand yen(18,373 yen)
54 thousand yen

FRC shall decide the amount of
FRC shall decide the amount ofdividends, which must exceed 90%
dividends, which must exceed 90%
of FRC’s distributable income asof FRC’s distributable income as
stipulated in Article 67-15 of the
stipulated in Article 67-15 of theSpecial Taxation Measures Law ofSpecial Taxation Measures Law ofJapan (Article 38-1-1 of FRC’s
Japan (Article 38-1-1 of FRC’s
Articles of Incorporation). For the
Articles of Incorporation). For thecurrent fiscal period, dividend as
current fiscal period, dividend as
income dividends totaled 1,980,317
income dividends totaled 1,966,829
thousand yen, which is almost thethousand yen, which is almost theentire amount of unappropriatedentire amount of unappropriatedearnings. Moreover, dividend in
earnings. Moreover, dividend inexcess of earnings as stipulated inexcess of earnings as stipulated in
Article 38-2 of FRC’s Articles of
Article 38-2 of FRC’s Articles ofIncorporation will not be provided.
Incorporation will not be provided.
(Note) Concerning amounts other than dividend per investment unit, fractions of 1,000 yen are omitted.

13

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

(5) Cash flows statements
7th fiscal period(September 1, 2007 to
February 29, 2008)
Amount(thousands of yen)Account

8th fiscal period(March 1, 2008 to
August 31, 2008)
Amount(thousands of yen)

I. Cash flows from operating activities
Net income before taxes
Depreciation expenses
Amortization of establishment expenses
Investment unit issuance depreciation
Interest received
Interest payment
Increase or decrease in operating receivables
Increase or decrease in uncollected consumption tax
receivables
Increase or decrease in consumption tax payable
Increase or decrease in operating payable
Increase or decrease in account payable
Increase or decrease in payable expenses
Increase or decrease in rent received in advance
Increase or decrease in deposits
Increase or decrease in prepaid expenses
Increase or decrease in long-term prepaid expenses
OthersSubtotalInterest received
Interest payment
Income for Corporation tax payment, etc
Income from Corporation tax payment
Cash flows from operating activities

1,981,346
763,679
5,595
8,412(7,149)345,043
42,467(50,608)

1,968,589
847,195
5,595
8,412(7,863)
410,487(69,450)
50,608(101,182)(1,499(17,077)(1,061)
28,536(215,758)
30,932
7,930
12,874
2,832,481
7,149(348,222)(15,388)—2,476,020

40,854
31,188(1,280)10,68250,260313,729(61,727)(37,950)
5,690
3,565,021
7,863(400,237)(29,056)
14,284
3,157,875

II. Cash flows from investing activities
Payment for purchase of tangible fixed assets
Payment for purchase of tangible fixed assets in trust
Payment from key money and security deposits
Proceeds from key money and security deposit in trust
Payment for key money and security deposits in trust
Net cash used for investing activities(477,708)(4,837,312)
80,288285,856(124,969)(5,073,844)—(4,409,606)—
287,371(330,175)(4,452,409)

15,300,000(20,900,000)
9,500,000—(1,966,518)
1,933,481(664,341)

30,100,000(29,600,000)
10,000,000(6,600,000)(1,979,389)
1,920,610
626,076

V. Balance of cash and cash equivalents at beginning of
period

5,860,328

5,195,986

VI. Balance of cash and cash equivalents at end of
period5,195,986

5,822,063

III. Cash flows from financing activities
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Payment of dividends
Cash flows from financing activities
IV. Net Increase or decrease in cash and cash equivalents(6) Significant accounting policy
Item

7th Fiscal Period (September 1, 2007 to

14

8th Fiscal Period (March 1, 2008 toFukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

Hedge accounting method

February 29, 2008)(1) Hedge accounting method
Deferred hedge accounting is applied.

(2) Hedging instrument and hedging
targets
Hedging instrument: Interest rate
swap transactions
Hedging targets: Borrowing rate(3) Hedging policy
In accordance with FRC’s Articles ofIncorporation, FRC uses derivatives
in order to hedge risks of changes ininterest rates related to variable-rate
debt.
(4) Method for assessing hedge
effectiveness
Assessing hedge effectiveness isomitted since requirements are met
for special treatment of interest swap
transactions.

August 31, 2008)(1) Hedge accounting method
Deferred hedge accounting isapplied for interest swap
transactions. However, special
treatment is applied for interest
swap transactions that meetrequirements for special treatment.
(2) Hedging instrument and hedging
targets
Same as on the left

(3) Hedging policy
Same as on the left

(4) Method for assessing hedge
effectivenessSame as on the left

The disclosure of items other than the above “hedge accounting method” is omitted since there are no
significant changes from contents disclosed by the latest Securities Report (submitted on May 27, 2008).
(7) Difference in accounting policy(Hedge accounting method)
Concerning interest swap transactions, deferred hedge accounting was applied until the previous
fiscal period. However, from the current fiscal period special treatment is applied for interest swap
transactions that meet requirements for special treatment since special treatment is allowed becauseof revision to the Investment Trust Law and FRC’s Articles of Incorporation.
As a result, total net assets increase by 97,682 thousand yen and total liabilities decreased by thesame amount compared to those total net assets and total liabilities under the previous accounting
method. There is no effect on profit or loss from this difference.
(8) Footnotes in financial statements
FRC omits the disclosure of footnoted items on the balance sheet, income statement, statement ofdifferences in net assets, Cash flows statement, lease transactions, securities, derivative transactions,retirement benefits, tax effect accounting, and related party transactions since the Company does notfind substantial need for disclosure in the earnings briefing.
(Data per investment unit)
7th Fiscal Period
September 1, 2007 to February 29, 2008
Net assets per investment unit:
580,104 yen
Net income per investment unit: 18,498 yen
Net income per investment unit is calculated by dividing
net income by the weighted average number ofinvestment units issued and outstanding during the fiscal
period. Diluted net income per investment unit is notshown since there are no potential investment units.

8th Fiscal Period
March 1, 2008 to August 31, 2008
Net assets per investment unit:
581,328 yen
Net income per investment unit: 18,373 yen
Net income per investment unit is calculated by dividing
net income by the weighted average number ofinvestment units issued and outstanding during the fiscal
period. Diluted net income per investment unit is notshown since there are no potential investment units.

15

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

(Note) Calculation of net income per investment unit is based on the following.
7th Fiscal Period (September 1,
Account
2007 to February 29, 2008)
Net income (thousands of yen)
1,980,297
Net income not distributed to shareholders—(thousands of yen)
Net income distributed to shareholders
1,980,297(thousands of yen)
Number of average investment units during the
107,050
fiscal period (units)

8th Fiscal Period (March 1,
2008 to August 31, 2008)
1,966,854—(Subsequent critical events)
7th Fiscal Period
September 1, 2007 to February 29, 2008
No relevant items

8th Fiscal Period
March 1, 2008 to August 31, 2008
Same as on the left

(9) Difference in the number of investment units issued and outstanding
No relevant items

4. Change in directors
No relevant items

16

1,966,854
107,050

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

5. Reference information(1) Investment situation(as of August 31, 2008)
Total value of properties
Percentage of total
heldassets (%)
Type of asset
PurposeLocation (Note 1)(Millions of yen)
(Note 3)(Note 2)
Commercial
Fukuoka urban area
38,38330.5
facility
Other Kyushu areas
37,305
29.6
Fukuoka urban area
36,656
29.1
Office building
Real estate
Other Kyushu areas——
Residential
Fukuoka urban area
3,215
2.6
property
Other Kyushu areas——
Subtotal
115,560
91.8
Interests in silent partnership (Note 4)
3,421
2.7
Deposits and other assets
6,972
5.5
Total assets
125,954100.0(Note 5)(118,981)(94.5)
Note 1: The Fukuoka urban area refers to cities, towns and villages where 10% or more of the population commute
to Fukuoka City for school and work, according to the 2005 census, which states “the number of workers
and students aged 15 years or older commuting between their homes and places of work or school”
conducted by Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs andCommunications.
“Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area) andYamaguchi Prefecture.
Note 2: “Total value of properties held” is based on figures on the balance sheet (the value of real estate in trust is abook value after depreciation).
Note 3: Concerning the “Percentage of total assets,” all numbers after the second decimal place are disregarded.
Note 4: Preferred interests in silent partnerships are capital contributions to an SPC (CCH Bridge LLC), who owns
and manages a section of Canal City Hakata excluding the section the Company already holds (Canal City
Hakata SPC holding section).
Note 5: Figures in parentheses for “Total assets” refer to the value and percentage of real estates held in real periods
to total assets.

Figures on balance sheet (millions of yen)

(as of August 31, 2008)
Percentage of total assets (%)

63,72362,231

50.6
49.4

Total amount of debt
Total amount of net assets(2) Investment assets(i) Primary issues of investment securities
TypeBook value(millions of yen)

Description(as of August 31, 2008)
Percentage of
Evaluated amount
total assets(millions of yen)(%)
(Note)

Preferred silent
Preferred interest in silent
3,421
3,400
2.7
partnership interest
partnerships to CCH Bridge LLC(Note) The evaluated amount is provided by the operator of a silent partnership in conformity with rules stipulated by
the Investment Trusts Association, Japan.

17

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008(ii) Real estate investment portfolio(a) Values and investment ratios at end of year are as follows.
(as of August 31, 2008)
Acquisition
value(millions ofyen)(Note 1)

Value onbalancesheet(millions ofyen)

Period-end
appraisal value(millions ofyen)(Note 2)

Investment
ratio
(%)
(Note 3)

Canal City Hakata

32,00031,65537,20027.8

Park Place Oita

15,70017,147

21,200

13.6

SunLive City Kokura

6,633

6,487

8,770

5.8

5,300

5,174

5,790

4.6

2,400

2,357

2,530

2.1

Hara SATY

5,410

5,592

5,700

4.7

Hanahata SC

1,130

1,134

1,210

1.0

Kurume Higashi
Kushiwara SC

2,500

2,515

2,630

2.2

K’s Denki Kagoshima

3,550

3,622

3,600

3.1

14,60014,431

17,10012.7

11,20010,752

14,000

9.7

4,400

4,491

5,610

3.8

7,000

6,979

8,090

6.1

2,060

2,070

2,060

1.8

1,111

1,144

1,140

1.0

Name of property

Square Mall Kagoshima
Usuki
Kumamoto
Intercommunity SC

Canal City BusinessCenter Building
Gofukumachi BusinessCenter Building
Sanix Hakata Building
Taihaku Street BusinessCenter Building
Amex Akasakamon
Tower
City House Keyaki DoriReal estate appraiser

TANIZAWA SOGOAPPRAISAL CO., LTD.
Japan Real Estate
InstituteJapan Real Estate
InstituteJapan Real Estate
InstituteJapan Real Estate
InstituteJapan Real Estate
Institute
TANIZAWA SOGOAPPRAISAL CO., LTD.
TANIZAWA SOGOAPPRAISAL CO., LTD.
TANIZAWA SOGOAPPRAISAL CO., LTD.
TANIZAWA SOGOAPPRAISAL CO., LTD.
TANIZAWA SOGOAPPRAISAL CO., LTD.
Japan Real Estate
InstituteJapan Real Estate
Institute
Daiwa Real EstateAppraisal Co., Ltd.
Daiwa Real EstateAppraisal Co., Ltd.

Total
114,994
115,560
136,630100.0Note 1: “Acquisition value” refers to be amount (purchasing prices shown on the purchasing contracts) not
including expenses for the acquisition of relevant properties (agency fees and taxes and other publiccharges).
Note 2: “Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser inconformity with the method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation
and rules stipulated by the Investment Trusts Association, Japan.
Note 3: “Investment ratio” refers to the percentage of each property’s acquisition value of the total acquisition
value.

18

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008(b) Summary of the real estate rental business

Name of property
Canal City Hakata
Park Place Oita
SunLive City
KokuraSquare Mall
Kagoshima Usuki
Kumamoto
Intercommunity SC
Hara SATY
Hanahata SC
Kurume Higashi
Kushiwara SC
K’s Denki
Kagoshima
Canal City
Business Center
Building
Gofukumachi
Business Center
Building
Sanix Hakata
Building
Taihaku Street
Business Center
Building(Note 4)
Amex Akasakamon
Tower
City House Keyaki
Dori
Total
Note 1:

Note 2:

Note 3:Note 4:(as of August 31, 2008)
Total rental
Percentage ofrevenue
total rental(millions of yen)revenue(Note 4)
(%)
1,397
26.1
1,012
18.9

Occupancy
rate(%)(Note 3)
100.0
99.9

Total
leasable
space (m2)

Total leased
space (m2)

47,860.48
103,963.32

47,860.48
103,826.00

1

100.0

61,450.22

61,450.22

292

5.5

11

100.0

14,661.72

14,661.72

258

4.8

2

100.0

6,968.66

6,968.66

90

1.7

1
2

100.0
100.0

27,580.75
2,801.15

27,580.75
2,801.15

212
40

4.0
0.8

1

100.0

6,467.80

6,467.80

88

1.6

1

100.0

7,296.17

7,296.17

95

1.8

1 (45)

99.6

23,014.11

22,917.80

696

13.0

18

97.9

19,906.22

19,482.38

554

10.4

13

98.6

6,293.67

6,207.30

196

3.7

1 (61)

94.8

14,652.68

13,888.43

317

5.9

1 (57)

85.6

4,755.14

4,069.21

64

1.2

1 (41)

97.8

2,710.86

2,650.7929

0.6

Numberof tenants(Note 1)
1 (27)
1 (100)56 [381]99.4 350,382.95
348,128.86
5,347
100.0
(Note 2)The number of tenants shown is based on the total number of sections stipulated in the tenancy agreements
for commercial and office buildings among relevant properties. For the number of tenants in pass-throughmaster leasing properties, the number of sections stipulated in the tenancy agreements with end tenants isshown in parentheses. The Taihaku Street Business Center Building is an office building with residential
blocks. Its number of tenants comprises nine offices and 52 residents.
The total of all the tenants in other than pass-through master leasing properties and the number of sections
stipulated in the tenancy agreements with end tenants for pass-through master leasing properties is shown inparentheses in the totals column.
“Occupancy rate” refers to the percentage of total leased space to total leasable space as of August 31,
2008.
The total rental revenues shown are the results of the real estate rental business in the current fiscal period.
During this period, FRC acquired the property for K’s Denki Kagoshima on March 27, 2008.

(3) Investment Target
The “Types of assets for investment” has been partially revised in accordance with a partial revisionof FRC’s Articles of Incorporation at the General Meeting of Shareholders on May 29, 2008.
The sections that changed from the latest Securities Report (submitted on May 27, 2008) are
underlined hereinafter. The disclosure of “investment standards and investment rates by type of asset,
by geographic location, and by purpose” has been omitted since there are no significant changes.

19

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

(Types of assets for investment)
FRC primarily invests in real estate and real estate-related securities (as stated in Items 29 and 31 of its
Articles of Incorporation).
(i) Real estates as follows:(1) Real estate(2) Lease of land(3) Surface rights(4) Easement(5) Trust beneficiary rights to real estate, lease of land, surface rights or easement (including acomprehensive trust with which money attached to real estates is entrusted together)(6) Beneficiary rights for a money trust designed to primarily invest its trust assets in assets definedabove(7) Equity interests in an agreement for dividend of profits from property management where one
party invests in another party for the management of assets defined above, and the other party
uses the investment received to primarily manage investments in the assets and distribute profits
from the managed assets (hereinafter “silent partnership equity interest in real estate”)(8) Beneficiary rights of a money trust designed to primarily invest its trust assets in silent
partnership equity interest in real estate(ii) Real estate-related securities refer to the following vehicles designed to invest more than half theamount of underlying assets in real estates.
(1) Preferred equity securities (preferred equity securities as stipulated in Article 2-9 of the law
concerning the liquidation of assets [Law No. 105 in 1998 including later revisions, hereinafter
the “Asset Liquidation Law”])(2) Beneficiary securities (beneficiary securities as stipulated in Article 2-7 of the Investment Trust
Law)(3) Investment securities (investment securities as stipulated in Article 2-15 of the Investment Trust
Law)(4) Beneficiary securities for a special purpose trust (beneficiary securities for a special purpose
trust as stipulated in Article 2-15 of the Asset Liquidation Law [excluding assets in items (i)(4)and (i)(5) above])(iii) FRC may invest in the following specified assets in addition to the above-mentioned real estates andreal estate-related securities.
(1) Deposits(2) Call loans(3) Government securities(4) Municipal securities(5) Debentures issued by a corporation under a special law (as stipulated in Article 2-1-3 of the
Financial Instruments and Exchange Law [Law No. 25 in 1948 including later revisions,
hereinafter the “Financial Instruments and Exchange Law”])(6) Corporate bond certificates (including corporate bond certificates of a mutual company, but
excluding convertible bonds, bonds-cum-warrants and corporate bonds with new sharereservation rights)(7) Specified corporate bonds stipulated by the Asset Liquidation Law (as stipulated in Article 2-1-4of the Financial Instruments and Exchange Law)
(8) Commercial papers (as stipulated in Article 2-1-15 of the Financial Instruments and Exchange
Law)(9) Investment corporation bonds (as stipulated in Article 2-1-11 of the Financial Instruments andExchange Law)(10) Securities or certificates representing options (as stipulated in Article 2-1-19 of the Financial
Instruments and Exchange Law)
(11) Beneficiary securities for a loan trust (as stipulated in Article 2-1-12 of the Financial Instruments
and Exchange Law)
(12) Monetary claims (as stipulated in Article 3-7 of the Order for Enforcement of Act on Securities
Investment Trust and Securities Investment Corporations [Cabinet order No.480 in 2000

20

Fukuoka REIT Corporation (8968), Earnings briefing for the term ended August 2008

including later revisions, hereinafter the “Enforcement of Act on Investment Trust”])(13) Rights in derivative transactions (as stipulated in Article 3-2 of the Enforcement on Act on
Investment Trust)(iv) When investing in real estates, FRC may invest in the following assets, if necessary.
(1) Trademarks as stipulated in Article 18-1 of the Trademark Law (Law No.127 in 1959 including
later revisions), or exclusive rights to use as stipulated in Article 30-1 of the Law, or ordinary
rights to use as stipulated in Article 31-1 of the Law(2) Rights to use the source of a hot spring and facilities of the relevant hot spring as stipulated in
Article 2-1 of the Hot Spring Law (Law No. 125 in 1948 including later revisions)(3) Chattels (among chattels stipulated in the Civil Law Act [Law No. 89 in 1896 including later
revisions] facilities, equipment and premises attached to real estate structurally or for use)(4) In addition to the assets mentioned above, assets that are necessary or useful to be acquired wheninvesting in real estates and real estate-related securities21