33rd Fiscal Period
Report on Performance andManagement Status (Semiannual Report)

Security Code 8968

September 1, 2020 to February 28, 2021

Fukuoka REIT
Corporation

8968

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation
To Our Unitholders

Status of the Investment Corporation

We would like to express our sincere appreciation to all unitholders
for your continued support of Fukuoka REIT Corporation (FRC).
We are pleased to report on the performance results and management status of FRC for the thirty-third fiscal period (September 1,
2020 to February 28, 2021).
FRC was listed in June 2005 and started as Japan’s first REIT specializing in regional properties. Since then, we have exhibited consistent growth and achieved stable performance through the support ofour unitholders and sponsor companies.
During the fiscal period under review (the 33rd fiscal period), theJapanese economy continued to show a pickup trend amid a severe
situation still persisting under the impact of the novel coronavirus(COVID-19) infection despite weakness in some areas. As for theoutlook, the economy is expected to further pick up due in part to theeffects of various political measures, although attention should be paid
to the impact of changes in the financial and capital markets, etc.
In the Fukuoka and Kyushu area, the core investment target area for
FRC, the economy is picking up amid a severe situation, with public
spending at a high level. The pickup trend in consumer spending hascome to a temporary pause, however, and supply-and-demand conditions for labor and compensation of employees are both on a weak note.
As we foresee, we must be wary of the impact of the trend of COVID-19
on corporate and household sentiments, among other factors.
Under such circumstances, FRC’s portfolio achieved solid performance in the asset types of office buildings, logistics facilities, andresidential properties. Sales of Canal City Hakata and other major
retail properties increased period-on-period, counter to the emergency declaration period against the spread of COVID-19 in the 32nd
fiscal period, while hotels failed to recover as demand from tourists,
etc. did not return strongly.
Against such a backdrop, FRC managed its assets steadily in the
33rd fiscal period and without any large-scale move-outs of tenants
or major rent reductions, etc. Moreover, from a perspective of dispersing risks through diversification of the portfolio, FRC decided todispose part of its co-ownership interest in Grand Building of Canal
City Hakata·B, a commercial complex, and acquire land with leasehold interest of an office building located in Tenjin, an urban center of
Fukuoka. The disposition and the acquisition will be conducted onJune 1, 2021 (the 34th fiscal period). We will aim to achieve an asset
size of 250.0 billion yen as the next target going forward, while working to reconsider the portfolio as a REIT with comprehensive asset
types specializing in regional properties. We will also continue to flexibly investigate property replacement and other measures if we find
any favorable opportunities.

Occupancy remained solid, with the average period-end occupancy rate of all properties FRC owns standing at 99.5%. FRC posted
operating revenues of 8,904 million yen, operating income of 3,061
million yen, ordinary income of 2,677 million yen, and profit of 2,675
million yen for the fiscal period under review. The dividend per unit
came to 3,361 yen. The actual dividend per unit for the period represents an increase by 111 yen from the previous fiscal period and by
61 yen from the dividend forecast at the time of the announcement of
the financial results for the 32nd fiscal period. The increase is due tomore customers attracted to our retail properties by such hit movies
as Demon Slayer (Kimetsu-no-Yaiba) and the government’s “Go To”
campaigns, and due to better earnings through such factors assmooth recovery at our retail properties that serve people’s dailyneeds. On top of these, we successfully achieved upward revision ofrents for office buildings for the ninth consecutive fiscal period while
maintaining high occupancy and continued endeavors to reduce
costs including administration and operation expenses. These efforts
also contributed to the increase. Looking ahead, we will continue ourendeavors to maintain and increase dividends in a stable manner byacquiring excellent properties to generate stable cash flows and continuously taking strategic initiatives.
Going forward, FRC will continue to exert its strengths as a REIT
specializing in regional properties and quickly respond to market
changes while receiving support and cooperation from powerfulsponsors leading the Kyushu business world. We will also strive tomaintain and increase the level of dividend per unit through steadyasset management. We at FRC will also pursue our mission of maximizing the interests of unitholders over the medium to long term
based on our management philosophy of “Act Local, Think Global.”
We greatly appreciate your continued support and cooperation.

FRC is Japan's first REIT specializing in regional properties. FRC manages a portfolio centering on retail facilities featuring excellent design and entertainment qualities and superior office buildings throughout all of Kyushu. With a central focus on Fukuoka,
and in Yamaguchi Prefecture and Okinawa Prefecture, we are utilizing our strength of knowing the local characteristics of realestate, which is a very regional-specific business.

Overview of the Investment Corporation
Name:
Fukuoka REIT Corporation
Representative: Etsuo Matsuyuki, Executive Director
Asset manager: Fukuoka Realty Co., Ltd. (Fukuoka Local Finance Branch Bureau (financial instruments) No. 10)
June 21, 2005 (Tokyo Stock Exchange, and Fukuoka Stock Exchange)

Listed date:Sponsors (Note 1)

5%

5%

5%

THE BANK OFFUKUOKA, LTD.

THE NISHI-NIPPON CITY BANK, LTD.

Development Bank of Japan Inc.

55%

Director

Fukuoka Realty Co., Ltd.

FUKUOKA JISHO
CO., LTD. (Note 2)

10%

Outsidedirector

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

5%

SAIBU GAS HOLDINGS CO., LTD.

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

Kyushu Railway Company(Note 1) The information is as of May 31, 2021.
(Note 2) Concluded MOU with Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. concerning pipeline support.

Overview of the Asset Manager
Name:
Fukuoka Realty Co., Ltd.
Representative: Etsuo Matsuyuki, CEO & Representative Director
Address:
2-25, 1-Chome, Sumiyoshi, Hakata Ward, Fukuoka City

Etsuo Matsuyuki

Portfolio

Telephone: +81-92-272-3900
Established: December 26, 2003
Capital:200,000,000 yen

Investment type (based on acquisition price)
RetailExecutive Director
Fukuoka REIT Corporation

Office buildings

58.0%

27.7%

Others14.3%

Investment area (based on acquisition price)

CONTENTSI.

ProfileOverview of Fukuoka REIT Corporation
To Our Unitholders ........................................................................................................ 1
Profile .............................................................................................................................................. 2
Trend of Growth in Asset Size of FRC / Financial Summary ......................................................... 3
Portfolio Overview .......................................................................................................................... 5
Overview of Asset Replacement .................................................................................................... 7
Initiatives on Sustainability ............................................................................................................. 8II.
III. Independent Auditor's Report ...................................................................................... 25
IV. Balance Sheet ....................................................................................................................... 27
V. Statement of Income ......................................................................................................... 29
VI. Statement of Changes in Net Assets ........................................................................ 30
VII. Cash Flow Statement ........................................................................................................ 31
VIII. Notes to Financial Statements ..................................................................................... 32

FUKUOKA REIT CORPORATION

1

Other
Kyushu areas

Fukuoka metropolitan area

76.6%

Semiannual Report ............................................................................................................... 9

23.4%

Total leasable floor space

Occupancy rate at end of period

608,557.70 m

99.5%

2

*Figures are based on properties owned as of February 28, 2021.

FUKUOKA REIT CORPORATION

2

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Trend of Growth in Asset Size of FRC
FRC More than Doubled Asset Size and Diversified Investment Types Since
The asset size surpassed 200 billion yen to reach 201.9 billion yen (on an acquisition price basis) in the 32nd fiscal period. FRC aims
Retail (left axis)(mm yen)

Office buildings (left axis)

Residence (left axis)

Logistics (left axis)

Listingto achieve 250.0 billion yen as the next target, while working to dissipate risks by diversifying the investment types.

Hotels (left axis)

Number of investment properties (right axis)(properties)
40

200,000

Acquired from sponsor

15

150,000

Sponsor31

60.9%

properties* Higashi Hie Business Center, which FRC acquired in the10th fiscal period ended August 2009, was acquired bothfrom an outside seller and a sponsor. Accordingly, the acquisition price of the property has been evenly divided andadded to the acquisition price from outside sources and theacquisition from the sponsor, respectively. As for the numberof properties, it has been added as a single property to thenumber of acquisitions from the sponsor.

Other thansponsor

39.1%

122,990

As ofmillion yen
February 28, 2021

31

30

201,959

78,969million yen

million yen

27

100,000

19

15

15

16

16

16

17

16

27

28

27

25

24

23

23

14

31

26

25

29

29

29

26

20

20

17

11

11

10

50,000

8

7
5

0

0

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

19th

20th

21st

22nd

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

33rd

(Aug. 2005)(Feb. 2006)(Aug. 2006)(Feb. 2007)(Aug. 2007)(Feb. 2008)(Aug. 2008)(Feb. 2009)(Aug. 2009)(Feb. 2010)(Aug. 2010)(Feb. 2011)(Aug. 2011)(Feb. 2012)(Aug. 2012)(Feb. 2013)(Aug. 2013)(Feb. 2014)(Aug. 2014)(Feb. 2015)(Aug. 2015)(Feb. 2016)(Aug. 2016)(Feb. 2017)(Aug. 2017)(Feb. 2018)(Aug. 2018)(Feb. 2019)(Aug. 2019)(Feb. 2020)(Aug. 2020)(Feb. 2021)(Note) As the senior equity interest in an anonymous partnership managed by CCH Bridge Y.K. was redeemed in the 14th fiscal period, it is excluded from the total acquired assets from the 14th fiscal period onward.
Since interest in the anonymous partnership managed by Limited Liability Company FRC1 was redeemed in the 26th fiscal period, it is excluded from the total acquired assets from the 26th fiscal period onward.

Financial Summary
 inancial Highlights for 33rd Fiscal Period and Business Forecasts forF
34th and 35th Fiscal Periods
Category

33rd fiscal period

34th fiscal period

35th fiscal period(September 1, 2020 to February 28, 2021)(March 1, 2021 to August 31, 2021)(September 1, 2021 to February 28, 2022)

ActualForecast

Forecast

Operating revenues

mm yen

8,904

8,979

8,724

Leasing NOI (Note)

mm yen

5,347

5,331

5,323

Depreciation and amortization expenses

mm yen

1,623

1,558

1,489

Operating income

mm yen

3,061

3,176

3,168

Ordinary income

mm yen

2,677

2,787

2,787

Profitmm yen

2,675

2,786

2,786

Dividend per unityen (1)

3,361

–

–

Latest dividend forecast per unityen (2)

3,300

3,500

3,500

yen (1)-(2)

61

–

–

units

796,000

796,000

796,000

Difference from forecast
Total number of investment units outstanding(at end of period)(Note) “Leasing NOI” is calculated using “Leasing business revenues − Expenses related to leasing business + Depreciation and amortization expenses.”
FUKUOKA REIT CORPORATION

3

Dividend Performance
Showing a recovery trend from the impact of COVID-19 in the 33rd fiscal period, FRC will keep its endeavors to maintain andstabilize dividends.
33rd fiscal period end

February 28, 2021 (semiannual periods ending every February and August) 33rd fiscal period days 181 days

33rd fiscal period dividend 3,361 yen per unit

Dividend yield

4.0% {(Dividend / Days × 365) / Unit price (as of February 28, 2021)}(yen)

4,000 3,802

3,687 3,726

3,468

3,672 3,699 3,674 3,609

3,475 3,479

3,356 3,293 3,384 3,324

3,238 3,257 3,291 3,243 3,278

3,435

3,563 3,574 3,479

3,398 3,422

3,512 3,593

3,687 3,693 3,642
3,250 3,361

3,500 3,500

3,000

2,000

1,000

0

2nd 3rd

4th

5th

6th

7th

8th

9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th 35th

Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb.
[2005
] [2006] [2006] [2007] [2007] [2008] [2008] [2009] [2009] [2010] [2010] [2011] [2011] [2012] [2012] [2013] [2013] [2014] [2014] [2015] [2015] [2016] [2016] [2017] [2017] [2018] [2018] [2019] [2019] [2020] [2020] [2021] [2021] [2022]*FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. Dividend per unit indicates the value after the 5-for-1 split.
FUKUOKA REIT CORPORATION

4(Forecast)(Forecast)I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation
Purchase of earthquake
insurance

Portfolio Overview
1

Retail2

Canal City Hakata

3

Retail4

RetailRetailOthers25 (residence)

26 Others(hotel)27 Others(hotel)Others28 (logistics)

Park Place Oita

SunLive City Kokura

Granfore Yakuin Minami

Hotel FORZA Oita

Tissage Hotel Naha

Tosu Logistics Center

One of the largest entertainment-type
retail facilities in Japan and comprising
United Cinemas and others

One of the largest entertainment-type
retail facilities in Japan and comprising
MUJI Canal City Hakata and others

A leading retail facility in the Oita area,
providing “park entertainment” for families

One of the largest malls in Kitakyushu andanchored by a SunLive supermarket
chosen by local consumers

A rental condominium in the Yakuin/Hirao
area that is popular among younger
generations and has plentiful bus networks

A business hotel located walking distancefrom Oita Station and specialized for
lodging to meet business needs

A hotel in Naha City, Okinawa Prefecture
located a 10-minute car ride from Naha
Airport. Guestrooms are of sufficient sizeand quality to take in leisure demand.

A logistics facility located in the Green
Logistics Park Tosu, operating around theclock and with three temperature zones

5

6

7

8

Others29 (logistics)

Others30 (logistics)

Others31 (logistics)

RetailCanal City Hakata• B

FRC has purchased earthquake insurance
for all the properties it owns.

RetailRetailRetailKonoha Mall Hashimoto

Square Mall Kagoshima Usuki

Kumamoto Intercommunity SC

A community-based retail facility with SunLive
as its anchor tenant and directly connected to
Hashimoto Station via a pedestrian bridge

A retail facility in Kagoshima, designed byJohn Jerde who designed Canal City
Hakata and Roppongi Hills

Located along a major arterial road andcomprising Sports Depo, Golf 5 andStarbucks coffee

Located in a new residential area andcomprising BON REPAS supermarket
and Matsumoto Kiyoshi drug store

9

10 Retail11 Retail12 Office Building

RetailHanahata SC

LOGICITY Minato Kashii

LOGICITY Hisayama

LOGICITY Wakamiya

A logistics facility among the largest in the
Fukuoka area, with a location featuring
traffic convenience and concentration ofsuch facilities

Approximately 5 km from the Fukuoka
Interchange featuring traffic convenience,and has good general-purpose capabilities

A logistics facility located in a leadingindustrial city of Fukuoka prefecture andcan conduct operations 24 hours a day as
well as frequent deliveries

Portfolio Map
Having a large floor area and tenanted byan electric appliance store widely
attracting customers from nearby cities

14 Office Building

Located east of Marinoa City Fukuoka
and has stable attractiveness throughsynergy with the Outlet building

An office building expected to exert
synergy with Canal City Hakata, withshowroom functions

15 Office Building

Saga

16 Office Building

30

29

Fukuoka
Metropolitan Area

31 4
28
9

Nagasaki

Island City,ay es w L in
resCit ypx daE no k sl aku 6 IF u u teRo

Fukuoka
Oita

26
3

e
Lin

13 Office Building

Canal City Business Center Building

23

7

Sa
ny
o

Kumamoto
MiyazakiFukuoka
Metropolitan
Area

Sh
in
ka
ns
en

Located on a corner of a heavy-trafficintersection and comprising Sports Depoand Golf 5

Marinoa City Fukuoka (Marina Side Building)ssway
Kyushu Expre

K’s Denki Kagoshima

ii
sh
Ka
JR

Kurume Higashi Kushiwara SC

3

Fukuoka IC

Kagoshima

Gofukumachi Business Center

Sanix Hakata Building

Taihaku Street Business Center

Higashi Hie Business Center

An office building facing major arterial
roads Meiji-dori Street and Taihaku-doriStreet, and directly connected to
Gofukumachi Station on the city subway

A highly-convenient, station-front officebuilding that is a two-minute walk from
Hakata Station

Good location along Taihaku-dori Street, a
two-minute walk from Gion subway stationand ten-minute walk from Hakata Station

Directly connected to Higashi Hie subway
station, a two-minute ride to Hakata Stationand three-minute ride to Fukuoka Airport

17 Office Building

18 Office Building

19 Office Building

20 Office Building

6
10

Higashi Hie Business Center II

Higashi Hie Business Center III

An office building facing Tenjin Nishi-doriStreet where commercial facilities areconcentrated

A highly convenient office building locatedin the Tenjin area that features Kyushu’s
largest integration of urban functions

Directly connected to Higashi Hie subway
station, a two-minute ride to Hakata
Station and highly recognized for its
excellent business continuity plan (BCP)

FRC’s 3rd office building in the Higashi
Hie area, close to Higashi Hie subway
station and a two-minute ride to Hakata
Station

Others22 (residence)

Others23 (residence)

KyushuArea

27

Fukuoka Expressway,
Route 1 (Loop Line)

SubwayKuko Line

JR Sasaguri

13

FUKUOKA
PayPay DOME

21 24
Ohori Park

202

18

19
Hakata
1
16
12
14 20
2
3

17

22

Tenjin25
SubwayNanakumaLine

202

Others24 (residence)5

Fukuoka Airport

City House Keyaki DoriA tower-type rental condominium near
downtown Fukuoka, with traffic convenience and environment that matches awide range of generations

A high-quality rental condominium in a
popular residential area of Fukuoka,
featuring traffic and living convenience

Aqualia Chihaya

D-Wing Tower

A rental condominium comprised of units
mainly for singles and small families tomatch the local characteristics

A large, high-rise (20-story) rental
condominium, approximately a seven-minute walk from Tenjin subway station

FUKUOKA REIT CORPORATION

5

202

0

1km

Fukuoka
E

xpr
ess
wa

y R oute

op Line)5 (LoFukuoka metropolitan area
Other Kyushu areas(including Okinawa and Yamaguchi prefectures)

0 - 10% Others

Investment type

(Hotels, Residence, Logistics and Other facilities)

8

FUKUOKA REIT CORPORATION

Investment area

40 - 70% Retail
20 - 50% Office buildings
0 - 30% Others

385

Amex Akasakamon Tower

Investment Policy
60 - 90%
10 - 30%

ine
aL
im
sh
go
Ka

202

Ni
sh
Omitetut su
a Te
Lin nj
e in

263

Line

15

JR

Others21 (residence)

Kyushu University Fukuoka Ex pr
Hakozaki Campus R oute 4 Kas essway,
uya Line
Site

ay
sw
es ne
pr Li
Ex ifu
an za
rb a
U D

Tenjin North Front Building

Hakata Bay

Okinawa

11

Tenjin Nishi-Dori Center Building

36

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Overview of Asset Replacement
FRC decided to conduct asset replacement, scheduled for June 1, 2021, and issued press releases on the matter on March 18.

About the Asset Replacement

Portfolio after asset replacement(Investment ratio by investment type)

Investment policy changed in March 2019

BeforeRetailOfficebuildings
Others

After

60-80
20-40
0-20

%

%

%

(Hotels, Residence, Logistics, etc.)

RetailOfficebuildings
Others

40-70
20-50
0-30

March 2019

June 2021 (scheduled)(Based on acquisition price)(Based on (scheduled) acquisition price)

Others%Others

13.9%
Officebuildings%

14.3%
RetailOfficebuildings

59.2%

26.9%

31.5%

Retail54.2%%(Hotels, Residence, Logistics, etc.)

Overview of the Asset Replacement
Asset to be acquired

Asset to be transferred

Property name

Tenjin Nishi-Dori Business Center(Land with leasehold interest)

Canal City Hakata·B Grand Building(88.28% co-ownership interest in Grand Building)Investment type

Office building (Land with leasehold interest)

RetailAcquisition/Disposition date (scheduled)
Seller/Buyer

June 1, 2021

June 1, 2021

Fukuoka Jisho Co., Ltd.

Hoshino Resorts REIT, Inc.

Acquisition/Disposition price (scheduled)

7,700 mm yen

7,700 mm yen

Appraisal value

7,790 mm yen

7,640 mm yen

Book value (Note 1)—

7,510 mm yen(90) mm yen

60 mm yen

3.5%

5.9%

Difference between acquisition/disposition price (scheduled)
and appraisal value
NOI yield (Note 2)(Note 1) The gain (loss) on disposition including expenses for the disposition, etc. is estimated to be 95 million yen.
(Note 2) The figure is calculated based on the NOI of the appraisal value.

Aim of the Asset Replacement
1

Conducted asset replacement based on investment policy changed in March 2019(lowering the investment ratio of retail facilities and heightening the investment ratio of office buildings)

2

Take in medium- to long-term office building market growth in the Tenjin area

3

Realize continuous sponsor support

4

Capture domestic demand further and contribute to future growth of Canal City Hakata as a whole

5

Reduce risks of having a full-service hotel which is largely impacted by COVID-19

6

Secure gain on sale by selling at a price above the appraisal value

7

Improve stability in dividends

FUKUOKA REIT CORPORATION

7The Bank of Fukuoka
Head OfficeTenjinBuilding
Fukuoka.
Fukuokaev
AHeiwa
a-dori
Shoken Building
TenjinShow
ine Tenjin Sta.
Building
Centeruko L
way K
Buildingl Sub
Tenjin Mitsui
a
ip
ic
un
Buildingoka M
Fukuoka
Fuku
e.
Hulic
Fukuoka
PARCO
ori Av
Land to be acquired
Fukuoka Shinkan
PARCO
Meiji-dBuilding
Sumitomoseimei
e.
i Av
dor
ishijin N
TenI nvestment policy(Investment ratios by investment type)

The property is located along Meiji-dori Avenue where the highest
level of maturity among office districts in the area is seen, andnear Tenjin Nishi-dori Avenue where retail facilities concentrate.
Meiji-dori Avenue runs east-west through the Tenjin area, andthere are many financial institutions located along the street including headquarters of local financial institutions, branches ofmajor banks, branches of securities firms and the Fukuoka Stock
Exchange, as well as retail facilities.

ve.
ri A
-do
abe
tan
Wa

In March 2019, FRC changed the investment ratios by investment type in the basic policy of asset management (as designatedin the Asset Management Guidelines). The change was made to allow FRC to more flexibly investigate acquisition of properties
of investment types other than retail facilities. Based on this policy, FRC conducted the latest asset replacement.

About the Asset to be Acquired

Fukuoka Building
G Building
Nishidori 01
Tenjin Prime

ncho
Shinte district
ping
shop

Nishitetsu
Grand Hotel

Nishitetsu
Fukuoka(Tenjin) Sta.

About the Asset to be Transferred
FRC decided to dispose the property based on the judgement that it would lead to the maximization of unitholder value over the medium to long term. Under the impact of the COVID-19
infection, FRC has considered various options including renewal of floors that are not accommodation-category floors, stabilizing earnings through change of use, as well as transfer of theproperty. As there was an offer to acquire the property from Hoshino Resorts REIT, Inc., thebuyer, for some time, and upon comprehensively considering that the transfer would lead tomedium- to long-term stability of the portfolio and that the transfer to Hoshino Resorts Groupis expected to increase demand for the property from domestic customers as well as otherfactors.

Canal City Hakata·B Grand Building

Canal City Hakata as a whole (portions owned by FRC)
(Note) FRC does not own Canal City Theater in the North Building
and has no plans to acquire it as of May 31, 2021.

Initiatives on Sustainability
 ublication of “Integrated Report 2020”P(becoming the only J-REIT to do so)

FRC published the second issue “Integrated Report 2020,” which integrally provides its financial and non-financial information and encompasses its initiatives for sustainable growth andmedium-to long-term corporate value creation. Aimed at demonstrating FRC’s value-creation
process in an easy-to-understand manner, the Report presents its history, management philosophy, value-creation activities and the foundations underpinning management, etc. This
report was complied in reference to the “International Integrated Reporting Framework” by theInternational Integrated Reporting Council (IIRC) and “Guidance for Collaborative Value Creation” by the Ministry of Economy, Trade and Industry.
Integrated Report: https://www.fukuoka-reit.jp/en/ir/index.html

External Evaluation

Green Building Certification

The GRESB Survey 2020

Green Building
certificate
acquisition ratio

Received the rating of “GreenStar” and “3 Star” in the GRESB
survey 2020

*As of February 2021
(based on total floor space)

FUKUOKA REIT CORPORATION

8

Certificatedproperties

79.8%

II. Semiannual Report

Overview of Asset Management

Overview of Asset Management

2. Management assessment(1) Brief history of the investment corporation

1. Changes in operating results and financial position
Fiscal Period(unit)

Operating revenues

mm yen[Leasing business revenues]

mm yen32nd fiscal period

33rd fiscal period(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)(September 1, 2020 toFebruary 28, 2021)

mm yen9,162[9,162]
5,888[5,226]
3,273
2,900
2,899
194,795[(0.2)]
77,500101,837[(0.0)]
98,9388,518[8,518]5,551[4,897]
2,966
2,587
2,586
199,004[2.2]
82,400101,525[(0.3)]
98,938

8,904[8,904]
5,842[5,180]
3,061
2,677
2,675
199,559[0.3]
82,400101,614[0.1]
98,938

units

796,000

796,000

796,000

796,000

796,000(d)/(e)yen(f)

mm yen127,987
2,939
3,693[3,693][–]

127,937
2,899
3,642[3,642][–]

127,5442,587
3,250[3,250][–]127,656
2,675
3,361[3,361][–]mm yenmm yenmm yenmm yen(a)

mm yen(b)

mm yen(c)

mm yen(d)

mm yen[Change from previous period]%[Change from previous period]%

Unitholders’ equity
Total number of investment
units outstanding
Net assets per unit
Total dividend
Dividend per unit

31st fiscal period(March 1, 2019 toAugust 31, 2019)

9,231[9,231]
5,913[5,250]
3,318
2,939
2,939
195,106[(0.2)]
77,500101,878[0.0]
98,938[Expenses related to leasing business]

Interest-bearing debt
Net assets

30th fiscal period(September 1, 2018 to
February 28, 2019)

9,242[9,242]
5,936[5,274]
3,306
2,935
2,934
195,433[1.2]
77,500101,874[0.1]
98,938Operating expenses
Operating income
Ordinary income
ProfitTotal assets

29th fiscal period(e)[Earnings dividend per unit]

yen[Dividend in excess of earnings per unit]

yen

127,982
2,934
3,687[3,687][–](Note 3)%

1.5 [3.0]

1.5 [3.0]

1.5 [3.0]

1.3 [2.6]

1.3 [2.7](Note 3)%

2.9 [5.8]

2.9 [5.7]

2.8 [5.7]

2.5 [5.0]

2.6 [5.3](d)/(b)

%

52.1

52.2

52.3

51.0

50.9

%

Ratio of ordinary income to total
assetsReturn on net assets
Ratio of net assets to total
assets(f)/(e)(Note 3)%[(0.6)]
100.0

[0.1]
100.0

[0.1]
100.0

[(1.3)]
100.0[(0.1)]
100.0(c)/(b)

%

39.7

39.7

39.8

41.4

41.3

properties

29

29

29

31

31

m2

580,665.27

580,664.27

580,662.77

591,021.51

608,557.70

%

99.7

99.6

99.7

99.7

99.5

mm yen

1,622

1,651

1,660

1,686

1,623

mm yen

947
5,591
181
4,557
5,725

476
5,633
184
4,591
5,767

465
5,596
182
4,559
5,728

790
5,307
184
4,273
5,368

687
5,347
181
4,299
5,401

[Change from previous period]

Payout ratio
Ratio of interest-bearing debt tototal assets at end of period (LTV)[Other reference information]
Number of investment
properties (at end of period)
Total leasable floor space(at end of period)

Occupancy rate
(at end of period)

Depreciation and amortization
expensesCapital expenditures
Leasing NOI
Days in fiscal period
FFO (Funds from Operation)
FFO per unityen

(Note 3)mm yendays(g)(Note 3) mm yen(g)/(e)yen(Note 1) Consumption tax is not included in operating revenues, etc.
(Note 2) In the above table, monetary amounts are rounded down to the nearest specified unit and percentage figures are rounded off to one decimal place.
(Note 3) The indicators are calculated by using the following methods. Furthermore, the figures in square brackets represent annualized value based on the number of days in each fiscal period.
Ratio of ordinary income to total assets
Return on net assets
Payout ratio
Leasing NOIFFO (Funds from Operation)

Ordinary income / average total assets
Average total assets = (Total assets at beginning of period + total assets at end of period) / 2
Profit / average net assets
Average net assets = (Net assets at beginning of period + net assets at end of period) / 2
Dividend per unit (excluding dividend in excess of earnings) / profit per unit
Profit per unit = Profit / total number of investment units outstanding
Leasing business revenues – expenses related to leasing business + depreciation and amortization expenses
Profit + depreciation and amortization expenses + impairment loss - gain or loss on sales of real estate

FUKUOKA REIT CORPORATION

9

Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on Investment Trusts andInvestment Corporations” (Act No. 198 in 1951 including later revisions, hereinafter the “Investment Trusts Act”) and listed on
the Tokyo Stock Exchange, Inc. and the Fukuoka Stock Exchange on June 21, 2005 as the nation’s first real estate investment
trust specializing in regional properties (code number: 8968). FRC invests in real estate throughout Kyushu (including Okinawa
Prefecture), with a central focus on Fukuoka City, and Yamaguchi Prefecture (hereinafter the “Fukuoka and Kyushu areas”) byusing expertise in regional characteristics, a strength in the real estate industry.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retail in Canal City
Hakata (excluding some areas of specialty shops, hotels, theaters, 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 33rd fiscal period (February 28, 2021), FRC manages a total of 31 properties comprising 11
Retail, 9 Office buildings and 11 Others.

(2) Investment environment and portfolio performance
During the 33rd fiscal period, the Japanese economy continued to show signs of improvement despite the negative interferenceof the novel coronavirus (COVID-19). It is expected that the economy will continue to improve given the effects of various politicalmeasures, although attention should be paid to the impact of changes in the financial and capital markets, etc.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy is picking up amid a severe situation,with public spending at a high level. The pickup trend in consumer spending has come to a temporary pause, however, andsupply-and-demand conditions for labor and compensation of employees are both on a weak note. As we foresee, we must bewary of the impact of the trend of COVID-19 on corporate and household sentiments, among other factors.
As for land price trends, the national average price in combined average for residential and commercial land took a downward
turn for the first time in 6 years, with the residential land price and commercial land price dropping for the first time in 5 years and7 years, respectively, according to the 2021 Land Market Value Publication. Meanwhile, in Fukuoka City, the central area of
FRC’s investment targets, land prices have continued to rise for 9 consecutive years, up 6.6% year-on-year for commercial land
and up 3.3% year-on-year for residential land.
Under such circumstances, FRC’s portfolio achieved solid performance in the asset types of office buildings, logistics facilities,
and residential properties. Sales of Canal City Hakata and other major retail properties increased period-on-period, countering
the negative influences of COVID-19 experienced during the 32nd fiscal period. Hotels, however, failed to recover given the
decline in demand for tourism.
When analyzing FRC’s portfolio (on an acquisition price basis) as of the end of the 33rd fiscal period by investment target area,
the investment ratio in the Fukuoka urban area accounted for 76.6%; when analyzing by property type, Retail, Office buildings,
and Others accounted for 58.0%, 27.7% and 14.3%, respectively.
On top of these efforts, FRC is engaged in promoting sustainability through environmental, social and governance (ESG) considerations based on its Sustainability Policy. For this purpose, the Sustainability Promotion Committee has been established at
Fukuoka Realty Co., Ltd. to which FRC entrusts its asset management (the Asset Manager). The Committee, which comprises
President/CEO and general managers of Property Management Department, Investment Department, Finance Department,
Planning Department and Compliance Department of the Asset Manager, investigates specific targets and measures and supervises the progress in implementation of the measures with regard to the internal system, cooperation with related parties outside
the company and information disclosure policy, etc. On the implementation side, FRC has established the Sustainability Promotion Office under the sustainability officer (general manager of the Planning Department), who is the person responsible for thepractical aspects concerning the targets set at the Sustainability Promotion Committee, and the Office is engaged in continuous
operations related to the GRESB Real Estate Assessment (with Green Star rating), the Principles for Responsible Investment(PRI) and the Principles for Financial Action for the 21st Century (PFA21) and other initiatives.

FUKUOKA REIT CORPORATION

10

II. Semiannual Report

II. Semiannual Report

Overview of Asset Management

Overview of Asset Management(3) Summary of fundraising[Changes in market price of investment certificates]

The balance of FRC's interest-bearing debt outstanding (including investment corporation bonds) at the end of the 33rd fiscal
period totaled 82,400 million yen, with the loan-to-value ratio (ratio of interest-bearing debt (including investment corporation
bonds) to total assets) at 41.3% and the ratio of fixed-interest rate debt (ratio of interest-bearing debt with fixed interest rates(including investment corporation bonds) to total interest-bearing debt) at 94.1% as of the same date. In addition, with regard to
the commitment line agreement (credit limit: 7,000 million yen) with The Nishi-Nippon City Bank, Ltd. serving as the agent, FRC
extended the commitment period by a year, lengthening the remaining term of commitment to three years.
Going forward, FRC will continue its endeavors to reduce refinancing risks by dispersing debt repayment dates and extending
debt duration. At the same time, FRC will work to mitigate risks of rising interest rates by shifting to fixed-interest rate borrowings
and through other measures.

The highest and lowest (closing price) market prices on the Real Estate Investment Trust Section of the Tokyo Stock Exchange,
Inc., on which FRC’s investment certificates are listed, in each fiscal period are as follows:Moreover, the credit ratings assigned to FRC as of the end of the 33rd fiscal period are as follows:
Credit Rating Agency
Rating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)

Rating Type
Issuer Rating
Long-term Issuer Rating

RatingA+
AA−

Rating Outlook
StableStable(4) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 8,904 million yen and operating income after excluding
operating expenses such as expenses related to leasing business and asset management fees totaled 3,061 million yen. Ordinary income was 2,677 million yen and profit amounted to 2,675 million yen. Management decided to make a dividend of 3,361
yen per unit to meet the requirements of special tax measures for an investment corporation (as stipulated in Article 67-15 of the
Act on Special Measures Concerning Taxation of Japan [Act No. 26 in 1957 including later revisions]). Under this act, an investment corporation is allowed to deduct the maximum amount of dividends paid to investors from its taxable income.

Fiscal period
HighestLowestFiscal period
ProfitUnappropriated surplus
Undistributed earnings
Total dividends[Dividend per unit]

Earnings dividends

Changes in unitholders’ capital from the incorporation of FRC to the end of the 33rd fiscal period are as follows:

Of the contribution refund,
distribution of the reserve
for temporary difference
adjustments

July 2, 2004
November 8, 2004
June 20, 2005
July 21, 2005
September 7, 2006
March 1, 2011
March 1, 2013
March 1, 2014
April 27, 2015
March 1, 2018

Established through private placement
Additional issue of investment units through private offering
Additional issue of new investment units through public offering
Additional issue of new investment units through third-party allotment
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering
Split of investment units
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering[Contribution refund per unit]

Unitholders’ capital(mm of yen) (Note 11)

Increase
125
41,4005,944
1,698
11,096
8,913
10,263–
11,701
7,795

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441
91,142
98,938Remarks(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)11

33rd fiscal period(March 1, 2020 toAugust 31, 2020)(September 1, 2020 toFebruary 28, 2021)

182,500 yen
166,000 yen

191,700 yen
167,900 yen

169,900 yen
72,500 yen

179,900 yen
126,300 yen(Of the contribution refund per unit,
distribution per unit of the reserve
for temporary difference
adjustments)

Of the contribution refund,
distribution through the
reduction in unitholders’capital for tax purposes(Of the contribution refund per unit,
distribution per unit through the
reduction in unitholders’ capital fortax purposes)

29th fiscal period

30th fiscal period

31st fiscal period

32nd fiscal period

33rd fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)(September 1, 2020 toFebruary 28, 2021)

2,934,877
2,935,391
539
2,934,852[3,687 yen]
2,934,852[3,687 yen]–[–]

2,939,139
2,939,679
51
2,939,628[3,693 yen]
2,939,628[3,693 yen]–[–]

2,899,112
2,899,164
132
2,899,032[3,642 yen]
2,899,032[3,642 yen]–[–]

2,586,899
2,587,031
31
2,587,000[3,250 yen]
2,587,000[3,250 yen]–[–]

2,675,572
2,675,604
248
2,675,356[3,361 yen]
2,675,356[3,361 yen]
–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

(Note 9)(Note 10)(Note 1) FRC was established with an issue of investment units at 500,000 yen per unit.
(Note 2) New investment units were issued through private offering at the issue price of 500,000 yen per unit for the purpose of procuring funds for acquiring new properties, etc.
(Note 3) New investment units were issued through public offering at the issue price of 880,000 yen per unit (purchase price of 849,200 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 4) New investment units were issued through third-party allotment at the purchase price of 849,200 yen per unit.
(Note 5) New investment units were issued through public offering at the issue price of 766,360 yen per unit (purchase price of 739,772 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 6) New investment units were issued through public offering at the issue price of 576,083 yen per unit (purchase price of 557,078 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 7) New investment units were issued through public offering at the issue price of 710,580 yen per unit (purchase price of 686,529 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 8) FRC implemented a 5-for-1 split of its investment units.
(Note 9) New investment units were issued through public offering at the issue price of 212,257 yen per unit (purchase price of 205,290 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 10) New investment units were issued through public offering at the issue price of 164,414 yen per unit (purchase price of 159,102 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 11) No consideration has been given to the change in unitholders’ equity due to distribution of dividend in excess of earnings that came from reserve for temporary difference adjustments.The same shallapply hereafter.

FUKUOKA REIT CORPORATION

32nd fiscal period(September 1, 2019 toFebruary 29, 2020)

With respect to the dividend (excluding dividend in excess of earnings) for the 33rd fiscal period, FRC determined to distributethe whole unappropriated surplus (except for the fraction amount, which is the dividend per unit of less than 1 yen) to be eligible
for special tax measures for an investment corporation (as stipulated in Article 67-15-1 of the Special Taxation Measures Act)
that allow FRC to deduct the maximum amount of earnings dividend from its taxable income. Accordingly, dividend per unit for
the fiscal period was 3,361 yen.
(thousands of yen)Contribution refund

Number of investment units
issued (units)
Increase
Balance250
250
82,80083,0507,000
90,0502,000
92,05015,000107,050
16,000123,050
14,950138,000
552,000
690,000
57,000747,000
49,000796,000

31st fiscal period(March 1, 2019 toAugust 31, 2019)

4. Results of dividend, etc.

3. Change in the number of investment units issued
Item

30th fiscal period(September 1, 2018 to
February 28, 2019)

176,100 yen
159,900 yen[Earnings dividend per unit]

Date

29th fiscal period

5. Future portfolio management policy and vital issues
FRC will further reinforce management and leasing capabilities by cooperating with property management companies including
sponsor companies, and secure and maintain the stable operation of the properties by making the most use of their advantages.
FRC will continue to make investments based on the basic policy stipulated in its Articles of Incorporation and its basic philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in “high growth potential
markets.” By geographic location, of the Fukuoka and Kyushu areas, FRC will invest 60% to 90% of its assets in the Fukuoka
metropolitan area, since the Fukuoka metropolitan area is expected to have a high population growth rate in the future. In addition to the Fukuoka metropolitan area, management has decided to actively acquire properties in major cities, if there are regionsor properties where FRC can generate investment merits through its knowledge of the local land. FRC will acquire high quality
properties through use of its advantages, such as information gathering ability in the areas, good knowledge of regional properties and close relations with the local business community and governments, so that investors can continue to invest in FRC withassurance.
FUKUOKA REIT CORPORATION

12

II. Semiannual Report

II. Semiannual Report

Overview of Asset Management

Overview of the Investment Corporation

Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try to maintain a solid
financial structure.

6. Significant events that have occurred after the end of the 33rd fiscal
period(1) Disposition of AssetOn March 18, 2021, FRC concluded a sales agreement regarding disposal of real estate trust beneficiary interest.
Type of asset to bedisposed

Property name

Use

Real estate trust
beneficiary interest

Canal City
Hakata·B Grand
Building (Note 1)

RetailLocation

Buyer

2-82, 1-chome,
Hoshino Resorts
Sumiyoshi, Hakata
REIT, Inc.
Ward, Fukuoka City

Disposition price Disposition date(planned)

Impact on earnings(planned)

7,700 million yen(Note 2)June 1, 2021

FRC plans to record gain on sales ofreal estate of approximately 95 million
yen as operating revenues for the
fiscal period ending August 2021.

(Note 1) FRC will dispose of the beneficiary interest of a trust with 88.28% co-ownership interest in Grand Building, one of the compartmentalized buildings, as trust property. The trust will be arising by splitting
the trust that has been established based on the real estate management and disposition trust agreement for Canal City Hakata·B.
(Note 2) The disposition price (planned) does not include disposition expenses, the amount equivalent to the settlement of property taxes and city planning taxes, etc. and consumption taxes.
(Note 3) The beneficiary interest disposition agreement for the property (the "Disposition Agreement") falls under the category of forward commitment, etc. (a postdated transaction agreement where the settlement and delivery are to take place one month or more after the conclusion of the agreement as well as other similar agreements). The Disposition Agreement states that, in the event either FRC or thebuyer fails to fulfill the obligations of the Disposition Agreement and the affected party demands to fulfill it within a reasonable period of time and the other party fails to fulfill it within the specified period of time, the affected party may cancel the sales agreement as long as the property has not yet been transferred. In addition, FRC or the buyer will be liable to compensate for damages, etc. sufferedby the other party in relation to the breach of the Disposition Agreement, but the compensation amount shall be up to 20% of the total sales price at a maximum.

(2) Acquisition of AssetOn March 18, 2021, FRC concluded a sales agreement regarding acquisition of real estate trust beneficiary interest.
Type of asset to be
Property nameacquired
Tenjin Nishi-Dori Business Center
Real estate trust(Land with leasehold interest)
beneficiary interest

Location

SellerAcquisition price

Acquisition date(planned)(planned)

Office2-149, Tenjin, Chuo Ward,
Fukuoka City and 4 other lots

Fukuoka Jisho Co.,
Ltd.

7,700 million yen

June 1, 2021

(Note 1) The acquisition price (planned) does not include acquisition expenses and the amount equivalent to the settlement of property taxes and city planning taxes, etc.
(Note 2) The beneficiary interest disposition agreement for the acquisition of the property (the "Acquisition Agreement") falls under the category of forward commitment, etc. (a postdated transaction agreement
where the settlement and delivery are to take place one month or more after the conclusion of the agreement as well as other similar agreements). FRC shall be able to cancel the Acquisition Agreement
without penalty if it becomes impossible to achieve the purpose of the agreement due to a cause not attributable to FRC. In the Transaction Agreement FRC will not pay any deposit.

Overview of the Investment Corporation

Total number of authorized
investment units
Total number of investment
units outstanding
Number of unitholders

Name

Investment units held (units)

Custody Bank of Japan, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Fukuoka Jisho Co., Ltd.
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
Custody Bank of Japan, Ltd. (Securities investment trust account)
NORTHERN TRUST CO. (AVFC) RE HCR00
The Shinkumi Federation BankSTATE STREET BANK WEST CLIENT – TREATY 505234
MetLife, Inc.
Shikoku Railway Company
Total

173,018
101,398
73,13630,703
19,847
15,51814,76011,976
10,2279,130459,713

Percentage of total number ofinvestment units outstanding (%) (Note)
21.73
12.73
9.18
3.85
2.49
1.94
1.85
1.50
1.28
1.14
57.75

(Note) Percentage of total number of investment units outstanding is rounded down to the nearest specified unit.

3. Matters related to directors(1) The names of FRC’s directors, etc. and their fees for the 33rd fiscal period are as
follows:
Name of directors, etc.

Major concurrent assignments

Total fee for each title for the
33rd fiscal period(thousands of yen) (Note 2)

Executive Director
Supervisory Directors
Independent Auditor

Etsuo Matsuyuki
Takashi Tanabe
Yasuo Kawasho
PricewaterhouseCoopers
Aarata LLC

CEO and Representative Director, Fukuoka Realty Co., Ltd.
Representative attorney at law at Tanabe Law Office
Representative Partner, Kawasho Authorize Accountant Office
–

6,000
3,600
8,500

(Note 1) Etsuo Matsuyuki, the Executive Director, possesses two investment units of FRC under his own name. The Supervisory Directors do not possess investment units of FRC under their own name or underanother person’s name. Although there are cases where the Supervisory Directors may be directors of companies other than those stated above, none of the companies or those stated above havevested interest in FRC.
(Note 2) The fees for the Executive Director and Supervisory Directors are the amounts paid to them in the 33rd fiscal period, and the fee to the Independent Auditor is the amount payable to it (estimate) foraudits pertaining to the 33rd fiscal period.

(2) Policy on deciding to dismiss and not to reappoint the Independent Auditor
FRC will review at its Board of Directors meetings decisions regarding the dismissal of the Independent Auditor in accordancewith the provisions of the Investment Trusts Act, and review decisions not to reappoint the Independent Auditor following thecomprehensive consideration of the audit quality, audit fee and other various conditions.

1. Summary of unitholders’ capital
Fiscal period

The following table sets forth the major unitholders of FRC as of February 28, 2021.

Title

Use

(Note 1)2. Matters related to investment units

29th fiscal period

30th fiscal period

31st fiscal period

32nd fiscal period

33rd fiscal period

as of February 28, 2019as of August 31, 2019as of February 29, 2020

as of August 31, 2020

as of February 28, 2021

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

796,000 units

796,000 units

796,000 units

796,000 units

796,000 units

10,47810,551

10,473

14,46813,817

4. Names of asset management company, asset custodian and generaladministrators as of the end of the 33rd fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as of February 28, 2021.
Category of entrustment
Asset Management Company
Asset Custodian
General Administrator (accounting matters, etc.)
General Administrator (administration of unitholders’ list)
General Administrator (administration of investment corporation bonds registry)
General Administrator (administration of investment corporation bonds registry)FUKUOKA REIT CORPORATION

13

Name
Fukuoka Realty Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Mitsubishi UFJ Trust and Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.

FUKUOKA REIT CORPORATION

14

II. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Status of FRC’s Assets under Management

1. FRC’s asset structure
Type of asset

Use

3. Details of real estate properties in the portfolio

Area(Note 1)

Real estate trust
beneficiary interest

as of February 28, 2021

The following table provides details of the real estate properties owned by FRC as of February 28, 2021.

Percentage of
total assets

Total value of
properties owned

Percentage of
total assets(mm of yen) (Note 2)(%) (Note 3)(mm of yen) (Note 2)(%) (Note 3)

–
–
–
–
–
1,821
74,852
37,03348,283–
20,171
5,408
11,433

–
–
–
–
–
0.9
37.6
18.6
24.3
–
10.1
2.7
5.7

–
–
–
–
–
2,167
74,58336,82847,996–
20,033
5,362
12,586

–
–
–
–
–
1.1
37.4
18.5
24.1
–
10.0
2.7
6.3

199,004[187,589]

100.0[94.3]

199,559[186,988]

100.0[93.7]

Fukuoka metropolitan area
Other Kyushu areas
Fukuoka metropolitan area
Office buildings
Other Kyushu areas
Fukuoka metropolitan area
OthersOther Kyushu areas
Fukuoka metropolitan area
RetailOther Kyushu areas
Fukuoka metropolitan area
Office buildings
Other Kyushu areas
Fukuoka metropolitan area
OthersOther Kyushu areas
Deposits and other assets
Total amount of assets (Note 4)

33rd fiscal period

as of August 31, 2020

Total value of
properties owned

RetailReal estate

32nd fiscal period(Note 1) “Fukuoka metropolitan 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 2015 census, which states “thenumber of workers and students aged 15 years or older (students including those aged 14 years or younger: particular reference) commuting between their homes and places of work or school” conducted by Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs and Communications. “Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka metropolitanarea).
(Note 2) “Total value of properties owned” is based on the value on the balance sheet (the value of real estate and real estate trust beneficiary interest is the book value after depreciation).
(Note 3) Concerning the “Percentage of total assets,” the figures are rounded off to one decimal place. The total of individual percentages in the above table may not equal 100%.
(Note 4) Figures in square brackets for “Total amount of assets” refer to the value and percentage of real estate owned in effect to the total amount of assets.

Real estate property namePark Place Oita
SunLive City Kokura
Konoha Mall Hashimoto
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Marinoa City Fukuoka(Marina Side Building)Real estate property name (Note 1)
Canal City Hakata
Canal City Hakata·B
Park Place Oita
Canal City Business Center Building
Konoha Mall Hashimoto
Gofukumachi Business Center
LOGICITY Minato Kashii
Taihaku Street Business Center
SunLive City Kokura
Marinoa City Fukuoka (Marina Side Building)
Total

Total leasable
floor space (m2)Book value(mm of yen)

29,58428,701
20,195
12,922
9,913
8,796
7,789
5,698
5,439
5,416
134,458

46,585.57
68,824.95
121,212.26
23,029.92
22,121.05
19,905.34
43,233.72
14,677.30
61,450.22
33,069.82
454,110.15

Total leased floor Occupancy rate(%) (Note 2)
space (m2)
45,501.63
68,473.81
121,198.96
23,029.92
21,631.32
19,905.34
43,233.72
14,505.95
61,450.22
33,069.82
452,000.69

97.7
99.5
100.0
100.0
97.8
100.0
100.0
98.8
100.0
100.0
99.5

(Note 1) The properties listed above are owned in the form of trust beneficiary interest.
(Note 2) “Occupancy rate” refers to the percentage of leased floor space to leasable floor space and the figures are rounded off to one decimal place.
(Note 3) “Percentage of total leasing business revenues” is rounded off to one decimal place.
(Note 4) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

Percentage of total
leasing businessrevenues (%) (Note 3)
11.4
16.1
13.5
7.2
8.7
6.3
Undisclosed (Note 4)
3.6
2.9
2.0
–

Main use
RetailRetailRetailOffice buildings
RetailOffice buildings
Others
Office buildings
RetailRetail–Retail subtotal:

Canal City Business Center Building

Sanix Hakata Building

Higashi Hie Business Center

The following is an overview of the major assets (top ten properties on a book value basis) owned by FRC as of February 28,
2021.

2-22, 1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City
2-1, 1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City1, 2-chome, Koen Dori Nishi, Oita City,
Oita
14-1, 2-chome, Kami Kuzuhara,
Kokura Minami Ward, Kitakyushu City
27-2, 2-chome, Hashimoto, Nishi
Ward, Fukuoka City
2-18, 2-chome, Usuki, Kagoshima
City, Kagoshima
1-5, 1-chome, Kozono, Higashi Ward,
Kumamoto City
9-12, 4-chome, Hanahata, Minami
Ward, Fukuoka City
370-3 Higashi Kushiwara, Kurume
City, Fukuoka
4-12, Tokai-cho, Kagoshima City,
Kagoshima
12-30, 2-chome, Odo, Nishi Ward,
Fukuoka City

Canal City Hakata·B

Taihaku Street Business Center

2. Major assets owned by FRC

Location

Canal City Hakata

Gofukumachi Business Center

Tenjin Nishi-Dori Center Building
Tenjin North Front Building
Higashi Hie Business Center II
Higashi Hie Business Center III

2-25, 1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City
10-10, Kami Gofukumachi, Hakata
Ward, Fukuoka City
1-23, 2-chome, Hakataeki Higashi,
Hakata Ward, Fukuoka City
3-21 Gokushomachi, Hakata Ward,
Fukuoka City
1-2, 3-chome, Higashi Hie, Hakata
Ward, Fukuoka City
5-28, 2-chome, Tenjin, Chuo Ward,
Fukuoka City
4-20, 4-chome, Tenjin, Chuo Ward,
Fukuoka City
5-13, 1-chome, Higashi Hie, Hakata
Ward, Fukuoka City45, 4-chome, Higashi Hie, Hakata
Ward, Fukuoka City

Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha
Tosu Logistics Center
LOGICITY Minato Kashii
LOGICITY Hisayama
LOGICITY Wakamiya

Form ofownership

4-23, 2-chome, Maizuru, Chuo Ward,
Fukuoka City
16-21, 2-chome, Kego, Chuo Ward,
Fukuoka City
3-12, 4-chome, Chihaya, Higashi
Ward, Fukuoka City
10-38, 2-chome, Daimyo, Chuo Ward,
Fukuoka City
11-20, 1-chome, Hirao, Chuo Ward,
Fukuoka City
5-18, 1-chome, Chuo-cho, Oita City,
Oita
14-1, 2-chome, Nishi, Naha City,
Okinawa
1607 Aza Momota, Himekata-cho,Tosu City, Saga
3-4, 2-chome, Minato Kashii, Higashi
Ward, Fukuoka City
2335-3 Oaza Yamada, Hisayamamachi, Kasuya County, Fukuoka
1406 Shimoaruki, Miyawaka City,
Fukuoka

Others subtotal:
Total

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Real estate

Total leasable
floor space (m2)Period-end
appraisalvalue(mm of yen)
(Note)

Book value
at end ofperiodReal estate appraiser(mm of yen)

46,585.57

30,70029,584

68,824.95

28,90028,701

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

121,212.26

21,20020,195

Japan Real Estate Institute61,450.22

8,440

5,439

Japan Real Estate Institute22,121.05

10,300

9,913

Tanizawa Sogo Appraisal
Co., Ltd.

14,602.88

4,960

4,296

Japan Real Estate Institute6,968.66

2,740

1,956

Japan Real Estate Institute2,801.15

1,200

967

6,467.80

2,740

2,010

7,296.17

3,660

2,930

33,069.82

6,080

5,416

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

391,400.53

120,920

111,41223,029.92

16,80012,922

19,905.34

15,2008,796

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

6,293.75

6,510

3,763

Japan Real Estate Institute

14,677.30

9,180

5,698

Japan Real Estate Institute13,614.59

8,280

4,405

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

3,140

2,663

Japan Real Estate Institute5,252.41

4,400

2,447

Japan Real Estate Institute6,214.77

4,580

4,023

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

2,981.14

3,320

3,275

95,308.54

71,41047,996

4,821.25

1,840

1,652

2,710.86

1,030

891

5,619.69

1,900

1,157

Japan Real Estate Institute7,187.59

3,580

2,652

2,496.06

1,340

1,088

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

5,785.44

1,890

1,364

Japan Real Estate Institute3,758.76

2,860

2,834

Tanizawa Sogo Appraisal
Co., Ltd.

4,173.29

1,320

1,162

Japan Real Estate Institute43,233.72

9,100

7,789

24,505.65

5,340

4,800

17,556.32

2,370

2,167

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

121,848.63
608,557.70

32,570224,900

27,563
186,972

Daiwa Real EstateAppraisal Co., Ltd.
Daiwa Real EstateAppraisal Co., Ltd.

(Note) “Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity with the method and standards for asset evaluation stipulated in FRC’s Articles ofIncorporation and rules stipulated by The Investment Trusts Association, Japan.

FUKUOKA REIT CORPORATION15FUKUOKA REIT CORPORATION

16

II. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Real estate property name

Canal City Hakata
Canal City Hakata·B
Park Place Oita
SunLive City Kokura
Konoha Mall Hashimoto
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Marinoa City Fukuoka (Marina Side Building)Retail subtotal:
Canal City Business Center Building
Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center
Higashi Hie Business Center
Tenjin Nishi-Dori Center Building
Tenjin North Front Building
Higashi Hie Business Center II
Higashi Hie Business Center III
Office buildings subtotal:

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

Number ofOccupancy
tenants at end rate at end ofof period
period(Note 1)

1 [50]
1 [45]
1 [106]
1
1 [126]
13
2
2
1
1
1
25 [348](Note 2)

1 [60]
36
16
1 [67]
1 [27]
1
11
2
5
74 [225](%) (Note 3)

Total leasing Percentage ofTotal leasing Percentage of
Number ofOccupancy
business
total leasing
business
total leasing
tenants at end rate at end ofrevenues
business
revenues
businessof period
periodduring periods
revenues
during periods
revenues(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)

100.0
99.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,016
1,306
1,113
262
710
253
89
40
88
111
165

11.9
15.3
13.1
3.1
8.3
3.0
1.1
0.5
1.0
1.3
1.9

99.9

5,157

60.6

99.2
100.0
100.0
98.4
100.0
100.0
100.0
100.0
94.1

624
554
207
318
349
86
145
164
47

7.3
6.5
2.4
3.7
4.1
1.0
1.7
1.9
0.6

99.4

2,497

29.3

Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha

1 [61]
1 [42]
1 [103]
1 [133]
1 [98]
1
1

90.6
100.0
97.9
96.7
99.0
100.0
100.0

Tosu Logistics Center

1

100.0

64
38
59
117
38
63
43
Undisclosed

0.8
0.4
0.7
1.4
0.5
0.7
0.5
Undisclosed(Note 5)(Note 5)

Undisclosed(Note 2)

1 [46]
1 [45]
1 [104]
1
1 [123]
13
2
2
1
1
1
25 [339](Note 2)

1 [62]
36
16
1 [68]
1 [27]
1
11
2
5
74 [228]

61.2

100.0
100.0
100.0
98.8
100.0
100.0
100.0
100.0
94.1

641
557
205
318
351
86
144
162
92

7.2
6.3
2.3
3.6
4.0
1.0
1.6
1.8
1.0
28.8

1

100.0

0.7
0.4
0.7
1.3
0.4
0.7
0.3
Undisclosed(Note 5)(Note 5)2

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)1

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)1

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)

99.4

892

10.0

99.5

8,904

100.0

(Note 5)LOGICITY Hisayama

1

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)LOGICITY Wakamiya (Note 6)

–

–

–

–

99.2

863

10.1

12 [444]

99.7

8,518

100.0

111 [1,011](Note 2)

5,450

66
39
60
112
38
63
28
Undisclosed(Note 5)110 [1,016]

99.5

2,560

100.0

Total

11.4
16.1
13.5
2.9
8.7
2.8
1.0
0.5
1.0
1.3
2.0

98.8
97.8
97.9
95.1
96.0
100.0
100.0

2

(Note 2)(%) (Note 4)

1,018
1,429
1,198
262
778
252
89
40
88
112
178

99.6

(Note 2)LOGICITY Minato Kashii

11 [443](mm of yen)

97.7
99.5
100.0
100.0
97.8
100.0
100.0
100.0
100.0
100.0
100.0

1 [66]
1 [41]
1 [103]
1 [132]
1 [95]
1
1

Undisclosed

Others subtotal:

Status of FRC’s Assets under Management(Note 2)
(Note 2)

(Note 1) “Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail 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 is shown in square brackets. The Taihaku Street Business Center is an office building with aresidential tower. Its number of tenants comprises 12 for the office building and 56 for the residence in the 33rd fiscal period (11 for the office building and 56 for the residence in the 32nd fiscal period).
(Note 2) The total of all the tenants in other than pass-through master leasing properties and the total number of sections stipulated in the tenancy agreements with end tenants for pass-through master leasing
properties is shown in square brackets in the subtotal and total columns for “Number of tenants.”(Note 3) “Occupancy rate” refers to the percentage of leased floor space to leasable floor space and the figures are rounded off to one decimal place.
(Note 4) “Percentage of total leasing business revenues” is rounded off to one decimal place, and the total of individual percentages in the above table may not equal 100%.
(Note 5) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.
(Note 6) Since the repair work was carried out after the acquisition and the operation started in November 2020, no rent, etc. was incurred in the 32nd fiscal period.

4. Details of renewable energy generation facilities in the portfolio
No relevant items.

5. Details of the rights to operate public facilities, etc. in the portfolio

7. List of specific transaction and forward exchange transaction contract
amount and status of fair value
The following table provides the contract amount of FRC’s specific transactions and the status of its fair value as of February 28,
2021.
Category
Off-market transaction

Contract amount, etc. (mm of yen)
Of which, exceeding 1 year

Type

(Note 1)

Interest rate swap transaction(Receivable floating; Payable fixed)
Total

23,70017,400(137)

23,70017,400(137)(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors.

8. Status of other assets
All real estate and real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in the portfolio” on page 16. There is no incorporation of other specified assets as of the end of the 33rd fiscal period.

9. Status of owned assets by country and region
As of the end of the 33rd fiscal period, no overseas real estate properties in countries or regions other than Japan are incorporated into FRC’s portfolio.

Capital Expenditures for Owned Real Estate
1. Planned capital expenditures
The following table provides amounts of major items of capital expenditures associated with currently planned renovations, etc.
for real estate properties owned by FRC as of the date of this Semiannual Report. The planned construction costs indicatedbelow may be partly classified as expenses. In addition, FRC will implement renewal construction work in order to maintain andimprove the competitiveness of properties in the market as well as tenant satisfaction, on top of the construction, facilities andreplacement work for which expenditures will be made regularly.
Planned construction cost
Real estate property
nameLocation

PurposeTotal

Hakata Ward,
Replacement of mechanical security
Fukuoka City
system monitoring terminals
Hakata Ward,
Replacement of mechanical security
Canal City Hakata·B
Fukuoka City
system monitoring terminals
Park Place Oita
Oita City, Oita
Rooftop painting
Kokura Minami Ward,
SunLive City Kokura
Renovation of common spaces
Kitakyushu City
Square Mall Kagoshima Kagoshima City,
Renovation of external walls
Usuki
Kagoshima
Hakata Ward,
Sanix Hakata Building
Replacement of air-conditioning units
Fukuoka City

Canal City Hakata

From August 2021 to
February 2022
From August 2021 to
February 2022
From April 2021 to May 2021
From June 2021 toSeptember 2021
From October 2021 to
February 2022
From March 2021 to April
2021

6. Securities incorporated in the portfolio
No relevant items.
17(mm of yen)

Schedule

No relevant items.

FUKUOKA REIT CORPORATION

Fair value(mm of yen) (Note 2)

FUKUOKA REIT CORPORATION

18

Construction
Amountcost
already paid

28

–

–

57

–

–

48

–

–

258

–

–

32

–

–

16

–

–

II. Semiannual Report

II. Semiannual Report

Capital Expenditures for Owned Real Estate

Expenses and Liabilities

2. Capital expenditures during the 33rd fiscal period

1. Details of expenses related to asset management

Capital expenditures for the real estate properties owned by FRC totaled 687 million yen in the 33rd period. Furthermore, FRC
incurred construction costs of 905 million yen in total in the period, including 211 million yen in repair and maintenance expenses classified as expenses on the Statement of Income and 7 million yen in expenses for restoration to former state. The following
table provides the overview of major construction work that was completed in the 33rd fiscal period.

Real estate property nameLocation

Purpose

PeriodFrom August 2020 toJanuary 2021
From April 2020 to
September 2020

Construction cost
(mm of yen)(thousands of yen)Item

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2019)(September 1, 2020 to February 28, 2021)(a) Asset management fees(b) Asset custody fees(c) Administrative service fees(d) Directors’ compensations(e) Other operating expenses
Total

520,263
7,344
57,1009,600
60,308654,617524,777
7,401
58,6659,600
61,374
661,818

Canal City Hakata

Hakata Ward, Fukuoka City

Formation of tenant sections

Canal City Hakata·B

Hakata Ward, Fukuoka City

Replacement of central monitoring equipment

Park Place Oita

Oita City, Oita

Replacement of air-conditioning units

November 2020

113

Square Mall Kagoshima Usuki

Kagoshima City, Kagoshima

Renovation of external walls

From November 2020 toFebruary 2021

24

2. Status of debt

Gofukumachi Business Center

Hakata Ward, Fukuoka City

Replacement of air-conditioning units

February 2021

38

As of the end of the 33rd fiscal period (February 28, 2021), FRC has the following debt from respective financial institutions.

Sanix Hakata Building

Hakata Ward, Fukuoka City

Replacement of air-conditioning units

From October 2020 to
December 2020

43

99
27

(Note) Aside from the amounts of the asset management fees shown above, 19,200 thousand yen was paid in the 32nd fiscal period for asset management, capitalized in the acquisition costs, related to theacquisition of Higashi Hie Business Center III, LOGICITY Wakamiya and Home Plaza NAFCO at Park Place Oita.

Category
Lender

3. Reserves for long-term repair and maintenance plans
FRC has deposited the following amounts from the cash flows generated during the 33rd fiscal period in order to fund largescale repair and maintenance work in the medium- to long-term, based on long-term repairs and maintenance plans preparedfor respective properties.
(millions of yen)
Fiscal period
Balance of deposits at beginning of period
Deposits during the period
Amounts used from deposits during the period
Deposits carried forward to the next period

29th fiscal period

30th fiscal period

31st fiscal period

32nd fiscal period

33rd fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)(September 1, 2020 toFebruary 28, 2021)

1,000
–
–
1,000

1,000
–
–
1,000

1,000
–
–
1,000

1,000
–
–
1,000

1,000
–
–
1,000

Mizuho Bank
The Norinchukin Bank
Current The Hiroshima Bank
maturities
The Kitakyushu Bankof longterm debt The Iyo Bank
The Higo Bank
Subtotal

DrawdowndateJuly 31, 2014

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note 1)

2,300
1,000
1,400
800
500
300
6,300

2,300
1,000
1,400
800
500
300
6,300

Repayment
date

Repayment
methodUse offunds

Description

0.835

July 30, 2021

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

August 29, 2014

4,000

4,000

1.010

August 31, 2022

Sumitomo Mitsui Banking
Corporation

June 30, 2015

1,600

1,600

0.790

June 30, 2022

Sumitomo Mitsui Trust Bank

July 31, 2015

1,500

1,500

0.564

July 31, 2023

Development Bank of Japan

August 31, 2015

4,000

4,000

0.880

August 31, 2023

The Bank of Fukuoka

August 31, 2015

400

400

0.424

August 31, 2022

The Nishi-Nippon City Bank

August 31, 2015

400

400

0.870

August 31, 2023

The Bank of Fukuoka

February 29, 2016

2,000

2,000

0.424

February 29, 2024

The Nishi-Nippon City Bank

February 29, 2016

2,000

2,000

0.440

February 29, 2024

Development Bank of Japan

February 29, 2016

2,000

2,000

0.620

February 28, 2025

February 29, 2016

500

500

0.440

February 29, 2024

July 29, 2016

700

700

0.400

July 31, 2024

September 30, 2016

300

300

0.416

September 30, 2025

1,500
100
100
100

1,500
100
100
100

0.718

December 30, 2025

200

200

Sumitomo Mitsui Trust Bank
Development Bank of JapanThe Oita Bank
The Kagoshima Bank
The Kitakyushu BankThe Juhachi-Shinwa Bank

December 30, 2016

(Note 2)

The Hiroshima Bank

19

Balance as ofFebruary 28,
2021

Development Bank of Japan

Mizuho Bank
Long-term
Shinsei Bankdebt

FUKUOKA REIT CORPORATION

Balance as of
September 1,
2020

100

100

The Bank of Fukuoka

December 30, 2016

1,500

1,500

0.422

December 30, 2026

MUFG Bank

March 31, 2017

800

800

0.481

March 31, 2025

Resona Bank

March 31, 2017

600

600

0.658

March 31, 2027

The Higo Bank

March 31, 2017

300

300

0.481

March 31, 2025

FUKUOKA REIT CORPORATION

20

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Lump-sum uponmaturity

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund

Refinance fund

Refinance fund
Refinance fund
Refinance fund
Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

No collateral/
No guarantee

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guaranteeII. Semiannual Report

II. Semiannual Report

Expenses and Liabilities
Category
LenderThe Bank of Fukuoka
The Nishi-Nippon City BankThe Oita Bank
The Kitakyushu Bank
The Miyazaki BankThe Juhachi-Shinwa Bank

Drawdown
dateJune 30, 2017

(Note 2)The Iyo Bank

Expenses and Liabilities

Balance as of
September 1,
2020

Balance as ofFebruary 28,
2021

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note 1)

1,300
1,000
700
700
700

1,300
1,000
700
700
700

1,100

1,100

500

500

0.777

Repayment
dateJune 30, 2026

Development Bank of Japan

June 30, 2017

1,800

1,800

0.650

December 31, 2026

The Bank of Fukuoka

July 31, 2017

2,000

2,000

0.792

July 31, 2027

The Nishi-Nippon City Bank

July 31, 2017

2,000

2,000

0.892

July 31, 2027

500
500
100
100

500
500
100
100

200

200

The Nishi-Nippon City Bank
The Bank of Fukuoka
The Oita Bank
The Kitakyushu BankThe Juhachi-Shinwa Bank

August 31, 2017

(Note 2)

The Hiroshima Bank

0.850

August 31, 2027

100

100

Resona Bank

September 29, 2017

2,000

2,000

0.493

September 30, 2027

The Bank of Fukuoka

December 29, 2017

1,500

1,500

0.812

December 30, 2027

Development Bank of Japan

December 29, 2017

500

500

0.680

December 30, 2027

The Nishi-Nippon City Bank

February 28, 2018

1,900

1,900

0.750

February 29, 2028

Sumitomo Mitsui Trust Bank

February 28, 2018

1,100

1,100

0.600

February 26, 2027

MUFG Bank

February 28, 2018

1,500

1,500

0.500

February 27, 2026

Long-term Resona Bank
debt
Development Bank of Japan

February 28, 2018

600

600

0.567

February 29, 2028

March 1, 2018

2,500

2,500

0.720

March 1, 2028

MUFG Bank

March 30, 2018

600

600

0.480

March 31, 2026

The Nishi-Nippon City Bank

March 30, 2018

600

600

0.802

March 31, 2028

The Bank of Fukuoka

March 30, 2018

500

500

0.802

March 31, 2028

Mizuho Bank

March 30, 2018

500

500

0.630

March 31, 2028

Sumitomo Mitsui Banking
Corporation

March 30, 2018

500

500

0.504

March 31, 2025

MUFG Bank

March 30, 2018

500

500

0.490

March 31, 2027

Sumitomo Mitsui Trust Bank

March 30, 2018

400

400

0.576

March 31, 2027

The Oita Bank

March 30, 2018

400

400

0.646

March 31, 2028

The Hiroshima Bank

March 30, 2018

400

400

0.646

March 31, 2028

Shinsei Bank

March 30, 2018

300

300

0.400

March 31, 2025

Sumitomo Mitsui Banking
Corporation

January 31, 2019

500

500

0.655

January 31, 2029

MUFG Bank

January 31, 2019

500

500

0.590

January 31, 2028

The Nishi-Nippon City Bank

January 31, 2019

400

400

0.426

January 31, 2029

The Bank of Fukuoka

January 31, 2019

300

300

0.426

January 31, 2029

The Oita Bank

February 28, 2019

200

200

0.334

February 27, 2026

The Kagoshima Bank

February 28, 2019

200

200

0.334

February 27, 2026

The Higo Bank

February 28, 2019

200

200

0.334

February 27, 2026

Resona Bank

February 28, 2019

200

200

0.488

February 28, 2029

FUKUOKA REIT CORPORATION

21

Repayment
methodLump-sum uponmaturity

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Lump-sum uponmaturity

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Use offunds

Refinance fund

Refinance fund
Refinance fund
Refinance fund

Refinance fund

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundAcquisition fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundCategory

Drawdown
date

Description
LenderNo collateral/
No guarantee

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

No collateral/
No guarantee

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

Balance as of
September 1,
2020

Balance as ofFebruary 28,
2021

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note 1)

Repayment
date

Repayment
methodUse offunds

Description

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Mizuho Bank
The Bank of Saga
The Higo Bank

July 31, 2019

1,200
500
500

1,200
500
500

0.521

July 31, 2029

The Norinchukin Bank

July 31, 2019

1,500

1,500

0.303

January 29, 2027

MUFG Bank

September 25, 2019

500

500

0.480

September 29, 2028

The Nishi-Nippon City Bank

February 28, 2020

2,500

2,500

0.480

February 28, 2030

Mizuho Bank

February 28, 2020

1,700

1,700

0.420

February 28, 2030

Aozora Bank
Long-term
Resona Bank
debt

June 30, 2020

1,000

1,000

0.569

June 28, 2030

June 30, 2020

700

700

0.569

June 28, 2030

MUFG Bank

June 30, 2020

500

500

0.600

June 29, 2029

The Kagoshima Bank

June 30, 2020

500

500

0.465

June 30, 2028

Development Bank of Japan

July 31, 2020

1,500

1,500

0.530

July 31, 2030

Mizuho Bank

July 31, 2020

1,000

1,000

0.470

July 31, 2030

The Kitakyushu Bank

July 31, 2020

500

500

0.526

July 31, 2030

The Iyo Bank

July 31, 2020

200

200

0.526

July 31, 2030

71,10077,40071,10077,400Subtotal
Total

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundAcquisition fundAcquisition fundAcquisition fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest rate of debt for which FRC conducted interest
rate swap transactions in order to hedge against interest rate fluctuation risks is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The Shinwa Bank and The Eighteenth Bank merged on October 1, 2020 to become The Juhachi-Shinwa Bank.

3. Investment corporation bonds
As of the end of the 33rd fiscal period (February 28, 2021), FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Decrease
Balance as of
Balance as of
September 1, during the fiscal February 28,
period2021
2020(mm of yen)

(mm of yen)

(mm of yen)(%)

Maturitydate

Maturity
methodUse

Description

CouponFirst Series ofUnsecured Bonds

December 30, 2013

2,000

–

2,000

1.32

December 29, 2023

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

Second Series ofUnsecured Bonds

July 31, 2017

2,000

–

2,000

1.00

July 30, 2032

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

Third Series ofUnsecured Bonds

July 31, 2018

1,000

–

1,000

1.20

July 30, 2038

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

5,000

–

5,000

Total

(Note 1) The bonds may be repurchased and cancelled by FRC at any time on and after the date following the payment date, unless otherwise determined by the book-entry transfer agent.
(Note 2) The bonds are subject to the limited pari passu clause among specified investment corporation bonds.

4. Short-term investment corporation bonds
No relevant items.

5. Subscription rights to shares
No relevant items.

FUKUOKA REIT CORPORATION

22

II. Semiannual Report

II. Semiannual Report

Acquisitions and Sales during the 33rd Fiscal Period

Acquisitions and Sales during the 33rd Fiscal Period

1. Acquisition and sale of real estate, asset-backed securities,
infrastructure assets, etc. and infrastructure-related assets, etc.

5. Transactions with the asset management company regarding
concurrent work conducted by the asset management company

No relevant items.

The asset management company (Fukuoka Realty Co., Ltd.) does not concurrently conduct any class 1 financial instruments
transaction business, class 2 financial instruments transaction business, land and building transaction business or real estatesyndication business, and has no such transactions with FRC.

2. Acquisition and sale of other assets
No relevant items.

Overview of Accounting

3. Survey on prices of specified assets, etc.
(1) Real estate, etc.
No relevant items.

1. Assets, liabilities, principal and profits/loss(2) Other

Please refer to the IV. Balance Sheet, V. Statement of Income, VI. Statement of Changes in Net Assets, VII. Cash Flow Statement, and VIII. Notes to Financial Statements on later pages of this report.

FRC carried out no transaction that was required to have the value, etc. reviewed pursuant to the provisions of Article 201 of theInvestment Trusts Act.

2. Changes in calculation method of depreciation

4. Transactions with interested parties, etc.

No relevant items.

(1) Transaction status

3. Changes in valuation method of real estate and infrastructure assets,
etc.

No relevant items.

(2) Amount of fees paid, etc.
FRC paid the following fees to the interested parties, etc. during the 33rd fiscal period. Furthermore, interested parties, etc. referto the interested parties of the asset management company who have concluded an asset management agreement with FRC
and are designated in Article 123 of the Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of
these interested parties, etc., the below table indicates the business partners to which FRC paid fees, etc. during the 33rd fiscal
period.
Category

Total paid fees (A)(thousands of yen)
(Note 1)

Property leasing brokerage fees (Note 2)

12,454

Property management fees (Note 3)

344,128

Outsourcing fees (Note 2) (Note 4)

1,526,435

Other operating expenses (Note 2)

1,366,844

Breakdown of transactions with interested parties, etc.
Paid amount (B)Paid party(thousands of yen)

Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Sunlife Co., Ltd.

5,582
2,571
69,320265,583
672,955
702,866
91,217
161,540
276,460
1,843

Percentage of total
amount(B) / (A)23

4. Overview of self-managed investment trust beneficiary certificatesNo relevant items.

5. Disclosure on corporation owning foreign real estate
No relevant items.

(%)

44.8
20.6
20.1
77.2
44.1
46.0
6.0
11.8
20.2
0.1

(Note 1) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 33rd fiscal period. The amounts include construction work
fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd.
278,430 thousand yen
FJ. Entertainment Works Ltd. 438,163 thousand yen
Sunlife Co., Ltd.
83,437 thousand yen(Note 2) The property leasing brokerage fees, outsourcing fees and other operating expenses include property leasing brokerage fees, etc. paid to third parties through interested parties, etc.
(Note 3) The property management fees do not include the following construction supervision fees. In addition, of the fees below, the construction supervision fees paid upon acquiring real estate are includedin the acquisition cost of the relevant real estate.
Fukuoka Jisho Co., Ltd.
8,395 thousand yen
FJ. Entertainment Works Ltd.
20,453 thousand yen(Note 4) The outsourcing fees shown above are paid fees, etc. regarding building management outsourcing fees, and do not coincide with the outsourcing fees described in VIII. Notes to Financial Statements(Notes to statement of income) that include property management fees and others.

FUKUOKA REIT CORPORATIONNo relevant items.

6. Disclosure on real estate owned by corporation owning foreign realestateNo relevant items.

Other
1. Handling of fractions of monetary amounts and percentage figures
Unless otherwise stated, the figures less than the specified unit are rounded down for monetary amounts and rounded off to one
decimal place for percentage figures throughout this Semiannual Report.

FUKUOKA REIT CORPORATION

24

III. Independent Auditor's Report

III. Independent Auditor's Report

FUKUOKA REIT CORPORATION25FUKUOKA REIT CORPORATION

26

IV. Balance Sheet

IV. Balance Sheet(thousands of yen)Account
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
OthersTotal current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Tools and fixtures
Accumulated depreciation
Tools and fixtures, net
Lands
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Vehicles and transport equipment in trust
Accumulated depreciation
Vehicles and transport equipment in trust, net
Tools and fixtures in trust
Accumulated depreciation
Tools and fixtures in trust, net
Lands in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold right in trust
Other intangible assets in trust
Total intangible assets
Investment and other assets
Deferred tax assets
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Total investment and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance expenses
Investment unit issuance expenses
Total deferred assets
Total assets

32nd fiscal period

33rd fiscal period(as of August 31, 2020)(as of February 28, 2021)

(thousands of yen)Account

32nd fiscal period

33rd fiscal period(as of August 31, 2020)(as of February 28, 2021)

Liabilities
3,733,612
4,660,047
1,043,924
282,717
177,6133,570
9,901,484*1*1

FUKUOKA REIT CORPORATION

974,393–
974,393
17,045–17,045–––830,254
103,899,463(33,495,971)
70,403,492
2,047,268(817,728)
1,229,539
1,487,396(595,564)
891,831
747
(676)
70
1,391,058(1,194,239)
196,818
107,452,281
18,319182,014,046

6,596,412
3,742,580
528,707287,185–
3,007
11,157,893*1*1

1,166,235(9,712)
1,156,522
20,698(129)
20,569
1,571
(78)
1,492
989,124
104,526,979(34,998,550)
69,528,428
2,049,545(848,800)
1,200,744
1,509,292(639,038)
870,254
747
(709)
37
1,393,755(1,210,954)
182,801
107,452,281
16,791
181,419,047

5,545,883
29,5195,575,402

5,545,883
24,044
5,569,927

14
10,000327,135
1,138,352
1,475,502
189,064,950

63
10,000327,135
1,042,944
1,380,143
188,369,118

34,142
3,835
37,978199,004,413

32,040–32,040199,559,052

27

Current liabilities
Operating accounts payable
Current maturities of long-term debt

340,991

561,6736,300,000

6,300,000

Accounts payable-other

12,612

22,905

Accrued expenses

355,374

415,653

Income taxes payable

967

1,835

–

316,581

Advances received

1,123,558

1,088,923

Deposits received

894,072

793,952

9,027,577

9,501,526

Investment corporation bonds

5,000,000

5,000,000

Long-term debt

71,100,000

71,100,000

366,654450,791

Accrued consumption taxes

Total current liabilities
Non-current liabilities

Tenant leasehold and security deposits
Tenant leasehold and security deposits received in trust*1

Total non-current liabilities

11,984,384*1

11,892,365

88,451,039

88,443,156

97,478,617

97,944,683

98,938,764

98,938,764

Unappropriated surplus

2,587,031

2,675,604

Total surplus

2,587,031

2,675,604

Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus

Total unitholders’ equity
Total net assets

101,525,796*3

Total liabilities and net assets

101,525,796
199,004,413

FUKUOKA REIT CORPORATION

28

101,614,369*3

101,614,369
199,559,052

V. Statement of Income

VI. Statement of Changes in Net Assets

(thousands of yen)Account

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

32nd fiscal period (March 1, 2020 to August 31, 2020)Operating revenues
Leasing revenues – real estate*1

7,912,804*1

8,306,678

Other leasing revenues – real estate*1605,527*1

597,438

Total operating revenues

8,518,332

8,904,117

Operating expenses
Expenses related to leasing business*1 *2

4,897,107

Asset management fees

520,263*1 *2

5,180,315
524,777

Unitholders’ Equity
Item
Balance as of March 1, 2020
Dividend of surplus(2,899,032)(2,899,032)(2,899,032)

Profit2,586,899

2,586,899

2,586,899–(312,132)(312,132)(312,132)

98,938,764

2,587,031

101,525,796

101,525,796

57,10058,665

Total of changes in the current fiscal period

Director’s compensations

9,600

9,600

Balance as of August 31, 2020

Other operating expenses

60,30861,374

Total operating expenses

5,551,725

5,842,134

2,966,606

3,061,982

Interest received

44

47

Others502

1,357

Total non-operating revenues

546

1,404

33rd fiscal period (September 1, 2020 to February 28, 2021)
Interest expenses on investment corporation bonds

29,20029,200

Amortization of investment corporation bond issuance
expenses

2,102

2,102

Amortization of investment unit issuance expenses

3,835

3,835

Financing related expenses

94,84897,663

Others3737379,275

386,021

Ordinary income

2,587,877

2,677,366

Profit before income taxes

2,587,877

2,677,366

974

1,842

Total non-operating expenses

Income taxes-current
Income taxes-deferred

3

(49)

Total income taxes

978

1,793

Profit2,586,899

2,675,572

Surplus brought forward

132

31

Unappropriated surplus

2,587,031

2,675,604

FUKUOKA REIT CORPORATION

29(thousands of yen)
Unitholders’ Equity

Item

Non-operating expenses
253,182

Total net assets

Changes in the current fiscal period

Administrative service fees

249,252

Total unitholders’ equity

101,837,928

7,401Interest expenses

98,938,764

Surplus
Unappropriated surplus

101,837,928

7,344

Non-operating revenues

Unitholders’ capital

2,899,164

Asset custody fees

Operating income(thousands of yen)

Balance as of September 1, 2020

Unitholders’ capital
98,938,764

Surplus
Unappropriated surplus

Total unitholders’ equity

Total net assets

2,587,031

101,525,796

101,525,796

Dividend of surplus(2,587,000)(2,587,000)(2,587,000)

Profit2,675,572

2,675,572

2,675,572–

88,572

88,572

88,572

98,938,764

2,675,604

101,614,369

101,614,369

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of February 28, 2021

FUKUOKA REIT CORPORATION

30

VII. Cash Flow Statement

VIII. Notes to Financial Statements(thousands of yen)Account

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)(Significant accounting policies)
1. Depreciation method for non-current assets(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The useful lives of major categories of property, plant and equipment including trust assets are as follows:		 Buildings:
10 – 65 years
		 Structures:
15 – 60 years
		 Machinery and equipment:
15 – 30 years
		 Vehicles and transport equipment:
7 years
		 Tools and fixtures:
5 – 20 years(2) Intangible assets
Intangible assets are amortized utilizing the straight-line method.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.

2. Accounting for deferred assets

Investment unit issuance expenses
Investment unit issuance expenses are amortized utilizing the straight-line method over three years.
Investment corporation bond issuance expenses
Investment corporation bond issuance expenses are amortized utilizing the straight-line method over theperiod through redemption.

3. Standards for recognition of revenues and expenses

Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses the methodof charging the corresponding amounts of assessed taxes to the current fiscal period as expenses related
to leasing business.
The amount equivalent to property taxes, etc. for the initial fiscal year paid to the seller as settlementmoney upon acquisition of real estate or trust beneficiary interests in real estate as entrusted property are
not expensed but capitalized as part of the acquisition cost of the relevant property.
The amount equivalent to property taxes, etc. capitalized in the acquisition cost of real estate, etc. was12,272 thousand yen for the 32nd fiscal period. No amount equivalent to property taxes, etc. was capitalized in the acquisition cost of real estate, etc. for the 33rd fiscal period.

4. Method of hedge accounting(1) Method of hedge accounting
Deferred hedge accounting is applied for interest rate swap transactions. However, special accounting isapplied for interest rate swap transactions that satisfy the requirements for special accounting.
(2) Hedging instruments and hedged items
Hedging instrument: interest rate swap transactions
Hedged items: interest rates of borrowings(3) Hedging policy
FRC conducts derivative transactions to hedge interest rate fluctuation risks for floating-rate borrowings
based on FRC’s Articles of Incorporation.
(4) Method for assessing the effectiveness of hedging
Assessment of the effectiveness of hedging is omitted as requirements are satisfied for special accounting for interest rate swap transactions.

Net cash provided by (used in) operating activities
Profit before income taxes

2,587,877

2,677,366

Depreciation and amortization expenses

1,686,347

1,623,716

Amortization of investment corporation bond issuance expenses

2,102

2,102

Amortization of investment unit issuance expenses

3,835

3,835

Interest received

(44)

(47)

Interest expenses

278,452

282,382

Decrease (increase) in operating accounts receivables(384,662)

515,217

Decrease (increase) in consumption taxes refund receivable(177,613)

177,613

Increase (decrease) in accrued consumption taxes(191,370)

316,581

Increase (decrease) in operating accounts payable(3,385)25,185

Increase (decrease) in accounts payable-other(6,241)

10,287

Increase (decrease) in accrued expenses(20,452)

60,503

Increase (decrease) in advances received

40,659(34,635)

Increase (decrease) in deposits expenses

26,365(100,119)

Decrease (increase) in prepaid expenses

5,534(4,468)(123,914)

95,407

Others, net

3,154

6,766

Subtotal

3,726,644

5,657,694

Decrease (increase) in long-term prepaid expenses

Interest income received

4447(274,651)(282,607)(1,048)(974)

3,450,990

5,374,159

Purchase of property, plant and equipment(1,809,655)(355,262)

Purchase of property, plant and equipment in trust(5,371,496)(479,144)

Proceeds from tenant leasehold and security deposits

29,78884,136

Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investment activities

Repayments of tenant leasehold and security deposits(66,382)–

Proceeds from tenant leasehold and security deposits in trust

316,851

122,888

Repayments of tenant leasehold and security deposits in trust(238,343)(214,907)

Proceeds from restricted trust deposits

5,296

2,016

Payments for restricted trust deposits(2,074)(2,470)(7,136,015)(842,743)

Proceeds from short-term debt

6,400,000–

Repayments of short-term debt

(6,400,000)–

Proceeds from long-term debt

5,900,000–

Repayments of long-term debt

(1,000,000)–

Dividends paid

(2,899,126)(2,586,536)

2,000,873(2,586,536)

Net cash provided by (used in) investment activities
Net cash provided by (used in) financial activities

Net cash provided by (used in) financial activities
Net increase (decrease) in cash and cash equivalents(1,684,151)

1,944,879

Balance of cash and cash equivalents at beginning of period

10,032,589

8,348,438

Balance of cash and cash equivalents at end of period

8,348,438*1

FUKUOKA REIT CORPORATION

31*1

10,293,317

5. Scope of funds (cash and cash equivalents) in cash flow The funds (cash and cash equivalents) in the cash flow statement consist of cash on hand and cash in trust;statement
deposits that can be withdrawn at any time and deposits in trust; and short-term investments with amaturity of 3 months or less from the date of acquisition, which are readily convertible to cash and bear
only an insignificant risk of value fluctuation.
6. Other significant items fundamental to preparing thefinancial statements(1) Accounting methods for trust beneficiary interests in real estate as entrusted property
Regarding trust beneficiary interests in owned real estate as entrusted property, all asset and liability
accounts of the entrusted properties as well as all revenue and expense accounts generated by the entrusted properties are recorded in relevant accounts on the balance sheet and statement of income.
Furthermore, the following material accounts are separately stated on the balance sheet for entrusted
properties recorded in relevant accounts.
➀ Cash and deposits in trust➁	Buildings in trust, structures in trust, machinery and equipment in trust, vehicles and transport equipment in trust, tools and fixtures in trust, lands in trust and construction in progress in trust➂ Leasehold right in trust➃ Other intangible assets in trust➄ Lease and guarantee deposits in trust➅ Tenant leasehold and security deposits received in trust(2) Accounting for consumption taxes
National and local consumption taxes are accounted with the consumption taxes excluded.

FUKUOKA REIT CORPORATION

32

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to accounting standards not yet adopted)• Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 (revised 2020) issued by the Accounting Standards Board of Japan (ASBJ) on March 31, 2020)• Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30 (revised 2020) issued
by ASBJ on March 31, 2020)• Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19 (revised 2020)
issued by ASBJ on March 31, 2020)(3) Impact of adoption of the accounting standards, etc.
The amount of impact on the financial statements by the adoption of the Accounting Standard for Fair Value Measurement, etc. is being assessed at present.

(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) jointly developed a comprehensive accounting standard for revenue recognition, and issued it as Revenue from Contracts with Customers (IFRS 15 issued by IASB and Topic 606 issued by FASB) in May 2014. IFRS 15 is applicable for accounting periods beginning on January 1, 2018 and thereafter, and Topic 606 is applicable for accounting periods beginning after
December 15, 2017. In accordance with this, the ASBJ has developed a comprehensive accounting standard for revenue
recognition and issued it together with its implementation guidance.
In developing the accounting standard for revenue recognition, the ASBJ made it a basic policy to adopt the basic
principles of IFRS 15 as a starting point. By doing so, the ASBJ established the accounting standard from the viewpointof comparability, which is a benefit for securing consistency with IFRS 15, between financial statements based on Japanese GAAP and those based on other accounting standards. Alternative treatments were also added, to the extent thatthey do not harm the comparability, in cases where there are items to be considered in the actual practices conducted inJapan to date.
(2) Scheduled date of adoption
FRC will adopt the accounting standard, etc. from the beginning of the fiscal period ending February 2022.
(3) Impact of adoption of the accounting standard, etc.
The amount of impact on the financial statements by the adoption of the Accounting Standard for Revenue Recognition,etc. is being assessed at present.

(1) Overview
With regard to the "sources of estimation uncertainty" for which disclosure is required under Paragraph 125 of the International Accounting Standards ("IAS") 1 "Presentation of Financial Statements" ("IAS 1") issued by IASB in 2003, requests
were made for the ASBJ to investigate the requirement of disclosure of such information in the form of notes under theJapanese GAAP as useful information for users of financial statements. Accordingly, the ASBJ has developed and published the Accounting Standard for Disclosure of Accounting Estimates (the "Accounting Standard").
The basic policy of the ASBJ for the development of the accounting standard was to provide general principles (disclosure objectives), instead of expanding required information in the notes, and let companies determine specific disclosure
contents in light of the disclosure objectives. In developing the Standard, the ASBJ referred to the provisions of the Paragraph 125 of the IAS 1.
(2) Scheduled date of adoption
FRC will adopt the accounting standard from the end of the fiscal period ending August 2021.

• Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30 issued by ASBJ on July 4, 2019)• Accounting Standard for Financial Instruments (ASBJ Statement No. 10 (revised 2019) issued by ASBJ on July 4, 2019)• Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31 issued by ASBJ
on July 4, 2019)• Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19 (revised 2020)
issued by ASBJ on March 31, 2020)(1) Overview
IASB and FASB have established detailed guidance for fair value measurement (IFRS 13 “Fair Value Measurement” underthe International Financial Reporting Standards and Topic 820 “Fair Value Measurement” of the Accounting Standards
Codification under the U.S. accounting standards) containing almost the same content. In light of this, the ASBJ worked
to secure consistency of the Japanese accounting standards with the international accounting standards, mainly in termsof the guidance on and disclosure of the fair value of financial instruments, and announced the Accounting Standard for
Fair Value Measurement, etc.
The basic policy of the ASBJ for the development of the Accounting Standard for Fair Value Measurement was to adopt
all provisions of the IFRS 13 as a rule by using a unified calculation method, from the viewpoint of improving the comparability between the financial statements of the Japanese and foreign companies. Moreover, in consideration of the practices conducted in Japan to date, the ASBJ determined to establish other treatments for individual items, to the extent
that they do not greatly harm the comparability between the financial statements.
(2) Scheduled date of adoption
FRC will adopt the accounting standards, etc. from the beginning of the fiscal period ending February 2022.

FUKUOKA REIT CORPORATION

33• Accounting Standard for Disclosure of Accounting Estimates (ASBJ Statement No. 31 issued by ASBJ on March 31, 2020)• Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections (ASBJ Statement No.
24 (revised 2020) issued by ASBJ on March 31, 2020)(1) Overview
Given the recommendation to investigate enhancement of note information regarding the "accounting principles andprocedures adopted in cases when provisions of relevant accounting standards are not clear," the ASBJ has made necessary amendments and published the Accounting Standard for Accounting Policy Disclosures, Accounting Changes andError Corrections.
Furthermore, the ASBJ has determined that, when enhancing the note information regarding the "accounting principles
and procedures adopted in cases when provisions of relevant accounting standards are not clear," the provisions in theNotes on Corporate Accounting Principles (Note 1-2) shall be followed as before in order to avoid any impact on thepractices taken to date when the provisions of relevant accounting standards are clear.
(2) Scheduled date of adoption
FRC will adopt the accounting standard from the end of the fiscal period ending August 2021.

FUKUOKA REIT CORPORATION

34

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to balance sheet)(Notes to statement of income)*1. Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:	*1. Breakdown of revenues and expenses related to real estate leasing business.
(thousands of yen)

Buildings in trust
Lands in trust

32nd fiscal period

33rd fiscal period

as of August 31, 2020

as of February 28, 2021

5,973,107
16,101,020
22,074,128

Total
Secured liabilities are as follows:	

5,914,267
16,101,020
22,015,288(thousands of yen)

Tenant leasehold and security deposits received in trust

32nd fiscal period

33rd fiscal period

as of August 31, 2020

as of February 28, 2021

1,089,814

1,057,440

2. Balance of unused committed line of credit
FRC has executed committed line of credit agreements with its banks primarily to conduct efficient and dynamic cash management.
[Committed line of credit agreement 1]
	(thousands of yen)

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of period

32nd fiscal period

33rd fiscal period

as of August 31, 2020

as of February 28, 2021

6,000,000–
6,000,000(thousands of yen)

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of period

32nd fiscal period

33rd fiscal period

as of August 31, 2020

as of February 28, 2021

7,000,000–
7,000,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
	(thousands of yen)
32nd fiscal period

33rd fiscal period

as of August 31, 2020

as of February 28, 2021

50,0007,000,000–
7,000,000

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

6,531,941
1,056,349
324,5136,830,181
1,075,140
401,356

7,912,804

568,375
37,152552,81144,627605,527
8,518,332

1,611,755
92,463
743,726
49,290479,907
1,686,347
233,617

1,870,563
211,326
743,094
45,880452,048
1,623,716
233,685

4,897,107
4,897,107
3,621,224*2. Transactions with affiliated companies.
	8,306,678

597,438
8,904,117

5,180,315
5,180,315
3,723,801(thousands of yen)

Item[Committed line of credit agreement 2]
	50,0006,000,000–
6,000,000

A. Real estate leasing business revenues
Leasing revenues - real estate		Rents
		 Common charges
		 Parking revenues
Other leasing revenues - real estate		 Incidental income
		 Other miscellaneous income
Total real estate leasing business revenues
B. Expenses related to real estate leasing business
Expenses related to leasing business		 Outsourcing fees		 Repair and maintenance expenses
		 Taxes and other public charges
		 Insurance premiums and trust compensation
		 Utilities expenses
		 Depreciation and amortization expenses
		 Other expenses related to real estate leasing businessTotal expenses related to real estate leasing business
C. Revenues and expenses related to real estate leasing business (A - B)(thousands of yen)
32nd fiscal period

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

Expenses related to real estate leasing business

970,797

966,563(Notes to statement of changes in net assets)
Total number of authorized investment units and total number ofinvestment units outstanding
Total number of authorized investment units
Total number of investment units outstanding

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

10,000,000 units
796,000 units

10,000,000 units
796,000 units(Notes to cash flow statement)*1. Relationship between the balance of cash and cash equivalents at end of period and the amounts of the corresponding accounts on the balance sheet.
	(thousands of yen)
32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents

3,733,612
4,660,047(45,221)
8,348,438

6,596,412
3,742,580(45,674)
10,293,317(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

(Notes to leases)
The future lease revenues under the non-cancellable operating leases [as lessor] are as follows:	

Due within 1 year
Due after 1 year
Total
FUKUOKA REIT CORPORATION

35(thousands of yen)

32nd fiscal period

33rd fiscal period(as of August 31, 2020)(as of February 28, 2021)

6,332,101
15,549,606
21,881,707

6,202,348
12,349,940
18,552,289

FUKUOKA REIT CORPORATION

36

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to financial instruments)
1. Matters concerning status of financial instruments(1) Policy on handling financial instruments
In order to secure stable earnings and steady growth of assets under management, FRC procures funds primarily throughborrowings from financial institutions, issuance of investment corporation bonds or issuance of investment units for property
acquisitions, repair and maintenance work, repayment of interest-bearing debt and other purposes.
In procuring interest-bearing debt, FRC borrows funds primarily in long-term, fixed interest debt based on the policy of
establishing a solid financial structure, and conducts conservative operations intended to secure financial stability and liquidity by dispersing debt payment dates and utilizing committed lines of credit and through other measures.
With regard to surplus funds, FRC manages them as various deposits and savings, etc. to support efficient management
while considering security.
FRC conducts derivative transactions only for the purpose of hedging the risk of future interest rate fluctuation, and not forthe purpose of speculation.
(2) Description of financial instruments and associated risks, and risk management structure
Debt and investment corporation bonds are funds procured primarily for acquiring real estate trust beneficiary interests andrefinancing of borrowings. Borrowings and investment corporation bonds are exposed to liquidity risks upon debt payment
dates, but FRC works to mitigate these risks by such measures as appropriately controlling the ratio of interest-bearing debt
to total assets and executing commitment line agreements with local financial institutions that are lenders to secure on-handliquidity.
In addition, borrowings with floating interest rates are exposed to interest rate fluctuation risks. However, FRC works to
reduce the risks by such measures as adjusting the ratio of the balance of borrowings with floating interest rates to totalborrowings in accordance with the financial environment and other factors. FRC conducts derivative transactions (specifically interest rate swap transactions) for part of its borrowings with floating interest rates in order to hedge the risk of futurefluctuations in the rates of interest payable. Furthermore, assessment of the effectiveness of these interest rate swaps isomitted as it has been determined that they have met the requirements for special accounting. FRC executes and manages
its derivative transactions in accordance with its financial derivative transaction management policies and, it does so only withfinancial institutions it determines to have a certain level of creditworthiness, by reference to their credit ratings, to reducecounterparty risks.
FRC manages surplus funds in large time deposits. Such deposits are subject to the risks of failure of the financial institutions holding the deposits as well as other credit risks. FRC mitigates the risks by limiting its deposits to financial institutions
with a certain level of creditworthiness, by reference to their credit ratings, as well as by setting short durations for these
deposits.
Tenant leasehold and security deposits received in trust are deposits from tenants and are exposed to liquidity risks if
tenants move out before the contracts expire. FRC mitigates this risk by such measures as securing on-hand liquidity.
(3) Supplementary explanation on matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, may include values based on reasonablecalculations when there is no market price. Certain assumptions are made in calculating those values, and there may becases where the values will vary when different assumptions are used.
As for the contract value and other conditions of derivative transactions indicated in “2. Matters concerning fair value offinancial instruments,” the contract value is not an indicator of the market risks related to such transactions.

2. Matters concerning fair value of financial instruments
The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding fairvalues and the difference between these amounts as of August 31, 2020. Please note that the following table does not include
those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheet
3,733,612
4,660,047
8,393,659–
6,300,000
5,000,000
71,100,000
378,477
82,778,477––

Fair value(Note 1)

Difference

3,733,612
4,660,047
8,393,659–
6,324,877
5,221,458
73,501,725
378,068
85,426,130
–
–

–
–
–
–
24,877
221,458
2,401,725(408)
2,647,653––

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding fairvalues and the difference between these amounts as of February 28, 2021. Please note that the following table does not include
those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheet
6,596,412
3,742,580
10,338,992–
6,300,000
5,000,000
71,100,000
232,943
82,632,943––

Fair value(Note 1)

Difference

6,596,412
3,742,580
10,338,992–
6,314,330
5,197,533
71,721,079
232,664
83,465,608
–
–

–
–
–
–
14,330
197,533
621,079(279)
832,665––(Note 1) Calculation method for fair value of financial instruments(1) Cash and deposits, (2) Cash and deposits in trust and (3) Short-term debt
		 As these are settled within a short period of time, the fair value is approximately the same as the book value and is thus stated at that book value.
(4) Current maturities of long-term debt, (5) investment corporation bonds and (6) Long-term debt
		The fair value of long-term debt with fixed interest rates (including debt with practical fixed interest rates through interest rate swaps) and investment corporation bonds (the “debt, etc.”) is
calculated by discounting the total amount of principal and interest by the rate assumed as being applicable in the event of a new drawdown of similar debt, etc.
		The fair value of long-term debt with floating interest rates is based on the book value, as the contract terms require the interest rates to be revised in a certain period of time (within six months) andthus is considered to be nearly equal to the book value.
(7) Tenant leasehold and security deposits received in trust		The fair value of tenant leasehold and security deposits received in trust, which are deposited by the lessees, is calculated by discounting the future cash flows of such deposits by a reasonably
estimated rate that takes into account the term remaining until the reimbursement deadline and credit risks.
(8) Derivative transactions
		 Please refer to (Notes to derivative transactions)(Note 2) Financial instruments for which determination of fair value is considered extremely difficult.

	(thousands of yen)
32nd fiscal period

33rd fiscal period(as of August 31, 2020)(as of February 28, 2021)

Tenant leasehold and security deposits received in trust (*)

11,605,906

11,659,421(*) Tenant leasehold and security deposits received in trust are not subject to the requirement to disclose fair value, as it is considered extremely difficult to determine the fair value. This is because future
cash flows cannot be estimated since there is no market price and it is difficult to assume the reimbursement dates due to the possibility of cancellation, renewal and re-execution of lease contracts bylessees even if the contract terms are fixed, and because the past rate of tenants moving out of the properties owned by FRC may not be indicative of future move out rates as they are too specific toindividual circumstances.

FUKUOKA REIT CORPORATION37FUKUOKA REIT CORPORATION

38

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

2. Derivatives to which hedge accounting is applied(Note 3) Amount of redemption of monetary claims scheduled to be due after closing of accounts (as of August 31, 2020)

	(thousands of yen)

32nd fiscal period (as of August 31, 2020)

Due in 1 year or less
3,733,612
4,660,047
8,393,659

Cash and deposits
Cash and deposits in trust
Total

The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing of accounts
for each method of hedge accounting.


Amount of redemption of monetary claims scheduled to be due after closing of accounts (as of February 28, 2021)

	(thousands of yen)Due in 1 year or less
6,596,412
3,742,580
10,338,992

Cash and deposits
Cash and deposits in trust
Total

Method of hedge accounting

Type of derivative transactions,etc.

Main hedged
item

Special accounting for interest rate swaps

Interest rate swap transaction
Receivable floating; Payable fixedLong-term debt

	(thousands of yen)Due in 1 year or less
6,300,000

1 to 2 years
6,000,000

2 to 3 years
5,900,000

3 to 4 years
5,200,000

4 to 5 years
3,900,000

Due after 5 years
50,100,000

–

–

–

2,000,000–

3,000,000

23,700,000

17,400,000

Fair
value

Calculation
method for thefair value(*)–

33rd fiscal period (as of February 28, 2021)
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing of accounts
for each method of hedge accounting.
(thousands of yen)
Method of hedge accounting

Type of derivative transactions,etc.

Main hedged
item

Special accounting for interest rate swaps

Interest rate swap transaction
Receivable floating; Payable fixedLong-term debt

Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of February 28, 2021)

	(thousands of yen)
Long-term debt
Investment corporation
bonds

Contract amount, etc.
Of which,exceeding 1 year(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt for accounting purposes. Accordingly, their fair value is included in the fair value of the relevant
long-term debt (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

(Note 4) Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of August 31, 2020)

Long-term debt
Investment corporation
bonds(thousands of yen)Due in 1 year or less
6,300,000

1 to 2 years
6,000,000

2 to 3 years
10,400,000

3 to 4 years
2,700,000

4 to 5 years
6,400,000

Due after 5 years
45,600,000––

2,000,000––

3,000,000

Contract amount, etc.
Of which,exceeding 1 year
23,700,000

17,400,000

Fair
value

Calculation
method for thefair value(*)–(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt for accounting purposes. Accordingly, their fair value is included in the fair value of the relevant
long-term debt (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

(Notes to retirement benefits)(Notes to investment securities)

32nd fiscal period (as of August 31, 2020)

32nd fiscal period (as of August 31, 2020)

Not applicable as FRC does not have any retirement benefit system.

Not applicable.

33rd fiscal period (as of February 28, 2021)
Not applicable as FRC does not have any retirement benefit system.

33rd fiscal period (as of February 28, 2021)
Not applicable.

(Notes to tax effect accounting)(Notes to derivative transactions)
1. Derivatives to which hedge accounting is not applied

1. Breakdown of primary causes for occurrence of deferred tax assets and deferred tax liabilities.


32nd fiscal period (as of August 31, 2020)
Not applicable.

(thousands of yen)

32nd fiscal period

33rd fiscal period(as of August 31, 2020)(as of February 28, 2021)

Deferred tax assets
Amount of accrued business taxes not deductible from taxable income
Total deferred tax assets
Deferred tax assets, net

33rd fiscal period (as of February 28, 2021)
Not applicable.

14
14
14

63
63
63

2. Breakdown of significant causes of the difference between the effective statutory income tax rate and the effective income tax rate after application of tax effect accounting.
(%)
32nd fiscal period

33rd fiscal period(as of August 31, 2020)(as of February 28, 2021)

Effective statutory income tax rate
Deductible dividend amount
Other
Effective income tax rate after application of tax effect accounting

FUKUOKA REIT CORPORATION39FUKUOKA REIT CORPORATION

31.25(31.24)
0.03
0.04

40

31.25
(31.23)0.04
0.07

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to equity method income and earnings)
32nd fiscal period (from March 1, 2020 to August 31, 2020)(3) Sister companies

Not applicable as FRC does not have any affiliated companies.

32nd fiscal period (from March 1, 2020 to August 31, 2020)

33rd fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable as FRC does not have any affiliated companies.

Classification(Notes to transactions with related parties)

Subsidiaries
of otheraffiliates

FJ.
Entertainment Hakata Ward,
Works Ltd. Fukuoka City

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,Ltd.

1. Transactions with related parties(1) Parent company and major corporate unitholders
32nd fiscal period (from March 1, 2020 to August 31, 2020)Classification

Other
affiliates

Name

Fukuoka
Jisho Co.,Ltd.

LocationHakata Ward,
Fukuoka City

Capital100,000(Note 3)Business
description

General realestatebusiness

FRC’s share of
voting rights, etc.
[or ownership of suchin FRC]

Descriptionofrelationship(thousands of yen)
Descriptionoftransaction

Purchase ofreal estate,
Consignment
etc. (Note 1)
Ownership in FRC
of real estate
Direct [9.19%]
management, Consignment
Indirect [0.76%]
of real estateetc.
management,
etc. (Note 2)

Transaction
amountCategory

Balance at
end ofperiod4,280,000––

Operatingaccounts
payable49,000(Note 4)

970,797(Note 4)(Note 4)(Note 1) Transaction terms and conditions are determined in reference to appraisal values by third parties and after negotiating on prices.
(Note 2) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 3) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Taihaku Street Business Center. The lease contract is a master lease type with passthrough rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues.
For the property covered by the said type of agreement, the above table shows figures that regard end tenants as direct lessees.
(Note 4) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

33rd fiscal period (from September 1, 2020 to February 28, 2021)
Classification

Name

Location

Other
affiliates

Fukuoka
Jisho Co.,Ltd.

Hakata Ward,
Fukuoka City

CapitalBusiness
description

100,000

General realestatebusiness(Note 2)

FRC’s share of
voting rights, etc.

Descriptionofrelationship(thousands of yen)

Descriptionoftransaction

Transaction
amountCategory

Balance at
end ofperiodConsignment Consignment
Ownership in FRC
of real estate of real estate
Direct [9.19%]
management, management,
Indirect [0.76%]
etc.
etc. (Note 1)

966,563

Operatingaccounts
payable71,773[or ownership of suchin FRC](Note 3)(Note 3)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Taihaku Street Business Center. The lease contract is a master lease type with passthrough rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues.
For the property covered by the said type of agreement, the above table shows figures that regard end tenants as direct lessees.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

(2) Affiliated companies, etc.

Name

Location

Capital

20,000(Note 2)

Hakata Ward,
Fukuoka City

200,000

FRC’s share ofBusiness voting rights, etc. Description of Description of Transaction
description [or ownership of relationship transaction
amountsuch in FRC]
Consignment Consignment
Real estateof real estate of real estate 1,018,539–(Note 6)businessmanagement, management,
etc.
etc. (Note 1)
Asset
Asset
management Payment ofmanagementof FRC, etc.
asset
520,263of FRC and–andmanagement(Note 6)otherconcurrent
fees(Note 5)businesses
service ofofficer (Note 4)

33rd fiscal period (from September 1, 2020 to February 28, 2021)
Classification

Name

Location

Subsidiaries
of otheraffiliates

FJ.
Entertainment Hakata Ward,
Works Ltd. Fukuoka City

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,Ltd.

Capital

20,000(Note 2)

Hakata Ward,
Fukuoka City

200,000

FRC’s share ofBusiness voting rights, etc. Description of Description of Transaction
description [or ownership of relationship transaction
amountsuch in FRC]
Consignment Consignment
Real estateof real estate of real estate 1,367,224–(Note 5)businessmanagement, management,
etc.
etc. (Note 1)
Asset
Asset
management Payment ofmanagementof FRC, etc.
asset
524,777of FRC and–andmanagement(Note 5)otherconcurrent
fees
(Note
4)
businesses
service ofofficer (Note 3)

Not applicable.

32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable.

33rd fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable.
FUKUOKA REIT CORPORATION

41

Balance at
end ofperiodOperatingaccounts
payable171,911

Accruedexpenses

245,498(Note 6)(Note 6)(thousands of yen)
Category

Balance at
end ofperiodOperatingaccounts
payable183,290

Accruedexpenses

305,873(Note 5)(Note 5)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded with FJ. Entertainment Works Ltd. a building lease and management consignment agreement for Canal City Hakata, Canal City Hakata·B, Canal City Business Center Building andKonoha Mall Hashimoto, and a real estate lease and management consignment agreement for Park Place Oita. The relevant lease agreements are master lease type with pass-through rent, in which
rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the properties covered by the said type of the agreements, the above table shows figuresthat regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, Executive Director of FRC, concurrently serves as a CEO & Representative Director of Fukuoka Realty Co., Ltd.
(Note 4) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

(4) Directors and major individual unitholders

33rd fiscal period (from September 1, 2020 to February 28, 2021)

Category(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded with FJ. Entertainment Works Ltd. a building lease and management consignment agreement for Canal City Hakata, Canal City Hakata·B, Canal City Business Center Building andKonoha Mall Hashimoto, and a real estate lease and management consignment agreement for Park Place Oita. The relevant lease agreements are master lease type with pass-through rent, in which
rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the properties covered by the said type of the agreements, the above table shows figuresthat regard end tenants as direct lessees.
(Note 3) For Canal City Hakata, Canal City Hakata·B and Canal City Business Center Building indicated in (Note 2), the master lease and property management company was changed from Fukuoka Jisho Co.,
Ltd. to FJ. Entertainment Works Ltd. as of June 1, 2020.
(Note 4) Etsuo Matsuyuki, Executive Director of FRC, concurrently serves as a CEO & Representative Director of Fukuoka Realty Co., Ltd.
(Note 5) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 6) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable.

(thousands of yen)

FUKUOKA REIT CORPORATION

42

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

2. Parent company and major affiliated companies

The following table provides the income (loss) from properties for lease.


32nd fiscal period (from March 1, 2020 to August 31, 2020)(thousands of yen)
Use

Not applicable.

33rd fiscal period (from September 1, 2020 to February 28, 2021)

RetailNot applicable.

(Notes to asset retirement obligations)

Office buildings

32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable.
Others33rd fiscal period (from September 1, 2020 to February 28, 2021)
Not applicable.
Total(Notes to properties for lease)
FRC owns retail, office buildings and residential properties for lease in the Kyushu area centering on Fukuoka Prefecture. The
following table provides the book value recorded on the balance sheet, amount of change during the period and fair value ofthese properties for lease.
(thousands of yen)
Use

RetailOffice buildings

OthersTotal

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period
Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period
Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period
Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period

111,234,313
664,304
111,898,617
122,860,000

111,898,617(475,229)
111,423,388
120,920,000

45,345,497
2,938,761
48,284,259
70,410,000

48,284,259(286,884)
47,997,375
71,410,000

25,772,812
1,633,758
27,406,571
32,270,000

27,406,571
161,640
27,568,211
32,570,000

182,352,623
5,236,824
187,589,448
225,540,000

187,589,448(600,473)
186,988,974
224,900,000(Note 1) Amount recorded on the balance sheet is the cost of acquisition less accumulated depreciation.
(Note 2) Of the amount of change during the 32nd fiscal period, the amount of increase is primarily attributable to acquisition of three properties (Higashi Hie Business Center III, LOGICITY Wakamiya and Home
Plaza NAFCO at Park Place Oita) (6,132 million yen in total) and capital expenditures (790 million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses(1,686 million yen). Of the amount of change during the 33rd fiscal period, the amount of increase is primarily attributable to renovation, etc. of LOGICITY Wakamiya (345 million yen) and capital expenditures (687 million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,623 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers. Furthermore, of the fair value of retail facilities at the end of the 33rd fiscal period, the value for Canal City
Hakata·B is the sum total of the planned disposition price for the portion for which FRC concluded a sales agreement with Hoshino Resorts REIT, Inc. on March 18, 2021, and the appraisal value for the
portion which FRC will continue to own after the disposition.

FUKUOKA REIT CORPORATION

43

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

Amount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing business

5,157,908
3,266,262
1,891,645

5,450,777
3,551,333
1,899,443

2,497,317
1,241,579
1,255,738

2,560,881
1,234,805
1,326,075

863,106
389,265
473,840

892,457
394,175
498,2818,518,332
4,897,107
3,621,224

8,904,117
5,180,315
3,723,801(Note) Real estate leasing business revenues and expenses related to real estate leasing business are comprised of leasing business revenues and accompanying expenses (outsourcing fees, depreciation andamortization expenses, taxes and other public charges, etc.), and are recorded as Leasing revenues - real estate, Other leasing revenues - real estate and Expenses related to leasing business, respectively.

(Notes to segment information)[Segment information]
Descriptions omitted as FRC has a single business segment of real estate leasing business.

[Related information]
32nd fiscal period (from March 1, 2020 to August 31, 2020)(1) Information by product and service
Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers exceed 90% of operating revenues recorded in the statement of income.

(2) Information by region(a) Operating revenues
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating revenues
recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of property, plant and equipment recorded on the balance sheet.

(3) Information by major customer
Descriptions are omitted as FRC’s operating revenues for an individual outside customer are less than 10% of operating
revenues recorded in the statement of income.

33rd fiscal period (from September 1, 2020 to February 28, 2021)(1) Information by product and service
Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers exceed 90% of operating revenues recorded in the statement of income.

FUKUOKA REIT CORPORATION

44

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to significant subsequent events)(2) Information by region(a) Operating revenues
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating revenues
recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of property, plant and equipment recorded on the balance sheet.

(3) Information by major customer
Descriptions are omitted as FRC’s operating revenues for an individual outside customer are less than 10% of operating
revenues recorded in the statement of income.

(Notes to per unit information)
32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

Net assets per unit (yen)Profit per unit (yen)127,544
3,249

127,656
3,361(Note 1) Profit per unit was calculated by dividing the profit by the daily weighted average number of investment units. Diluted profit per unit is not stated as there are no dilutive investment units.
(Note 2) Profit per unit was calculated based on the following data:

32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

2,586,899–
2,586,899
796,000

Profit (thousands of yen)Amounts not attributable to ordinary unitholders (thousands of yen)
Profit attributable to ordinary investment units (thousands of yen)
Average number of units during the fiscal period (units)

2,675,572–
2,675,572
796,000(thousands of yen)
32nd fiscal period

33rd fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)

I. Unappropriated surplus

2,587,031

2,675,604

II. Total dividend[Dividend per investment unit]
III. Surplus brought forward

2,587,000[3,250 yen]
31

2,675,356[3,361 yen]
248

Method for calculating dividends

On March 18, 2021, FRC concluded a sales agreement regarding disposal of real estate trust beneficiary interest.
Type of asset to bedisposed

Property name

Use

Real estate trust
beneficiary interest

Canal City
Hakata·B Grand
Building (Note 1)

RetailLocation

Buyer

2-82, 1-chome,
Hoshino Resorts
Sumiyoshi, Hakata
REIT, Inc.
Ward, Fukuoka City

Disposition price Disposition date(planned)

7,700 million yen(Note 2)

Impact on earnings(planned)

June 1, 2021

FRC plans to record gain on sales ofreal estate of approximately 95 million
yen as operating revenues for the
fiscal period ending August 2021.

(Note 1) FRC will dispose of the beneficiary interest of a trust with 88.28% co-ownership interest in Grand Building, one of the compartmentalized buildings, as trust property. The trust will be arising by splitting
the trust that has been established based on the real estate management and disposition trust agreement for Canal City Hakata·B.
(Note 2) The disposition price (planned) does not include disposition expenses, the amount equivalent to the settlement of property taxes and city planning taxes, etc. and consumption taxes.
(Note 3) The beneficiary interest disposition agreement for the property (the "Disposition Agreement") falls under the category of forward commitment, etc. (a postdated transaction agreement where the settlement and delivery are to take place one month or more after the conclusion of the agreement as well as other similar agreements). The Disposition Agreement states that, in the event either FRC or thebuyer fails to fulfill the obligations of the Disposition Agreement and the affected party demands to fulfill it within a reasonable period of time and the other party fails to fulfill it within the specified period of time, the affected party may cancel the sales agreement as long as the property has not yet been transferred. In addition, FRC or the buyer will be liable to compensate for damages, etc. sufferedby the other party in relation to the breach of the Disposition Agreement, but the compensation amount shall be up to 20% of the total sales price at a maximum.

(2) Acquisition of AssetOn March 18, 2021, FRC concluded a sales agreement regarding acquisition of real estate trust beneficiary interest.
Type of asset to be
Property nameacquired
Tenjin Nishi-Dori Business Center
Real estate trust(Land with leasehold interest)
beneficiary interest

Use

Location

SellerAcquisition price

Acquisition date(planned)(planned)

Office2-149, Tenjin, Chuo Ward,
Fukuoka City and 4 other lots

Fukuoka Jisho Co.,
Ltd.

7,700 million yen(Note 1)

June 1, 2021

(Note 1) The acquisition price (planned) does not include acquisition expenses and the amount equivalent to the settlement of property taxes and city planning taxes, etc.
(Note 2) The beneficiary interest disposition agreement for the acquisition of the property (the "Acquisition Agreement") falls under the category of forward commitment, etc. (a postdated transaction agreement
where the settlement and delivery are to take place one month or more after the conclusion of the agreement as well as other similar agreements). FRC shall be able to cancel the Acquisition Agreement
without penalty if it becomes impossible to achieve the purpose of the agreement due to a cause not attributable to FRC. In the Transaction Agreement FRC will not pay any deposit.

(Schedule of securities)(Notesto cash distributions)
Account(1) Disposition of Asset

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-2 of
FRC’s Articles of Incorporation and must exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15-1of the Special Taxation Measures Act.
Following the above policy, FRC shall decide to distribute
2,587,000 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-2 of
FRC’s Articles of Incorporation and must exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15-1of the Special Taxation Measures Act.
Following the above policy, FRC shall decide to distribute
2,675,356 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

Not applicable.

(Schedule of contract amount, etc. and fair value of derivative transactions
andforward exchange transactions)(thousands of yen)
Category

TypeInterest rate swap transaction
Receivable floating; Payable fixed

Off-market transaction
Total(Note 1)

Contract amount, etc.
Of which, exceeding 1 year

45

(Note 2)

23,700,000

17,400,000(137,711)

23,700,000

17,400,000(137,711)(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors.

(Note) Amounts other than the amounts of dividend per unit are rounded down to the nearest thousand yen.

FUKUOKA REIT CORPORATION

Fair value

FUKUOKA REIT CORPORATION

46

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Schedule of property, plant and equipment, and intangible assets)(thousands of yen)

Balance as of
September 1,
2020
974,393
17,045–830,254
103,899,463
2,047,268

Type of asset
Buildings
Structures
Tools and fixtures
Land
Buildings in trust
Structures in trust
Total
property, Machinery and equipment
plant and in trust
equipment Vehicles and transport
equipment in trust
Tools and fixtures in trust
Land in trust
Construction in progressin trust
Subtotal
Leasehold right in trust
Total
Other intangible assets inintangible
trust
assetsSubtotal
Total

Increase

Decrease

Balance as ofAccumulated Depreciation
February 28,
depreciation for the period
2021
1,166,235
9,712
9,712
20,698
129
129
1,571
78
78
989,124––
104,526,979
34,998,550
1,511,219
2,049,545
848,800
31,072

Net property
andRemarks
equipment
1,156,522 (Note 1)
20,569 (Note 1)
1,492 (Note 1)
989,124 (Note 1)
69,528,428 (Note 2)
1,200,744 (Note 2)

191,841
3,653
1,571
158,869
642,593
2,277

–
–
–
–
15,078–1,487,396

21,895–

1,509,292

639,038

43,473870,254

747

–

–

747

709

33

37

1,391,058
107,452,281

8,812
–

6,115
–

1,393,755
107,452,281

1,210,954–

22,524–

182,801
107,452,281

18,319

1,800

3,328

16,791––

16,791

218,118,227
5,545,883

1,033,315–

24,522–

219,127,021
5,545,883

37,707,974–

1,618,242–

181,419,047
5,545,883

81,417––

81,41757,373

5,474

24,044

5,627,301
223,745,528–
1,033,315–
24,522

5,627,301
224,754,322

57,37337,765,347

5,474
1,623,716

5,569,927
186,988,974(Note 2)

(Schedule of debt)
Balance as of
September 1,
2020

Increase

Decrease

Mizuho Bank

2,300,000––

2,300,000

The Norinchukin Bank

1,000,000––

1,000,000

Current The Hiroshima Bank
maturities
The Kitakyushu Bankof longterm debt The Iyo Bank

1,400,000––

1,400,000

800,000––

800,000

500,000––

500,000

300,000––

300,000

6,300,000––

6,300,000

Development Bank of Japan

4,000,000––

Sumitomo Mitsui Banking
Corporation

1,600,000–

Sumitomo Mitsui Trust Bank

1,500,000

Development Bank of Japan

Category

Balance as of Average
February 28, interest rate(%) (Note 1)
2021

Repayment
date

Use of funds Description

0.835

July 30, 2021

Refinance fundNo collateral/
No guarantee

4,000,000

1.010

August 31, 2022

Refinance fundNo collateral/
No guarantee–

1,600,000

0.790

June 30, 2022

Refinance fundNo collateral/
No guarantee––

1,500,000

0.564

July 31, 2023

Refinance fund4,000,000––

4,000,000

0.880

August 31, 2023

Refinance fund

The Bank of Fukuoka

400,000––

400,000

0.424

August 31, 2022

Refinance fund

The Nishi-Nippon City Bank

400,000––

400,000

0.870

August 31, 2023

Refinance fund

Lender

The Higo Bank
Subtotal(Note 2)(thousands of yen)

(Note 1) The main increase in the 33rd fiscal period is due to renovation of LOGICITY Wakayama.
(Note 2) The main increase in the 33rd fiscal period is due to construction work at properties.

The Bank of Fukuoka

2,000,000––

2,000,000

0.424

February 29, 2024

Refinance fund

The Nishi-Nippon City Bank

2,000,000––

2,000,000

0.440

February 29, 2024

Refinance fund(Schedule of other specified assets)

Development Bank of Japan

2,000,000––

2,000,000

0.620

February 28, 2025

Refinance fundMizuho Bank

500,000––

500,000

0.440

February 29, 2024

Refinance fund

Shinsei Bank

700,000––

700,000

0.400

July 31, 2024

Refinance fund

Sumitomo Mitsui Trust Bank

300,000––

300,000

0.416

September 30, 2025

Refinance fundDevelopment Bank of Japan

1,500,000––

1,500,000

100,000––

100,000

The Kagoshima Bank
Long-term
The Kitakyushu Bank
debt
The Juhachi-Shinwa Bank (Note 2)

100,000––

100,000

100,000––

100,000

0.718

December 30, 2025

Refinance fund

200,000––

200,000

The Hiroshima Bank

100,000––

100,000

The Bank of Fukuoka

1,500,000––

1,500,000

0.422

December 30, 2026

Refinance fund

MUFG Bank

800,000––

800,000

0.481

March 31, 2025

Refinance fundResona Bank

600,000––

600,000

0.658

March 31, 2027

Refinance fund

The Higo Bank

300,000––

300,000

0.481

March 31, 2025

Refinance fund

The Bank of Fukuoka

1,300,000––

1,300,000

The Nishi-Nippon City Bank

1,000,000––

1,000,000

The Oita Bank

700,000––

700,000

The Kitakyushu Bank

700,000––

700,000

0.777

June 30, 2026

Refinance fund

The Miyazaki Bank

700,000––

700,000

1,100,000––

1,100,000

500,000––

500,000

Development Bank of Japan

1,800,000––

1,800,000

0.650

December 31, 2026

Refinance fund

The Bank of Fukuoka

2,000,000––

2,000,000

0.792

July 31, 2027

Refinance fund

The Nishi-Nippon City Bank

2,000,000––

2,000,000

0.892

July 31, 2027

Refinance fundNot applicable.

(Schedule of investment corporation bonds)
Issue

Issue date

Balance as of
September 1,
2020

Decreaseduring the
fiscal period

Balance as ofFebruary 28,
2021(thousands of yen)(thousands of yen)(thousands of yen)–

2,000,000

First Series ofUnsecured Bonds

December 30,
2013

2,000,000

Second Series ofUnsecured Bonds

July 31, 2017

2,000,000

Third Series ofUnsecured Bonds

July 31, 2018

Total

–

Coupon(%)

2,000,000

1,000,000–

1,000,000

5,000,000–

5,000,000

1.32

Maturity date
December 29,
2023

Lump-sumupon maturity

July 30,2032

Lump-sumupon maturity

July 30,
2038

Lump-sumupon maturity

1.00
1.20

The Oita Bank

Maturity
method(Note 1)

(Note 1)

(Note 1)

Use

Description

Repayment ofdebt

No collateral/
No guarantee

Repayment ofdebt

No collateral/
No guarantee

Repayment ofdebt

No collateral/
No guarantee(Note 2)

(Note 2)

(Note 2)

(Note 1) The bonds may be repurchased and cancelled by FRC at any time on and after the date following the payment date, unless otherwise determined by the book-entry transfer agent.
(Note 2) The bonds are subject to the limited pari passu clause among specified investment corporation bonds.
(Note 3) Amount of redemption of investment corporation bonds scheduled to be due within 5 years after period end.



(thousands of yen)
Category
Investment corporation bonds

Due in 1 year or less–

1 to 2 years–

2 to 3 years
2,000,000

3 to 4 years–

4 to 5 years–

The Juhachi-Shinwa Bank (Note 2)
The Iyo BankFUKUOKA REIT CORPORATION47

FUKUOKA REIT CORPORATION48

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

No collateral/
No guarantee

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

No collateral/
No guarantee

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

Balance as of
September 1,
2020

Increase

Decrease

The Nishi-Nippon City Bank

500,000––

500,000

The Bank of Fukuoka

500,000––

500,000

The Oita Bank

100,000––

100,000

The Kitakyushu Bank

100,000––

100,000

The Juhachi-Shinwa Bank (Note 2)

200,000––

200,000

The Hiroshima Bank

100,000––

100,000

Resona Bank

2,000,000––

2,000,000

0.493

September 30, 2027

Refinance fund

The Bank of Fukuoka

1,500,000––

1,500,000

0.812

December 30, 2027

Refinance fundDevelopment Bank of Japan

500,000––

500,000

0.680

December 30, 2027

Refinance fund

The Nishi-Nippon City Bank

1,900,000––

1,900,000

0.750

February 29, 2028

Refinance fund

Sumitomo Mitsui Trust Bank

1,100,000––

1,100,000

0.600

February 26, 2027

Refinance fund

MUFG Bank

1,500,000––

1,500,000

0.500

February 27, 2026

Refinance fundResona Bank

600,000––

600,000

0.567

February 29, 2028

Refinance fund

2,500,000––

2,500,000

0.720

March 1, 2028

Acquisition fund

MUFG Bank

600,000––

600,000

0.480

March 31, 2026

Refinance fund

The Nishi-Nippon City Bank

600,000––

600,000

0.802

March 31, 2028

Refinance fund

The Bank of Fukuoka

500,000––

500,000

0.802

March 31, 2028

Refinance fundMizuho Bank
Long-term
Sumitomo Mitsui Banking
debt
Corporation

500,000––

500,000

0.630

March 31, 2028

Refinance fund

500,000––

500,000

0.504

March 31, 2025

Refinance fund

MUFG Bank

500,000––

500,000

0.490

March 31, 2027

Refinance fund

Sumitomo Mitsui Trust Bank

400,000––

400,000

0.576

March 31, 2027

Refinance fund

The Oita Bank

400,000––

400,000

0.646

March 31, 2028

Refinance fund

The Hiroshima Bank

400,000––

400,000

0.646

March 31, 2028

Refinance fund

Shinsei Bank

300,000––

300,000

0.400

March 31, 2025

Refinance fund

Sumitomo Mitsui Banking
Corporation

500,000––

500,000

0.655

January 31, 2029

Refinance fund

MUFG Bank

500,000––

500,000

0.590

January 31, 2028

Refinance fund

The Nishi-Nippon City Bank

400,000––

400,000

0.426

January 31, 2029

Refinance fund

The Bank of Fukuoka

300,000––

300,000

0.426

January 31, 2029

Refinance fund

The Oita Bank

200,000––

200,000

0.334

February 27, 2026

Refinance fund

The Kagoshima Bank

200,000––

200,000

0.334

February 27, 2026

Refinance fund

The Higo Bank

200,000––

200,000

0.334

February 27, 2026

Refinance fundResona Bank

200,000––

200,000

0.488

February 28, 2029

Refinance fundMizuho Bank

1,200,000––

1,200,000

The Bank of Saga

500,000––

500,000

0.521

July 31, 2029

Refinance fund

The Higo Bank

500,000––

500,000

1,500,000––

1,500,000

0.303

January 29, 2027

Refinance fund

500,000––

500,000

0.480

September 29, 2028

Refinance fund

The Nishi-Nippon City Bank

2,500,000––

2,500,000

0.480

February 28, 2030

Refinance fundMizuho Bank

1,700,000––

1,700,000

0.420

February 28, 2030

Refinance fundCategory
LenderDevelopment Bank of JapanThe Norinchukin BankMUFG Bank

Balance as of Average
February 28, interest rate(%) (Note 1)
2021

FUKUOKA REIT CORPORATION

49

0.850

Repayment
date

August 31, 2027

Use of funds Description

Refinance fundNo collateral/
No guarantee

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

Balance as of
September 1,
2020

Increase

Decrease

Aozora Bank

1,000,000––

1,000,000

Resona Bank

700,000––

MUFG Bank

500,000–

Long-term The Kagoshima Bank
debt
Development Bank of Japan

500,000

Mizuho Bank

Category

Balance as of Average
February 28, interest rate(%) (Note 1)
2021

Repayment
date

Use of funds Description

0.569

June 28, 2030

Refinance fund

700,000

0.569

June 28, 2030

Acquisition fund–

500,000

0.600

June 29, 2029

Acquisition fund––

500,000

0.465

June 30, 2028

Acquisition fund

1,500,000––

1,500,000

0.530

July 31, 2030

Refinance fund

1,000,000––

1,000,000

0.470

July 31, 2030

Refinance fund

The Kitakyushu Bank

500,000––

500,000

0.526

July 31, 2030

Refinance fund

The Iyo Bank

200,000––

200,000

0.526

July 31, 2030

Refinance fund71,100,000––

71,100,000

77,400,000––

77,400,000

LenderSubtotal
Total

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest rate of debt for which FRC conducted interest
rate swap transactions is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The Shinwa Bank and The Eighteenth Bank merged on October 1, 2020 to become The Juhachi-Shinwa Bank.
(Note 3) Amount of repayment of long-term debt scheduled to be due within 5 years after period end.

(thousands of yen)

Category
Long-term debt

1 to 2 years
6,000,000

2 to 3 years
10,400,000

3 to 4 years
2,700,000

4 to 5 years
6,400,000

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

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