Hello, everyone. I’m Zenji Koike. I’m CEO of Fukuoka Realty. Thank you very muchfor tuning in our presentation on the performance overview of Fukuoka REIT
Corporation for the 35th fiscal period between September 1, 2021 and February 28,
2022. Let’s get started.

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Executive summary
Dividend per unit for the 35th period surpassed the forecast by 1.0%

Executive summary

1

Let me start with the executive summary on page 1 and go straight to talk about thedividends. You’ll find the numbers at the bottom of the page. The dividend payout forthe 35th fiscal period was 3,536 yen per unit, beating our own expectations by one
percent. It’s been on a steady path to recovery since the 32nd fiscal period’s 3,250
yen per unit. And as you can see, we keep our dividend forecast for the 36th and 37th
fiscal periods on hold at 3,500 yen per unit.
Next, please take a look at the upper left part of the page for the overview of ourexisting properties. Properties in Fukuoka were affected by the state of emergency
until September 2021 and then by another set of the COVID restrictions that were put
in place between January and March this year. But our active retail performed better
than expectations thanks in part to renovations of some of the properties. Canal City
Hakata, a leading property in our active retail, is now being considered for an extensive
renovation to be reborn as a “Next Generation Canal City Hakata.” We will soon beable to share with you its new concept and roadmap.
Our office buildings were 100 percent occupied at the end of the 35th fiscal period. We
continue to be able to raise rent on rent revisions. Upward rent revisions increased ata healthy clip. We are expecting a large displacement of space in September this year,
and we are trying to find a replacement as quickly as possible. I will give you moredetail on that later in my presentation.
If you look to the right, here is our financial dashboard. As you can see, we remain
steadfast to ensure the stability of our financial structure. We will monitor the outlook
for interest rates more closely to manage the risk of rising rates.
Last but not least, when it comes to ESG, we set KPIs and goals for each materiallysignificant issue just a few weeks ago and we are going to execute our roadmap toachieve them. Also, we will continue to disclose more non-financial information such2

as green performance data through the publication of our integrated report andother means.
Let’s go to the next slide.

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Dividend per unit
Dividend per unit for the 35th fiscal period recovered to 3,536 yen

Financial statements and Business forecasts

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These are the factors that determine our dividend payout and details follow as to theactual payout for the last fiscal period and the forecast for the next two fiscal periods.
Key factors include the asset replacement during the 35th, the acquisition of a newproperty in the 36th, and the large displacement of space at Higashi Hie BusinessCenter for the 37th fiscal periods, respectively. As I explained at the last meeting, ourdividend policy is to pay no lower than 3,500 yen per unit for each fiscal period.
Please go to the next slide.

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Statements of Income （compared with the previous fiscal period）
Absorbed the impact of asset replacement with reduced expenses, etc.
- unit : mm yen

Sign indicates impact on profit （unit : mm yen）

Financial statements and Business forecasts

3

Let’s take a look at our income statement and dividend payment for the 35th fiscal
period as compared with the previous fiscal period. You can read details in the orange
box as to what affected our operating revenues and expenses. Total operating
revenues fell 280 million yen from the previous period, half of which, about 140 million
yen, was due to the absence of gains on real estate sales. The other half of thedecrease was primarily due to the asset replacement in the previous period. We lost
263 million yen in leasing revenue following the disposal of the co-ownership share of
Canal City Hakata・B Grand Building and instead acquired a land with leaseholdinterest for Tenjin Nishi-Dori Business Center, which generated 79 million yen inrevenue for the last fiscal period.
Other active retail such as Park Place Oita or Konoha Mall Hashimoto performed
better than in the previous period with revenue up by 50 million yen.
Total operating expenses decreased 168 million yen from the previous period thanks inlarge part to slashing outsourcing and repair expenses as well as a decrease indepreciation costs. SG&A expenses and non-operating expenses also decreased.
The dividend per unit was 3,536 yen for the 35th fiscal period.
Next slide, please.

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Statements of Income （compared with the forecast）
With the recovery of rent revenue from retail properties, dividend per unit surpassed the forecast by +1.0%- unit : mm yen

Sign indicates impact on profit （unit : mm yen）

Financial statements and Business forecasts

4

This slide compares the actuals of the last fiscal period against the forecast. Again,
you can read details in the orange box. Despite the unexpected extension of the
COVID restrictions, leasing revenue from our retail properties with variable rents
increased from the previous period. That is why operating income came in better thanforecast by 29 million yen in the face of increased expenses including repair expenses.
The dividend per unit beat expectations by 36 yen a unit.
Next slide, please.

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Business forecast （the 36th fiscal period, Aug. 2022）
Dividend forecast to be 3,500 yen, with newly acquired property contributing to earnings to cover increase in expenses

Financial statements and Business forecasts

5This is our business forecast for the 36th fiscal period. The acquisition of Hakata
Chikushi-Dori Center Building on March 1 is the key factor that will push up theoperating revenue by 149 million yen from what it was in the 35th fiscal period.
However, operating income is expected to go down 17 million yen because operating
expenses are expected to go up by 167 million yen in part due to increases in
outsourcing and repair expenses. The DPU forecast is 3,500 yen per unit.
Next slide, please.

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Business forecast （the 37th fiscal period, Feb. 2023）
Absorb negative impact of Higashi Hie Business Center through increase in rent at active retail and decrease in expenses

Financial statements and Business forecasts

6

This is our business forecast for the 37th fiscal period. A large displacement of spaceis expected in Higashi Hie Business Center during that period. But its impact will be
partially offset by an expected recovery in sales of our active retail, which will curtailthe loss of operating revenue to 58 million yen compared with the preceding period.
We will also cut back on utilities and repair expenses to further mitigate the impact on
our operating income. The DPU forecast for the 37th fiscal period thus remains
unchanged from the 36th fiscal period at 3,500 yen per unit.
Next slide, please.

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Leasing policy for Higashi Hie Business Center
Reduce rent gap by improving rent unit price

Leasing policy for Higashi Hie Business Center

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I want to explain the new leasing guideline for Higashi Hie Business Center. As weannounced in a press release back on March 30, we expect a large displacement of
space, 35 percent of the building’s total leasable area or more than 4,600 square
meters of space. We know that that is a cause for concern that the space may not be
replaceable, but we take this as an excellent opportunity to fill the rent gap. Ourcurrent rent unit price ranges between 12,500 and 13,000 yen while the market rent
unit price is between 15,000 and 16,000 yen. This business center building sits on aprime location with excellent accessibility, directly connected with Higashi Hie subway
station, which is just one stop away from both JR Hakata Station and Fukuoka Airportand standing next to the exits of Fukuoka Expressway. On top of that, there is ademand for large office space in this area and we’ve already received a number ofinquiries for this building. Our activities of looking for new tenants started in earnest in
April. Our current priority is to shrink the rent gap, and we are going to formulate
tactics to find replacements as we examine the needs of prospective tenants in theregion.
Next slide, please.

8External Growth Initiatives
Aiming for an asset size of 250 billion yen by diversifying risks by investment type as a comprehensive REIT

External growth strategy and New Acquisition of property

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Let’s turn our focus to external growth. Our current asset size as of March 1st, 2022 isabout 206.3 billion yen, and we continue to work harder to reach our target, 250 billion
yen in asset size. We will also continue to work closely with our sponsor not only toacquire existing profitable buildings but also to seek for new, high quality, highperforming properties in development including office buildings and logistics facilities.
We have local connections. We have knowledge about the local market. We deliver avariety of solutions that cater to the local needs. And we can find high quality
properties locally. We are also planning to acquire other stable assets such as
residential properties in addition to office buildings and logistics facilities, tapping
external sources.
Next slide, please.

9New acquisition of property for the 36th fiscal period
Recover occupancy rate by focusing on leasing activities

External growth strategy and New Acquisition of property

9This slide gives you more detail about Hakata Chikushi-Dori Center Building, which we
acquired at the beginning of this fiscal period. The transaction was completed on
March 1st as scheduled. There were some tenants who had notified us of theirintentions to terminate the leasing contract before the completion of the acquisition andthey indeed left the building. But we worked hard and found replacements before theacquisition was completed. We could also successfully raise the rent by almost 30
percent and achieved some internal growth as planned. Our next goal is to achieve
100 percent occupancy at the earliest possible time.
Next slide, please.

10Trends in the Fukuoka office market
The competitiveness of office buildings owned by FRC is high with 0% of the period-end vacancy rate

Portfolio overview

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From here, I’m going to give you updates on the recent performance and situation of
our properties by asset type. Let me start with the office market in Fukuoka. The new
supply of office space surged during 2021 as the rental area increased by almost
73,000 square meters. But the rise in the vacancy rate has been minimal and it is at
4.9 percent as of March 2022 while the vacancy rate in Central Tokyo is hovering ataround 6.37 percent. More recently the rise in the average vacancy rate in Fukuoka
has been more moderate than the rise in Tokyo as indicated in the chart on the rightside of the slide. And the fact that our office buildings have this really low vacancy rate
shows that they are highly competitive properties in the market.
Next slide, please.

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Initiatives by Fukuoka City Government and status of office workers
Office demand going forward will be boosted

Portfolio overview

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The demand for office space in Fukuoka is propped up by the city’s efforts to attract
companies. In 2020, the city of Fukuoka successfully lured 50 companies including
foreign businesses and call centers to move in to the city. Indeed, one of thecharacteristics of the office market in Fukuoka is that the city is a great place toestablish call centers which require relatively large floor space. Also, a Hong Kong
company that established its local office in Fukuoka signed a strategic partnershipagreement with a Japanese company to start new businesses in the region.
In fact, the city of Fukuoka boasts the highest ratio of new business openings in Japanfor three consecutive years. And we think that it is because the city has been providing
local startups with many different kinds of support by taking full advantage of its status
as a national strategic special zone.
Next slide, please.

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Historical and projected office buildings’ occupancy rates
Maintaining occupancy levels while steadily increasing rent per unit（％）

Portfolio overview

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The weighted-average occupancy rate for the nine office buildings in our portfolio
remains at an extremely high level of 99.9 percent for the 35th fiscal period. Tenants
left three of our office buildings but the vacancies were filled immediately during thelast fiscal period. And those expected to leave during this fiscal period will be fully
replaced pending official confirmation. As I explained earlier, the large displacement of
space is expected in Higashi Hie Business Center in the 37th fiscal period. We thinkthat this is going to be a great opportunity to fill the rent gap, but we will also work hard
to find replacements as quickly as possible. According to CBRE, the rent we charge
for our office buildings is still about 20 percent lower than the market rent. And that isexactly why we are going to continue to raise rent at the time of rent revisions andincrease the rent unit price.

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Strategies to strengthen active retail①
Renovation eyeing the post-COVID-19 recovery phase

Portfolio overview

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On the next page I will explain our strategy for boosting the competitiveness of ouractive retail. We invested in these three retail facilities, mostly by way of doing
renovations, to boost competitiveness in general and increase traffic in anticipation of apost-pandemic surge in demand.
In Park Place Oita, we carried out an extensive renovation of its third floor, an area ofmore than 2,200 square meters, called Shangri-La zone, as part of its 20th anniversary
project, and created a themed playground to attract more customers with kids. It isscheduled to be open on April 22.
Konoha Mall Hashimoto caters to local customers who buy groceries and other daily
necessities. That is why we expanded its “Hashimoto Marche,” a food product area,
which has been doing quite well in the face of the COVID crisis. Nine new shops areadded to the area and have already been open for business.
SunLive City Kokura, too, underwent an extensive renovation between June and
September last year. Its sales jumped almost 17 percent for the five months after therenovation.
We believe that all these renovations and other initiatives we put in place for our active
retail will help drive internal growth not only in days and weeks ahead but also formonths and years to come.

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Strategies to strengthen active retail②
Initiatives for next-generation Canal City Hakata

Portfolio overview

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Next, I’d like to briefly outline what we are trying to do to transform Canal City Hakata
for the next generation. But, first, as a background, it is important to note that theexternal environment that surrounds Canal City Hakata is going through yet anothersignificant transformation. In fact, Canal City Hakata’s original brand concept was “thepursuit of entertainment and uniqueness” when it was open in 1996. Since then, it has
been reshaping itself as “the iconic retail facility in Asia” and later around 2013 as “thedestination retail facility for inbound tourists,” and as such, has suffered a great impact
from the current pandemic.
In the face of lingering uncertainty as to when inbound tourism recovers, Fukuoka
REIT is working closely with our sponsor and property management companies andleading the efforts to transform Canal City Hakata for the next generation. The
objectives of this project are: “deliver new customer experience value and new
shopping experience,” “bring a whole new dining experience,” and “create newcommunity space and new attractions.” There is only so much I can share with you
today about the project, but I will give you a lot more detail in our next meetings.
Next slide, please.

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Situation of other assets（Logistics）
Rents are expected to increase due to strong demand

Portfolio overview

15This is the situation of our logistics assets. The logistics property market in Fukuoka
has been very bullish with zero percent vacancy rate since 2019. Despite thesignificant amount of new supply expected this year and beyond, CBRE expects only amodest rise in the vacancy rate and that it will remain below the 2017 level. Also, it isvery likely that the market continues to be bullish not only in Fukuoka but also in Tosu
area, Saga Prefecture, and the rent unit price is expected to go up even in the face ofthe expected large supply of new logistics facilities. Currently we own four logistics
properties and every single one of them is running at 100 percent occupancy.
Next slide, please.

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Situation of other assets（Residence, Hotel）
Operation of residential properties are steady, for hotels, FRC owns only those specialized for accommodation

Portfolio overview

16This is about the situation of our residences and hotels. The average occupancy rateof our five residential properties remained high at 96.7 percent for the 35th fiscal period.
We keep trying to raise rent at the time of tenant replacements and rent revisions. All
the hotels in our portfolio are room-only hotels. They continue struggling to recoverfrom the pandemic during the 35th fiscal period because of the extension of the COVID
restrictions. But we hope that our hotels’ performance will get back on track if thegovernment resumes its domestic travel subsidy campaign. For your information,
Hotel FORZA Oita is currently a designated hotel for COVID patients with mild
symptoms in Oita Prefecture. Fukuoka Washington Hotel is reopen in April after theplumbing renovation was finished.
Next slide, please.

17Key financing events in the 35th fiscal period and the 36th fiscal period
Commitment line period maintained and long-term borrowing （10 years）

Financial strategy

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From here I’m going to talk about our finances. Let me start with the key financing
events in the 35th and 36th fiscal periods. As you can read, we signed an agreement
to extend the term of the seven billion yen committed line of credit by one year, setting
the remaining term to three years. That allows us to remain on solid financial footing
and have access to fast funding availability. Also, in March we borrowed one billion
yen for ten years from Mizuho Trust and Banking, paying 30bps higher loan spreads,
to fund the acquisition of Hakata Chikushi-Dori Center Building. Mizuho Trust andBanking is a bank that we do business with for the first time.
Next slide, please.

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Financing condition
Establishment of stable financial baseFinancial strategy

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Here are more details about our financing capacity. Our average debt duration is 5.2
years with a 0.67 percent interest rate on average for the 35th fiscal period. According
to the latest securities firm report, the average debt duration across the J-REIT
industry is 3.9 years. That means that we have access to longer-term borrowings. We
firmly stick to our policy of hedging the risk of rising rates, diversifying debt maturities,
extending the borrowing term as long as possible, and lowering interest cost as muchas possible. Our LTV remains at the low level of 41.5 percent for the 35th fiscal period,
so we have no problem in using debt to finance the acquisition of investment properties.
Also, we keep JCR’s AA- (Double A Minus) credit rating for the period.
Next slide, please.

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Appraisal value
Maintained unrealized gains for all properties （＊1）- unit : mm yen

Appraisal value

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This is about the appraisal value of our portfolio. All the properties we own haveunrealized gains and the total unrealized gains increased about two billion yen from theprevious period to approximately 42.8 billion yen as of the end of the 35th fiscal period.
There may be times in the future where we need to increase our capex investment or
the leasing market just falls into a slump. But even if we find it hard to only rely on
profits from our existing properties to maintain the payout of 3,500 yen per unit, we will
still have an option to realize those gains to at least sustain the lower end of thedividend range.

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Sustainability
Set KPIs and targets for each item of materiality （April 2022）

Sustainability

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Last but not least, let me talk about what we are doing with respect to sustainability. It
is one of our management priorities. We set KPIs and goals for each materiallysignificant issue in April. Details are available on this page, and we will make public
our progress in addressing these issues and share more information going forward. As
I explained last time, activities related to the environment will only get more attention.
So, we are going to execute our roadmap to really make sure we achieve our KPIs.
Also, when it comes to TCFD, we are getting ourselves ready to sign on its
recommendations. We understand that sustainability continues to be one of theimportant criteria for real estate investment, so we want to continue our discussion with
our investors how to move forward.
And that brings to an end to my presentation on the performance overview for the 35th
fiscal period. Thank you very much for watching.

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Profile

Appendix

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A real estate investment trust specializing in regional properties

Appendix23

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Current situation of Fukuoka City①

Appendix24

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Current situation of Fukuoka City②

Appendix25

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Earthquake risk in Fukuoka, etc.
All properties owned by Fukuoka REIT are covered by earthquake insurance

Appendix

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Certification from external organizations and information disclosure
Currently preparing to endorse the recommendations of TCFD （Task Force on Climate-Related Financial Disclosures）

Appendix

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ESG Initiatives （Environment）

Appendix

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ESG Initiatives （Society①）

Appendix

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ESG Initiatives （Society②）

Appendix30

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ESG Initiatives （Governance）

Appendix31

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IR Initiatives

Appendix32

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Unitholders’ data

Appendix33

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Unit price chart

Appendix34

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Financial highlights
Dividend per unit was 3,536 yen- unit : mm yen

Appendix35

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Balance sheets（compared with the previous fiscal period）- unit : mm yen

Appendix36

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Cash flow statements（compared with the previous fiscal period）- unit : mm yen

Appendix37

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Income and expenditure by properties（Retail）- unit : mm yen（＊）Forecast at the financial results of the 34th fiscal period.

Appendix38

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Income and expenditure by properties（Office buildings・Others）- unit : mm yen（＊1）Forecast at the financial results of the 34th fiscal period. （＊2）Information is not disclosed because the permission of tenants has not been obtained.

Appendix39

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Income and expenditure by properties（Total）/Repair and maintenance expenses, capital expenditures, and depreciation- unit : mm yen

Appendix40

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Portfolio table①（As of February 28, 2022）

Appendix41

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Portfolio table②

Appendix42

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Portfolio map

Appendix

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Dividend and NAV per unit

Appendix44

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Historical trends of asset’s size by investment type （based on acquisition）
Aiming for an asset size of 250 billion yen

Appendix

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Historical appraisal values（unrealized gains）
Increase in unrealized gains for ten consecutive fiscal periods （unrealized gains: 42,812 million yen, ratio of unrealized gains: 23.1％（＊1））

Appendix

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Portfolio properties' occupancy rates
Maintained high occupancy rates

Appendix

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Top tenants by leased floor area

Appendix48

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Office building rent revisions and tenant replacement situation
Continue to realize rent increase

Appendix49

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Breakdown of variable rents

Appendix

5051

Impact of COVID-19 infection
Aiming to recover sales through renovation in anticipation of COVID-19 coming under control

Appendix51

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Situation of active retail
Sales of active retail recovered

Appendix

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List of Interest-bearing debt

Appendix

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Lenders
A stable network of sponsor banks and other lenders

Appendix54

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Asset management company’s organization

Appendix

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The condition of suburb area in Fukuoka

Appendix

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The condition of Fukuoka city center
Nanakuma subway line extension project will be completed by FY2022

Appendix

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Redevelopment in Tenjin area（Tenjin Big Bang）
2-year extension until the end of Tenjin Big Bang project in the end of Year 2026 （＊1）

Appendix

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Redevelopment in Hakata area（Hakata Connected）

Appendix

5960

Sponsor pipeline （Fukuoka Jisho Group）

Appendix60

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