25th Fiscal Period

Report on Performance andManagement Status (Semiannual Report)
September 1, 2016 to February 28, 2017

Fukuoka REIT
Corporation

2-25, 1-Chome, Sumiyoshi, Hakata Ward, Fukuoka City
http://www.fukuoka-reit.jp/eng/
FUKUOKA REIT CORPORATION

100

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Highlights for 25th Fiscal Period

To Our Unitholders

Financial Highlights

Stable Dividend

Steady Growth

LTV

Dividend per unit

Total assets

38.1 %

3,398 yen

175,063 mm yen

Credit ratings

Latest dividend forecast per unit 3,300 yen

Number of investment
properties at end of period(as of February 28, 2017)

S&P
CEO & Representative Director,
Fukuoka REIT Corporation(Positive)

A+

R&I

Etsuo Matsuyuki

A-(Stable)JCRAA-

Dividend forecasts
26th fiscal period:

25 properties

27th fiscal period:

Occupancy rate (at end of period)

3,400 yen per unit
3,470 yen per unit

99.4 %(Stable)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 andmanagement status of FRC for the 25th fiscal period (September 1,
2016 to February 28, 2017).
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 thesupport of our unitholders and sponsor companies.
The business conditions of the Fukuoka and Kyushu area arerecovering as a whole.
In the Fukuoka and Kyushu area, the core investment target area
for FRC, the economy is recovering as a whole, as replacement
demand for durable goods continues to be strong primarily in theareas struck by the Kumamoto Earthquake (Note 1), and sales of luxury
goods have started to increase in accordance with improvements in
consumer sentiments, although recovery has come to a temporarystop in the tourism sector.
FRC disposed two properties and acquired a property as wellas equity interests in a silent partnership in the 25th fiscal
period.
In the fiscal period under review, FRC disposed AEON Hara
Shopping Center at this time while the real estate market is still brisk.
At the same time, FRC disposed Aqualia Kego for a price thatgenerated gain on sales significantly higher than the assumed
unrealized gain.
In September 2016, we acquired Sports Club NAS Park Place Oita
by utilizing a sponsor pipeline, in an effort to secure stable earnings
by concluding a long-term contract with a fixed-rent scheme.
Moreover, in December 2016, we acquired silent partnership equity
interests in LOGICITY Hisayama, a logistics facility located near the
Fukuoka Interchange as property held in trust.
Fountains renewed and projection mapping system introduced
at Canal City Hakata.
At Canal City Hakata, the flagship of FRC, a water show withprojection mapping started in November 2016 after the fountains
were renewed.

Thanks to collaborations using content also popular in Japan and thetiming of attention being paid to "spending on events," such as
experiential consumption by foreign tourists visiting Japan, the show
helped attract 16.38 million people (Note 2) to Canal City Hakata in fiscal
2016, a level nearing the past record high of 16.48 million in fiscal
2015.
Occupancy remained solid, with the average occupancy rateof all properties FRC owns at 99.4%.
In the business districts of Fukuoka City, the vacancy rate of officebuildings has dropped to as low as the 3% level (Note 3), while supply
in the future will be limited. Bolstered by the strong office market, theaverage occupancy rate of office buildings owned by FRC came to
99.8% (Note 4). With other assets also operating in good shape, theaverage occupancy rate of the entirety of properties FRC owns as ofthe end of the 25th fiscal period stood at 99.4%. Standing on theseasset management operations, we decided to deliver 3,398 yen as
dividend per unit for the fiscal period, up 98 yen from the forecast.
FRC decided to acquire LOGICITY Hisayama in the 26th fiscal
period.

Changes in Investment Unit Price
69,890 units(yen)
300,000

FUKUOKA REIT CORPORATION

1

25
24th

30,000

4th PO since listing

250,000

25,000June 21, 2005

March 1, 2013

Listing

3rd PO since listing

200,000

20,000March 1, 2011

2nd PO since listing

15,000150,000
・Unit price: 177,100 yen
・Total number of investment units outstanding: 747,000 units
・Market capitalization: 132,293 mm yen
・Net assets value per unit: 125,410 yen
・Market net assets value per unit: 153,726 yen

September 7, 2006

1st PO since listing

100,000

10,000(as of February 28, 2017)

5,000

50,000Going 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.

(Note1) The earthquake refers to the 2016 Kumamoto Earthquake, named by the Japan
Meteorological Agency, in April 2016.
(Note 2) The figures include visitors to Canal City Hakata East Building.
(Note 3) The figure is based on the data publicized by Miki Shoji Co., Ltd.
(Note 4) The figure has been rounded to the second decimal place. For Taihaku Street BusinessCenter, the occupancy rate does not include the property's residential portion.

Trading volume (right axis) (Note 2) (units)
April 27, 2015

Moreover, FRC has decided to acquire LOGICITY Hisayama in June
2017. With the acquisition, FRC forecasts the dividend per unit for the
26th fiscal period to be 3,400 yen.

As we do so, we will strive to achieve growth of our portfolio in themedium to long term and secure stable earnings through steady asset
management. We at FRC are also resolved to pursue our mission of
maximizing investor interests based on our management philosophyof "Act Local, Think Global."
We greatly appreciate your continued support and cooperation.

Investment unit price (left axis) (Note 1)00
Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 29, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 29, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 29, Aug 31, Feb 28,
2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017

*Each figure is as of the end of each month.
*FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date.
(Note 1) The investment unit prices through February 25, 2014 have been modified to the figures after the 5-for-1 split.
(Note 2) The trading volumes through February 25, 2014 have been modified to the figures obtained by multiplying the original figures by 5.

CONTENTS
I.

Overview of Fukuoka REIT Corporation
To Our Unitholders
Highlights for 25th Fiscal Period
Trend of Growth in the Asset's Size of FRC / Financial Summary
Portfolio Overview
Profile12
3
5
7

II. Semiannual Report
III. Independent Auditor's Report
IV. Balance Sheet
V. Statement of Income
VI. Statement of Changes in Net Assets
VII. Cash Flow Statement
VIII. Notes to Financial Statements

FUKUOKA REIT CORPORATION

2

8
25
26
28
29
30
31

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Trend of Growth in the Asset’s Size of FRC
Since listing, FRC has expanded its asset’s size by more than double,
while diversifying its investment types
Office buildings (total acquisition price, left axis)

Retail (total acquisition price, left axis)
Number of investment properties (right axis)

Others (total acquisition price, left axis)

Occupancy Rate

(mm yen)

99.6

99.4

300,000

99.8

99.4

99.0

99.7

99.4

99.3

98.6
99.2

98.8

98.8

99.1

98.1

99.0

19

3,171

3,171

3,171

37,20037,20071,07374,623

14
2,060
11

100,000

25,80054,3330

8

7

550,00037,20030,20037,2002,060
1137,20016

16

16

55,07355,07362,773

27

27

27

16

3,171

3,171

3,171

3,171

37,20043,10043,10043,10043,10074,62374,62374,62374,62374,623

2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
(Aug 2005) (Feb 2006) (Aug 2006) (Feb 2007) (Aug 2007) (Feb 2008) (Aug 2008) (Feb 2009) (Aug 2009) (Feb 2010) (Aug 2010) (Feb 2011)(properties)

99.4

30 100.0%

24

23

26

25

25

25 95.0%

20 90.0%

22,081

17

17

3,171

3,171

7,251

43,10043,10043,1007,251

11,581

22,081

13,931

12,831

11,581

22,081

19,281

24,33115

45,70048,50048,50048,50048,50048,50048,50048,50048,50048,50010

103,323
67,44399.5

20200,000

15

99.6

97.0

23

15

99.5

98.1

250,000

150,000

99.6

99.3

98.8

103,323

103,323

103,323

103,323

103,323

103,323

103,323

109,163

109,163

109,163

105,223

105,223

5

0

14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th As of the end of(Aug 2011) (Feb 2012) (Aug 2012) (Feb 2013) (Aug 2013) (Feb 2014) (Aug 2014) (Feb 2015) (Aug 2015) (Feb 2016) (Aug 2016) (Feb 2017) June 2017(scheduled)

Financial Summary
Financial Highlights for 25th Fiscal Period and Business Forecasts for 26th and 27th Fiscal Periods

Dividend Performance

FRC forecasts that distribution per unit will regain to the 3, 400 yen level due to property acquisition and other factors.
Category

25th fiscal period

26th fiscal period

27th fiscal period(September 1, 2016 to February 28, 2017

(March 1, 2017 to August 31, 2017)(September 1, 2017 to February 28, 2018)(unit)

Results

Operating revenues

mm yen

9,730

8,109

8,125

Leasing NOI (Note 1)

mm yen

5,010

4,993

5,060

Depreciation and amortization expenses

mm yen

1,455

1,477

1,501

Operating income

mm yen

4,585

2,908

2,946

Ordinary income

mm yen

4,199

2,540

2,593

Profit (Note 2)

mm yen

4,198

2,539

2,592

Dividend per unit (Note 2)yen (1)

3,398

–

–

Latest dividend forecast per unityen (2)

3,300

3,400

3,470

yen (1)-(2)

+98

–

–

units

747,000

747,000

747,000

Difference from forecast
Total number of investment units
outstanding (at end of period)

Forecast

Forecast(Note 1) “Leasing NOI” is calculated using "Leasing business revenues − Expenses related to leasing business + Depreciation and amortization expenses."(Note 2) The gain and loss on sales that accrued upon disposition of two properties are handled differently for accounting purposes and for tax purposes. Accordingly, FRC recorded a reserve for temporary
difference adjustments for the 24th fiscal period and reversed the reserve for temporary difference adjustments in the 25th fiscal period.

FUKUOKA REIT CORPORATION

3

25th fiscal period end

February 28, 2017

25th fiscal period dividend

3,398 yen per unit

(semiannual periods ending every February and August)25th fiscal period days

181 days

Dividend yield

3.9% {(Dividend / Days × 365) / Unit price (as of February 28, 2017)}

（yen）

3,802
4,000 （19,014）3,687 3,726

3,672 3,699 3,674

3,609（18,632）（18,438）（18,373）3,468（18,360）（18,499）（18,049）3,475 3,479
3,563 3,574（17,377）（17,397）3,356 3,293 3,384 3,324 3,238 3,257 3,291 3,243（17,341）
3,435（16,922）（16,783）（16,621）（16,465）（16,458）（16,193）（16,289）（16,219）3,278

3,479

3,398 3,400

3,470

25th

27th

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

26th

(Forecast) (Forecast)*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. Figures in parentheses indicate the value before
the 5-for-1 split.

FUKUOKA REIT CORPORATION

4Portfolio Overview
1

Retail2

3

Retail4

RetailRetailCanal City Hakata

Canal City Hakata・B

Park Place Oita

One of the largest entertainmenttype retail facilities in Japan anda typical tourist destination in
Fukuoka

One of the largest entertainmenttype retail facilities in Japan anda typical tourist destination in
Fukuoka

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

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

5

6

7

8

RetailRetailRetailOthers21 (residence)

SunLive City Kokura

RetailOthers22 (residence)

D-Wing Tower

Granfore Yakuin Minami

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

25

23 Others(hotel)24

Hotel FORZA Oita

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

Others(logistics)

Tosu Logistics Center

A business hotel located walking
distance from Oita Station andspecialized for lodging to meetbusiness needs

A logistics facility located in theGreen Logistics Park Tosu, operatingaround the clock and with threetemperature zones

LOGICITY Hisayama

Purchase ofearthquake
insurance

Others(logistics)

Approximately 5km from the Fukuoka
Interchange featuring traffic
convenience, with good generalpurpose capabilities

Square Mall Kagoshima Usuki

Kumamoto Intercommunity SC

Hanahata SC

Kurume Higashi Kushiwara SC

LOGICITY Minato Kashii

A retail facility in Kagoshima,
designed by John Jerde who
designed Canal City Hakata andRoppongi Hills

Located along a major arterial roadand comprising Sports Depo, Golf 5
and Starbucks

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

Located on a corner of a heavilytraffic intersection and comprising
Sports Depo and Golf 5

A logistics facility among the largest
in the Fukuoka area, with a location
featuring traffic convenience andconcentration of such facilities

Retail10 Retail11

12

FRC decided to acquire a logistics facility
in a good location, situated near
the Fukuoka Interchange.
Planned acquisition price: 5.05 billion yen
Planned acquisition date: June 1, 2017

◉ Portfolio Map

OfficeBuilding

25
4

Fukuoka City

Located east of Marinoa
City Fukuoka and has stableattractiveness through synergy with
the Outlet building

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

An office building facing majorarterial roads and directly connected
to Gofukumachi Station on the city
subway20

6Kumamoto
Prefecture
MiyazakiPrefecture

3

13

14

OfficeBuilding

15

OfficeBuilding

16

OfficeBuilding

5
9

KyushuArea

Fukuoka IC

Fuku
R o u o ka E x
te 4p
K a sr e s s w a y
u ya
Line,

3

Kagoshima
Prefecture

OfficeBuilding

Sh
in
ka
ns
en

Having a large floor area andtenanted by an electric appliancestore widely attracting customers
from nearby cities

NagasakiPrefecture

23
3

Sa
ny
o

Gofukumachi Business Center
Building

Oita
PrefectureeLin

Canal City Business Center
Building

24
8

ii
sh
Ka
JR

Marinoa City Fukuoka(Marina Side Building)

K s Denki KagoshimaIsland City

Fukuoka
Prefecture

Saga
Prefecture

Hakata Bay

JR Sasaguri

Sanix Hakata Building

Taihaku Street Business Center

Higashi Hie Business Center

Tenjin Nishi-Dori Center Building

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

Good location along Taihaku-doriStreet, a two-minute walk from Gion
subway station and ten-minute walkfrom Hakata Station

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

An office building facing Tenjin
Nishi-dori Street where commercial
facilities are concentrated

Fukuoka Expressway,
Route 1 (Loop Line)10

SubwayKuko Line

12

FukuokaYafuoku! Dome

18 21
Ohori Park

202

17

OfficeBuilding

Others18 (residence)

Others19 (residence)

ne
Li

1km

ifu
za
Da

0

Fukuoka
E

ay
sw
es
pr
Ex

5

385
202

an
rb
U

FUKUOKA REIT CORPORATION

Nish
Omitetut su
a Te
Lin nje in

Aqualia Chihaya
A rental condominium comprisedof units mainly for singles andsmall families to match the local
characteristics

3

ine
aL
im
sh
go
Ka

City House Keyaki DoriA high-quality rental condominium
in a popular residential area of
Fukuoka, featuring traffic and living
convenience

Fukuoka Airport

15

JR

Amex Akasakamon Tower

Tenjin263

202

A tower-type rental condominium
near downtown Fukuoka, with traffic
convenience and environment thatmatches a wide range of generations

Hakata
2
11
13
1

16

19

14

SubwayNanakumaLine

202

Tenjin North Front Building

17

Line

22

Others20 (residence)

A relatively new office building
scarce in the Tenjin area that features
Kyushu s largest integration of urban
functions

LOGICITY Hisayama

ssway
Kyushu Expre

9

OfficeBuilding

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

xpr
ess
wa

5
y R oute

Line)
(Loop

7

FUKUOKA REIT CORPORATION

6

Fukuoka City

Profile

II. Semiannual Report

Status of the Investment Corporation
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 real estate, which is a very regional-specific business.

Overview of Asset Management
1. Changes in operating results and financial position

Overview of the Investment Corporation
Representative: Etsuo Matsuyuki, CEO & Representative 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:

22nd fiscal period

7,789[7,789]4,928[4,350]
2,860
2,370
2,369
167,369[(0.3)]
81,811[0.1]
79,441

Sponsors

units(c)/(d)yen(e)

mm yen(e)/(d)

yen

5%

5%

Director

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

KYUSHU RAILWAY COMPANYRoyal Holdings Co., Ltd.

TEL:

+ 81- 92- 272- 3900

Established:

December 26, 2003

Capital:200, 000, 000 yen

yen

118,567
2,370
3,435[3,435][–]125,574
2,661
3,563[3,563][–]

125,585
2,669
3,574[3,574][–]

123,2672,598
3,479[1,256][2,223]

125,4102,538
3,398[3,398][–](b)

mm yen(c)

mm yen%%(Note 3) mm yen

(d)

yen
(Note 4)

Office buildings

Retail

28.0%

60.8%
Investment area (based on acquisition price)
Fukuoka metropolitan area

76.3%

Others 11.1%

Other
Kyushu areas

23.7%

Occupancy rate at end of period2

99. 4%*Figures are based on properties owned as of February 28, 2017.

FUKUOKA REIT CORPORATION

7(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)(March 1, 2016 toAugust 31, 2016)

25th fiscal period (Note 6)(September 1, 2016 to
February 28, 2017)%

1.4 [2.9]

1.5 [3.0]

1.5 [3.0]

1.4 [2.9]

2.4 [4.8]%

2.9 [5.8]

3.0 [6.0]

2.8 [5.7]

1.0 [2.0]

4.5 [9.1]

%

48.9

51.7

51.7

51.3

53.5

[Change from previous period]

%

[0.2]
100.0

[2.8]
100.0

[0.0]
100.0

[(0.4)]
100.0

[2.2]
60.5

25

27

27

27

25

m2

478,197.10

554,464.84

554,549.65

554,541.30

523,817.31

%

99.6

99.5

99.6

99.5

99.4

mm yen

1,390

1,458

1,471

1,470

1,455

mm yen

328
4,829
181

445
5,229
184

630
5,237
182

665
5,164
184

1,789
5,010
181

(Note 5)【Other reference information】
Number of investment
properties (at end of period)
Total leasable floor space

Depreciation and amortization
expensesCapital expenditures
Leasing NOI
Days in fiscal period%

properties(Note 5) mm yen
days(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) 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.
(Note 4) The dividend in excess of earnings per unit for the 24th fiscal period came from the reserve for temporary difference adjustments.
(Note 5) 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

Total leasable floor space(September 1, 2014 to
February 28, 2015)

Ratio of ordinary income to total (Note 5)
assets(Note 5)Return on net assets
Ratio of net assets to total(c)/(b)assets(at end of period)

Investment type (based on acquisition price)

523, 817. 31m

747,000

mm yenOccupancy rate

Portfolio (Note)2- 25, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka
City

747,000

mm yen(a)(at end of period)

Address:

747,000

mm yenPayout ratio

5%

Representative: Etsuo Matsuyuki
CEO & Representative
Director

747,000

Operating income
Ordinary income
ProfitTotal assets[Dividend in excess of earnings per unit]

10%

Outsidedirector

Fukuoka Realty Co., Ltd.

Fukuoka Realty Co., Ltd.

690,000

mm yenmm yenTotal number of investment
units outstanding
Net assets per unit
Total dividend
Dividend per unit

Saibu Gas Co., Ltd.

(Note 1) Concluded MOU with Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. concerning pipeline support.

Name:

9,730
[8,072]
5,145[4,517]
4,585
4,199
4,198
175,063[(2.5)]
93,681[1.7]
91,142[Expenses related to leasing business][Earnings dividend per unit]

Overview of the AssetManager

8,234[8,234]5,165[4,540]
3,069
2,616
938
179,513[(1.1)]
92,081[(1.8)]
91,142

Operating expenses

Unitholders’ equity

5%

The Nishi-Nippon City Bank, Ltd. Development Bank of Japan Inc.

Fukuoka Jisho Co., Ltd. (Note 1)

8,343[8,343]
5,201[4,577]
3,141
2,670
2,669
181,445[(0.1)]
93,812[0.0]
91,142mm yen[Change from previous period]

50%

8,423
[8,423]
5,256[4,651]
3,167
2,663
2,661
181,597[8.5]
93,804[14.7]
91,142mm yen[Leasing business revenues]

Net assets

The Bank of Fukuoka, Ltd.

24th fiscal period

Operating revenues[Change from previous period]

5%

23rd fiscal period(unit)

Fukuoka REIT Corporation

Name:

21st fiscal period

Fiscal Period

Payout ratio
Leasing NOI

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(Note 6) For the 25th fiscal period, profit amounted to 4,198 million yen as a result of recording 1,657 million yen from gain on sales of real estate. However, because 1,660 million yen in reserve fortemporary difference adjustments was reversed, the total dividend obtained by deducting the amount of the reserve for temporary difference adjustments from unappropriated surplus of 4,199 million
yen came to 2,538 million yen. The payout ratio after taking into account the reversal of the reserve for temporary difference adjustments stands at 100.0%.
FUKUOKA REIT CORPORATION

8

II. Semiannual Report

Overview of Asset Management

Overview of Asset Management
Moreover, the credit ratings assigned to FRC as of the end of the 25th fiscal period are as follows:

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

Credit Rating Agency

Rating Type

RatingRating Outlook

Standard & Poor's Ratings Japan K.K.(Note) (S&P)

Long-term Corporate Credit Rating
Short-term Corporate Credit Rating

A−
A−2

Positive−

Rating and Investment Information, Inc. (R&I)

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 25th fiscal period (February 28, 2017), FRC manages a total of 25 properties
comprising 10 Retail, 7 Office buildings and 8 Others.

(2) Investment environment and portfolio performance
During the fiscal period under review (the 25th fiscal period), the Japanese economy remained on course for a modest
recovery despite delayed improvements in some areas. Looking ahead, with employment and average income showing
continual improvement, the economy is expected to recover moderately while being aided by complementary government
policies.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy is recovering as a whole, as
replacement demand for durable goods continues to be strong primarily in the areas struck by the Kumamoto Earthquake,and sales of luxury goods have started to increase in line with rising consumer sentiment in most areas excluding tourism.
As for land price trends, the combined national average for residential and commercial land over the past year from January
2016 increased for two consecutive years. By land type, the national average for residential land price stopped decreasing andturned to a level-off for the first time in nine years, according to the 2017 Land Price Survey. In Fukuoka City, the central areaof FRC's investment targets, land prices continued rising for the fifth consecutive year, up 8.5% year-on-year for commercial
land and up 3.5% year-on-year for residential land, marking higher rates of increase.
Under such circumstances in the 25th fiscal period, FRC acquired Sports Club NAS Park Place Oita on September 1, 2016.
Moreover, FRC disposed AEON Hara Shopping Center on September 30, 2016 and Aqualia Kego on November 29, 2016,
respectively. Additionaly, FRC continued its efforts to reinforce competitive advantages and customer drawing ability at Canal
City Hakata and other major retail properties, and focused on maintaining and increasing the occupancy rate of its owned
properties. As a result of these endeavors, the average occupancy rate of all properties FRC owns was 99.4% at the end of
the period.
When analyzing FRC’s portfolio (on an acquisition price basis) by investment target area, the investment ratio in the Fukuoka
urban area accounted for 76.3%; when analyzing by property type, Retail, Office buildings, and Others accounted for 60.8%,
28.0% and 11.1%, respectively.

(3) Summary of fundraising
In the 25th fiscal period, FRC utilized the proceeds obtained from the disposition of two properties to fully repay 4,000 million
yen in short-term debt on the repayment date and repay 1,200 million yen for the long-term debt that matured in the period(totaling 5,100 million yen). As a result, the balance of interest-bearing debt outstanding (including investment corporation
bonds) at the end of the period totaled 66,675 million yen, with the loan-to-value ratio (ratio of interest-bearing debt (including
investment corporation bonds) to total assets) at 38.1% and the ratio of fixed-interest rate debt (including investment
corporation bonds) at 78.9% as of the same date. Going forward, FRC will continue its efforts to reduce refinancing risks bydispersing the debt repayment dates and increasing the average length of time until debt maturity, and to mitigate risks ofrising interest rates by shifting to fixed-interest rate borrowings and through other measures.

FUKUOKA REIT CORPORATION

II. Semiannual Report

9Japan Credit Rating Agency, Ltd. (JCR)

Issuer Rating

A+

StableLong-term Issuer Rating

AA−

Stable(Note) Standard & Poor's Ratings Japan K.K. was renamed to S&P Global Ratings Japan Inc. as of April 1, 2017.

(4) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 9,730 million yen and operating income after excluding
operating expenses such as expenses related to leasing business and asset management fees totaled 4,585 million yen.
Ordinary income was 4,199 million yen and profit amounted to 4,198 million yen.
Dividend per unit came to 3,398 yen, as FRC decided to reverse the reserve for temporary difference adjustments (as set
forth in Article 2-2-30 of the Regulations on Calculations of Investment Corporations; the same shall apply hereafter) at 1,660
million yen.

3. Change in the number of investment units issued

Changes in unitholders’ capital from the incorporation of FRC to the end of the 25th fiscal period are as follows:
Date
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

Item
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

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

Unitholders’ capital(mm of yen)

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

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441
91,142

Remarks(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(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.

[Changes in market price of investment certificates]
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:
Fiscal period
HighestLowest21st fiscal period

22nd fiscal period

23rd fiscal period

24th fiscal period

25th fiscal period

244,400 yen
186,200 yen

226,000 yen
187,100 yen

209,000 yen
171,300 yen

214,500 yen
186,100 yen

192,000 yen
169,000 yen(September 1, 2014 to
February 28, 2015)(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)

FUKUOKA REIT CORPORATION(March 1, 2016 toAugust 31, 2016)10(September 1, 2016 to
February 28, 2017)

II. Semiannual Report

II. Semiannual Report

Overview of the Investment Corporation

Overview of Asset Management
4. Results of dividend, etc.

1. Summary of unitholders’ capitalWith respect to the dividend (excluding dividend in excess of earnings) for the 25th fiscal period, FRC determined to distributethe whole amount obtained by deducting the reversal of reserve for temporary difference adjustments from unappropriatedsurplus (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, the earnings dividend per unit (exclusive ofdividend in excess of earnings) for the fiscal period was 3,398 yen.
(thousands of yen)
Fiscal period
ProfitUnappropriated surplus
Undistributed earnings
Total dividends[Dividend per unit]

Earnings dividends[Earnings dividend per unit]

Contribution refund[Contribution refund per unit]

Of the contribution refund,
distribution of the reserve
for temporary difference
adjustments(Of the contribution refund per unit,
distribution per unit of the reserve fortemporary 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)

21st fiscal period

22nd fiscal period(September 1, 2014 to
February 28, 2015)

23rd fiscal period(March 1, 2015 toAugust 31, 2015)

2,369,872
2,370,18737
2,370,150[3,435 yen]
2,370,150[3,435 yen]

–

[– ]

–

[–]

–

[–]

24th fiscal period(September 1, 2015 toFebruary 29, 2016)

2,661,683
2,661,720
159
2,661,561[3,563 yen]
2,661,561[3,563 yen]

–

–

[–]

[–]

–

–

[–]

[– ]

–

–

[–]

[–]

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

21st fiscal period

22nd fiscal period

23rd fiscal period

24th fiscal period

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

690,000 units

747,000 units

747,000 units

747,000 units

747,000 units

7,350

10,524

10,330

9,722

10,259as of February 28, 2015

as of August 31, 2015

as of February 29, 2016

25th fiscal period

as of August 31, 2016as of February 28, 2017

25th fiscal period(March 1, 2016 toAugust 31, 2016)

2,669,627
2,669,786
8
2,669,778[3,574 yen]
2,669,778[3,574 yen]

Fiscal period(September 1, 2016 to
February 28, 2017)938,400
938,409177
2,598,813[3,479 yen]
938,232[1,256 yen]
1,660,581[2,223 yen]

4,198,931
4,199,108
221
2,538,306[3,398 yen]
2,538,306[3,398 yen]

1,660,581[2,223 yen]

[–]

–

[–]

–

[– ]

–

–

2. Matters related to investment units
The following table sets forth the major unitholders of FRC as of February 28, 2017.
Investment units held (units)

NameJapan Trustee Service Bank, Ltd. (Trust account)
Fukuoka Jisho Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust account)
Trust & Custody Service Bank, Ltd. (Securities investment trust account)
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
Kazuhiko Enomoto
STATE STREET BANK AND TRUST COMPANY 505223
MetLife, Inc.
STATE STREET BANK – WEST PENSION FUND CLIENTS – EXEMPT 505223
Shikoku Railway Company
Total

208,573
66,07563,83441,511
26,23011,985
11,945
11,872
10,0869,130
461,241

Percentage of total number ofinvestment units outstanding (%) (Note)
27.92
8.84
8.54
5.55
3.51
1.60
1.59
1.58
1.35
1.22
61.74

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

[–]

3. Matters related to directors

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 even in a weak consumer spending environment, and secure and maintain the stable operation of theproperties 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 growthpotential markets.” By geographic location, of the Fukuoka and Kyushu areas, FRC will invest 60% to 90% of its assets in the
Fukuoka urban area, since the Fukuoka urban area is expected to have a high population growth rate in the future. In addition
to the Fukuoka urban area, management has decided to actively acquire properties in major cities, if there are regions orproperties 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 with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try to maintain asolid financial structure.

6. Significant events that have occurred after the end of the 25th fiscal period
No relevant items.

FUKUOKA REIT CORPORATION

11(1) The names of FRC’s directors, etc. and their fees for the 25th fiscal period are as
follows:
Title

Name of directors, etc.

Major concurrent assignments

Total fee for each title for the
25th fiscal period(thousands of yen) (Note 2)

CEO and Representative Director

CEO and Representative Director, Fukuoka Realty
Co., Ltd.
Representative Council, Shindo Law Firm
Representative Partner, Kawasho Authorize
Accountant OfficeEtsuo Matsuyuki
Hiroyasu ShindoSupervisory Directors
Independent Auditor

Yasuo Kawasho
PricewaterhouseCoopers
Aarata LLC

–

6,000
3,600
8,500

(Note 1) The CEO and Representative Director and Supervisory Directors do not possess investment units of FRC under their own name or under another person’s name. Although there are cases where theSupervisory Directors may be directors of companies other than those stated above, none of the companies or those stated above have vested interest in FRC.
(Note 2) The fees for the CEO and Representative Director and Supervisory Directors are the amounts paid to them in the 25th fiscal period, and the fee to the Independent Auditor is the amount payable to it(estimate) for audits pertaining to the 25th 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.

FUKUOKA REIT CORPORATION

12

II. Semiannual Report

Overview of the Investment Corporation

Status of FRC’s Assets under Management

4. Names of asset management company, asset custodian and generaladministrators as of the end of the 25th fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as ofFebruary 28, 2017
Category of entrustment

II. Semiannual Report

2. Major assets owned by FRC
The following is an overview of the major assets (top ten properties on a book value basis) owned by FRC as of February 28,
2017.
Real estate property name (Note 1)

Book value(mm of yen)

Name

Total leasable floor Total leased floor
space (m2)space (m2)Occupancy rate(%) (Note 2)

Percentage of total
leasing businessrevenues (%) (Note 3)

Main use

Canal City Hakata

30,572

46,602.94

46,377.56

99.5

15.6

RetailMitsubishi UFJ Trust and Banking Corporation

Canal City Hakata·B

29,13568,822.21

68,651.39

99.8

20.0

RetailGeneral Administrator (accounting matters, etc.)

Mitsubishi UFJ Trust and Banking Corporation

Park Place Oita (Note 4)

19,067

113,593.79

111,739.81

98.4

14.7

RetailGeneral Administrator (administration of unitholders’ list)

Sumitomo Mitsui Trust Bank, Limited

Canal City Business Center Building

13,45623,031.09

23,031.09

100.0

7.8

Office building

General Administrator (administration of investment corporation bonds registry)

Sumitomo Mitsui Banking Corporation

Gofukumachi Business Center

9,410

19,905.34

19,905.34

100.0

6.6

Office building

LOGICITY Minato Kashii

8,045

43,233.72

43,233.72

100.0

Undisclosed (Note 5)

Taihaku Street Business Center

6,277

14,677.27

14,463.62

98.5

3.7

Office building

SunLive City Kokura

5,816

61,450.22

61,450.22

100.0

3.6

RetailMarinoa City Fukuoka (Marina Side Building)

5,287

33,069.82

33,069.82

100.0

2.2

RetailHigashi Hie Business Center

4,715

13,614.59

13,614.59

100.0

4.1

Office building

Total

131,785

438,000.99

435,537.16

99.4

–

Asset Management Company

Fukuoka Realty Co., Ltd.

Asset Custodian

Status of FRC’s Assets under Management
1. FRC’s asset structure
24th fiscal period
Type of asset

Area

Use

as of February 28, 2017

Total value of
properties held

Percentage of
total assets

Total value of
properties held

Percentage of
total assets

Fukuoka urban area

68,692

38.3

66,011

37.7

Other Kyushu areas

35,581

19.8

36,76321.0

Fukuoka urban area

43,29224.1

43,168

24.7

Other Kyushu areas

–

–

−

−

Fukuoka urban area

18,64010.4

15,907

9.1

Other Kyushu areas

2,696

1.5

2,676

1.5

–

–

104

0.1

Deposits and other assets

10,6105.9

10,432

6.0

Total amount of assets (Note 5)

179,513[169,109]

100.0[94.2]

175,063[164,809]

100.0[94.1](Note 1)(mm of yen) (Note 2)

RetailReal estate trust
beneficiary interest

25th fiscal period

as of August 31, 2016

Office buildings

OthersSilent partnership equity interests (Note 4)(%) (Note 3)(mm of yen) (Note 2)(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 numbers are rounded off to one decimal place.
(Note 3) “Percentage of total leasing business revenues” is rounded off to one decimal place.
(Note 4) Park Place Oita includes Sports Club NAS Park Place Oita that FRC acquired on September 1, 2016. The same shall apply hereafter.
(Note 5) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

(%) (Note 3)(Note 1) “Fukuoka urban area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City for school and work, according to the 2010 census, which states “the numberof 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 the Fukuoka and Kyushu area excluding the Fukuoka urban area.
(Note 2) “Total value of properties held” is based on the value on the balance sheet (the value of real estate trust beneficiary interest is the book value after depreciation).
(Note 3) Concerning the “Percentage of total assets,” the numbers are rounded off to one decimal place. The total of individual percentages in the above table may not equal 100%.
(Note 4) Silent partnership equity interests represent FRC’s equity investment in an SPC (Limited Liability Company FRC1) that operates with LOGICITY Hisayama as the investment property.
(Note 5) Figures in square brackets for “Total amount of assets” refer to the value and percentage of real estate held in effect to the total amount of assets.

FUKUOKA REIT CORPORATION13FUKUOKA REIT CORPORATION

14OthersII. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Status of FRC’s Assets under Management(March 1, 2016 to August 31, 2016)

Real estate property name

The following table provides details of the real estate properties owned by FRC as of February 28, 2017.

Real estate property nameForm ofownership

Location

2-22, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka City
2-1, 1-Chome, Sumiyoshi,
Canal City Hakata·B
Hakata Ward, Fukuoka City1, 2-Chome, Koen Dori Nishi,
Park Place Oita
Oita City, Oita
14-1, 2-Chome, Kami Kuzuhara,
SunLive City Kokura
Kokura Minami Ward, Kitakyushu
City
2-18, 2-Chome, Usuki,
Square Mall Kagoshima Usuki
Kagoshima City, Kagoshima
1-5, 1-Chome, Kozono, HigashiKumamoto Intercommunity SC
Ward, Kumamoto City
9-12, 4-Chome, Hanahata,
Hanahata SC
Minami Ward, Fukuoka City
370-3 Higashi Kushiwara,
Kurume Higashi Kushiwara SC
Kurume City, Fukuoka
4-12, Tokai-cho, Kagoshima
K’s Denki Kagoshima
City, Kagoshima
Marinoa City Fukuoka (Marina Side 12-30, 2-Chome, Odo, Nishi
Building)
Ward, Fukuoka City
Retail subtotal:
2-25, 1-Chome, Sumiyoshi,
Canal City Business Center Building
Hakata Ward, Fukuoka City
10-10, Kami Gofukumachi,
Gofukumachi Business Center
Hakata Ward, Fukuoka City
1-23, 2-Chome, Hakataeki Higashi,
Sanix Hakata Building
Hakata Ward, Fukuoka City
3-21 Gokushomachi, Hakata
Taihaku Street Business Center
Ward, Fukuoka City
1-2, 3-Chome, Higashi Hie,
Higashi Hie Business Center
Hakata Ward, Fukuoka City
5-28, 2-Chome, Tenjin, Chuo
Tenjin Nishi-Dori Center Building
Ward, Fukuoka City
4-20, 4-Chome, Tenjin, Chuo
Tenjin North Front Building
Ward, Fukuoka City
Office buildings subtotal:
4-23, 2-Chome, Maizuru, Chuo
Amex Akasakamon Tower
Ward, Fukuoka City
16-21, 2-Chome, Kego, Chuo
City House Keyaki DoriWard, Fukuoka City
3-12, 4-Chome, Chihaya,
Aqualia Chihaya
Higashi Ward, Fukuoka City
10-38, 2-Chome, Daimyo, Chuo
D-Wing Tower
Ward, Fukuoka City
11-20, 1-Chome, Hirao, Chuo
Granfore Yakuin Minami
Ward, Fukuoka City
5-18, 1-Chome, Chuo-cho, Oita
Hotel FORZA Oita
City, Oita
1607 Momota, Himekata-cho
Tosu Logistics Center
Aza, Tosu City, Saga
3-4, 2-Chome, Minato Kashii,
LOGICITY Minato Kashii
Higashi Ward, Fukuoka City
Others subtotal:
Total
Canal City Hakata

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

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

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

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

46,602.94

31,90030,572

68,822.21

29,90029,135

113,593.79

19,20019,067

Japan Real Estate Institute61,450.22

7,930

5,816

Japan Real Estate Institute14,602.88

5,330

4,560

Japan Real Estate Institute6,968.66

2,670

2,056

Japan Real Estate Institute2,801.15

1,250

1,015

6,467.80

2,790

2,145

7,296.17

3,710

3,116

33,069.82

5,600

5,287

361,675.64

110,280

102,774

23,031.09

14,90013,456

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

19,905.34

13,6009,410

6,293.75

5,300

3,942

Japan Real Estate Institute

14,677.27

7,330

6,277

Japan Real Estate Institute

4,715

Tanizawa Sogo Appraisal
Co., Ltd.

13,614.59

25th fiscal period

24th fiscal period

3. Details of real estate properties in the portfolio

6,620

Retail subtotal:

1 [48]
1 [49]
1 [104]
1
12
2
1
2
1
1
1
24 [222](Note 2)

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

1 [61]
35
16
1 [70]
1 [25]
1
11
66 [219]

Office buildings subtotal:(Note 2)

100.0
99.4
99.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,273
1,598
1,138
292
269
32
212
41
88
111
182

15.5
19.4
13.8
3.6
3.3
0.4
2.6
0.5
1.1
1.4
2.2

99.8

5,240

63.6

100.0
99.5
100.0
99.2
100.0
100.0
100.0

628
533
197
297
327
86
136

7.6
6.5
2.4
3.6
4.0
1.1
1.7

99.7

2,207

26.8
0.8
0.4
1.4
0.7
1.4
0.5
0.8
Undisclosed

Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Kego (Note 6)
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita

1 [63]
1 [39]
1 [124]
1 [99]
1 [131]
1 [96]
1

92.8
91.7
95.7
93.6
96.0
97.0
100.0

Tosu Logistics Center

1

100.0

67
36
118
57
114
39
63
Undisclosed(Note 7)(Note 7)2

100.0

Undisclosed

Undisclosed(Note 7)(Note 7)

10 [556]

98.1

786

100 [997]

99.5

8,234

LOGICITY Minato Kashii

3,339.32

2,890

2,717

Japan Real Estate Institute5,252.41

3,510

2,647

Japan Real Estate InstituteTotal

86,113.77

54,15043,1684,821.25

1,910

1,782

2,710.86

1,080

960

5,619.69

1,600

1,196

7,187.59

3,380

2,765

2,496.06

1,280

1,157

5,785.44

1,860

4,173.29

Japan Real Estate InstituteTotal leasing
Percentage ofTotal leasing
Percentage of
Number of tenants Occupancy rate
Number of tenants Occupancy ratebusiness revenues total leasing
business revenues total leasingat end of period at end of period
at end of period at end of period
during period business revenues
during periods business revenues(Note 1)(%) (Note 3)(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)(mm of yen)(%) (Note 4)

Canal City Hakata
Canal City Hakata·B
Park Place Oita
SunLive City Kokura
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
AEON Hara Shopping Center (Note 5)
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Marinoa City Fukuoka (Marina Side Building)

Others subtotal:

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

(September 1, 2016 to February 28, 2017)(Note 2)
(Note 2)

1 [45]
1 [48]
1 [101]
1
12
2
–

99.5
99.8
98.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,256
1,611
1,186
292
252
88
34
40
88
111
177

15.6
20.0
14.7
3.6
3.1
1.1
0.4
0.5
1.1
1.4
2.2

99.4

5,138

63.7

100.0
100.0
100.0
98.5
100.0
100.0
100.0

631
531
196
298
329
86
135

7.8
6.6
2.4
3.7
4.1
1.1
1.7

99.8

2,210

27.4

100.0
95.5

0.8
0.5
0.7
0.7
1.4
0.5
0.8
Undisclosed

–

2
1
1
1
23 [214](Note 2)

1 [61]
35
16
1 [67]
1 [25]
1
11
66 [216](Note 2)

1 [67]
1 [40]
1 [103]
1 [133]
1 [94]
1

98.2
97.0
94.9
100.0

1

100.0

67
37
55
58
113
38
63
Undisclosed(Note 7)(Note 7)2

100.0

Undisclosed

Undisclosed(Note 7)(Note 7)

9.6

9 [441]

99.3

723

9.0

100.0

98 [871]

99.4

8,072

100.0

–

–

(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 55 for the residence in the 25th fiscal period (13 for the office building and 57 for the residence in the 24th 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 numbers 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) FRC disposed the property on September 30, 2016.
(Note 6) FRC disposed the property on November 29, 2016.
(Note 7) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

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

4. Details of renewable energy generation facilities in the portfolio

1,443Japan Real Estate Institute

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

1,390

1,232

Japan Real Estate Institute43,233.72

8,750

8,045

Tanizawa Sogo Appraisal
Co., Ltd.

76,027.90
523,817.31

21,250185,680

18,584
164,527(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 of Incorporation
and rules stipulated by The Investment Trusts Association, Japan.

No relevant items.
No relevant items.

6. Securities incorporated in the portfolio

As of the end of the 25th fiscal period, FRC has the following securities incorporated in the portfolio.
Issue

Type of asset

Silent partnership equity interestsin Limited Liability Company FRC1

Silent partnership equity interests

Total

Book value

Quantity

Unit priceAppraisal value (Note 1)

Amount (mm of yen)

Unit priceAmount (mm of yen)

Profit or loss from valuation(mm of yen)

–

–

104

–

100

(4)

–

–

104

–

100

(4)

(Note 1) The appraisal value indicates the value provided by the operator of the silent partnership, based on the rules stipulated by The Investment Trusts Association, Japan.
(Note 2) Limited Liability Company FRC1 manages the trust beneficiary interest in LOGICITY Hisayama.
FUKUOKA REIT CORPORATION15FUKUOKA REIT CORPORATION

16

Remarks(Note 2)

II. Semiannual Report

Status of FRC’s Assets under Management

Capital Expenditures for Owned Real Estate
2. Capital expenditures during the 25th fiscal period

7. List of specific transaction and forward exchange transaction contract
amount and status of fair value

The following table provides the overview of major construction work that was completed in the 25th fiscal period out of thecapital expenditures totaling 1,789 million yen. Furthermore, FRC incurred construction costs of 2,021 million yen in total in the
period, including 222 million yen in repair and maintenance expenses classified as expenses on the statement of income and 9
million yen in expenses for restoration to former state.

The following table provides the contract amount of FRC’s specific transactions and the status of its fair value as of February
28, 2017.
Contract amount, etc. (mm of yen)
Of which, exceeding 1 year

CategoryType

Off-market transaction

Interest rate swap transaction(Payable fixed; Receivable
floating)

Fair value(mm of yen) (Note 2)(Note 1)

II. Semiannual Report

Real estate property nameLocation

PurposeConstruction cost

Period(mm of yen)

24,50018,500(166)

Canal City Hakata

Hakata Ward, Fukuoka City

Introduction of attraction devices for new
customers

24,50018,500(166)

Canal City Hakata·B

Hakata Ward, Fukuoka City

Introduction of attraction devices for new
customers

From June 2016
To February 2017844

Park Place Oita

Oita City, Oita

Replacement of industrial televisions

October 201630

8. Status of other assets

Canal City Business Center Building

Hakata Ward, Fukuoka City

Introduction of attraction devices for new
customers

From June 2016
To February 2017108

All real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in theportfolio” on page 15. There is no incorporation of other specified assets as of the end of the 25th fiscal period.

Gofukumachi Business Center

Hakata Ward, Fukuoka City

Renovation of external walls

From May 2016
To December 2016

137

Total

(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.

From June 2016
To February 2017425

3. Reserves for long-term repair and maintenance plans

9. Status of owned assets by country and region
As of the end of the 25th fiscal period, no overseas real estate properties in countries or regions other than Japan areincorporated into FRC’s portfolio.

FRC has deposited the following amounts from the cash flows generated during the 25th 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)

Capital Expenditures for Owned Real Estate

Fiscal period
Balance of deposits at beginning of period

1. Planned capital expenditures
The following table provides major items of capital expenditures associated with currently planned renovations, etc. for realestate properties owned by FRC as of the date of this Semiannual Report. The planned construction costs indicated below
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.

21st fiscal period(September 1, 2014 to
February 28, 2015)

22nd fiscal period(March 1, 2015 toAugust 31, 2015)

23rd fiscal period(September 1, 2015 toFebruary 29, 2016)

PurposeSchedule
Total

Conduction
cost

Amountalready paid

Canal City Hakata

Hakata Ward,
Fukuoka City

Renovation of external walls of Canal City
Business Center building

From February 2016
To May 2017

122

53

53

Canal City Hakata

Hakata Ward,
Fukuoka City

Repair of external walls of South Building

From August 2017
To February 2018

37

-

-

Canal City Hakata·B

Hakata Ward,
Fukuoka City

Renovation of external walls of Canal City
Business Center building

From February 2016
To May 2017

242

106

106

Canal City Hakata·B

Hakata Ward,
Fukuoka City

Repair of external walls of South Building

From August 2017
To February 2018

75

-

-

Park Place Oita

Oita City, Oita

Improvement of food terrace environment

From February 2017
To April 2017

69

-

-

Marinoa City Fukuoka(Marina Side Building)

Nishi Ward,
Fukuoka City

Painting of external walls

From February 2017
To July 2017

29

-

-

LOGICITY Minato Kashii

Higashi Ward,
Fukuoka City

Floor renovation on the 2nd floor

From September 2017
To February 2018

77

-

-

FUKUOKA REIT CORPORATION

17

25th fiscal period(September 1, 2016 to
February 28, 2017)

800

800

800

800

800

–

–

–

–

200

Amounts used from deposits during the period

–

–

–

–

–

Deposits carried forward to the next period

800

800

800

800

1,000

(mm of yen)

Location(March 1, 2016 toAugust 31, 2016)

Deposits during the period

Planned construction cost
Real estate property
name24th fiscal period

FUKUOKA REIT CORPORATION

18

II. Semiannual Report

Expenses and Liabilities

Expenses and Liabilities

1. Details of expenses related to asset management(thousands of yen)

Category

25th fiscal period

24th fiscal period

Item

II. Semiannual Report(March 1, 2016 toAugust 31, 2016)(September 1, 2016 to
February 28, 2017)(a) Asset management fees

492,164

Lender

6,841

6,676

(c) Administrative service fees

54,53751,646(d) Directors’ compensations

9,600

9,600

(e) Other operating expenses

61,153

83,042624,297

627,860

Total

LenderThe Bank of Fukuoka (Note 2)
Resona Bank (Note 2)
The Nishi-Nippon City Bank

Short-term
debt(mm of yen)August 31, 2016

(Note 2)

Resona Bank (Note 2)
The Bank of Nagasaki (Note 2)
The Oita Bank (Note 2)
The Bank of Saga (Note 2)
Subtotal
The Bank of Fukuoka

August 31, 2016

December 30, 2010

(mm of yen)

1,500
300

–
–

1,571

–

220
157
157
94
4,000

–
–
–
–
–

1,500

–

Repayment
date

Repayment
methodUse offunds

Description

0.382

September 30, 2016

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

0.508

September 30, 2016

December 30, 2016

The Hiroshima Bank

December 30, 2011

500

–

1.182

December 30, 2016The Oita Bank

December 30, 2011

500

–

1.182

December 30, 2016

The Eighteenth Bank

December 30, 2011

500

–

1.182

December 30, 2016

The Shinwa Bank

December 30, 2011

500

–

1.182

December 30, 2016

The Kitakyushu Bank

December 30, 2011

500

–

1.182

December 30, 2016

The Kagoshima Bank

January 31, 2012

100

–

1.168

January 31, 2017

Resona Bank

January 31, 2012

400

–

1.218

January 31, 2017

Sumitomo Mitsui Trust Bank

September 28, 2012

600

–

0.462

September 30, 2016

Development Bank of Japan

Current
The Bank of Fukuoka
maturities
of long-term The Nishi-Nippon City Bank
debt
Mitsubishi UFJ Trust and Banking

June 30, 2009
July 29, 2011

1,950
2,000

1,875
2,000

2.200
1.305

June 30, 2017
July 31, 2017

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(Note 3)Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fundDecember 30, 2017

Resona Bank

September 28, 2012

–

2,000

1.033

September 29, 2017

The Nishi-Nippon City Bank
Current
maturities
Sumitomo Mitsui Trust Bankof long-term
Mitsubishi UFJ Trust and Banking
debt

February 28, 2013

–

1,900

0.559

February 28, 2018

February 28, 2013

–

1,100

0.609

February 28, 2018

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

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

Refinance fundNo collateral/
No guarantee

Corporation
Aozora Bank
Subtotal
The Dai-Ichi Life Insurance
Company

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

July 29, 2011

2,000

2,000

1.305

July 31, 2017

March 1, 2012

2,000

2,000

1.170

March 31, 2017

Lump-sum uponmaturity

Acquisition fundNo collateral/
No guarantee

March 30, 2012

500

500

1.203

March 31, 2017

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Resona Bank

March 30, 2012

600

600

1.253

March 31, 2017

Refinance fund

The Higo Bank

March 30, 2012

300

300

1.203

March 31, 2017

Lump-sum uponmaturity
Lump-sum uponmaturity

No collateral/
No guarantee
No collateral/
No guarantee

Corporation
Sumitomo Mitsui Banking
Corporation

The Bank of Fukuoka
The Nishi-Nippon City BankThe Oita Bank
The Miyazaki BankThe Shinwa BankThe Iyo Bank
The Bank of Saga
The Eighteenth Bank
The Kitakyushu Bank

June 29, 2012

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

Refinance fund

Refinance fund

–

1,500

0.409

February 28, 2018

February 28, 2013

–

600

0.409

February 28, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

20,45023,875

July 29, 2011

1,000

1,000

1.800

July 31, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

December 30, 2011

1,500

–

0.658

December 30, 2017

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui Banking
Corporation

January 31, 2012

500

500

1.338

January 31, 2019

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Resona Bank

September 28, 2012

2,000

–

1.033

September 29, 2017

Refinance fund

The Nishi-Nippon City Bank

February 1, 2013

2,500

2,500

0.775

February 29, 2020

The Nishi-Nippon City Bank

February 28, 2013

1,900

–

0.559

February 28, 2018

Mizuho Bank

February 28, 2013

1,700

1,700

0.559

February 29, 2020

Sumitomo Mitsui Trust Bank

February 28, 2013

1,100

–

0.609

February 28, 2018

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

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

Mitsubishi UFJ Trust and Banking
February 28, 2013
Corporation

1,500

–

0.409

February 28, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

0.409

February 28, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Mitsubishi UFJ Trust and Banking
Corporation

March 29, 2013

600

600

0.408

March 30, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Aozora Bank

June 28, 2013

1,000

1,000

0.458

June 30, 2020

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

200

200

July 31, 2014

3,000

3,000

0.538

July 31, 2019

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

0.835

July 30, 2021

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

The Norinchukin Bank
The Bank of Saga
Mizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu BankThe Iyo Bank
The Higo Bank

July 31, 2014

Development Bank of Japan

500

500

2,300

2,300

1,000

1,000

1,400

1,400

800

800

500

500

300

300

August 29, 2014

4,000

4,000

1.010

August 31, 2022

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

September 25, 2014

500

500

0.520

September 25, 2019

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

June 30, 2015

1,600

1,600

0.790

June 30, 2022

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui Trust Bank

July 31, 2015

1,500

1,500

0.564

July 31, 2023

Refinance fundDevelopment Bank of Japan

August 31, 2015

4,000

4,000

0.880

August 31, 2023

August 31, 2015

400

400

0.409

August 31, 2022

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

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

The Bank of Tokyo- Mitsubishi
UFJ
Sumitomo Mitsui Banking
Corporation

700

700

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

0.409

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

Mizuho Bank

February 29, 2016

500

500

0.440

February 29, 2024

500

500

500

500

500

500

500

500

FUKUOKA REIT CORPORATION

19

June 30, 2017

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Refinance fund–

The Bank of Fukuoka

0.858

Refinance fund

600

1,000

600

Refinance fundFebruary 28, 2013

1,000
700

Acquisition fundAozora Bank

1,000

600

Refinance fundFebruary 28, 2013

Mizuho Bank

Long-term
debt

Refinance fundLump-sum uponmaturity

1,000
700

Description(Note 1)

0.658

(Note 1)

0.382

Use of
funds

1,500

As of the end of the 25th fiscal period (February 28, 2017), FRC has the following debt from respective financial institutions.
Averageinterest
rate (%)

Repayment
method

–2. Status of debt

Balance as Balance as ofDrawdown of September 1, February 28,
date
2017
2016

(mm of yen)

Repayment
date

December 30, 2011

(Note) Aside from the amounts of the asset management fees shown above, 4,175 thousand yen was paid for asset management, capitalized in the acquisition costs, related to the acquisition of Sports ClubNAS Park Place Oita and silent partnership equity interests in the 25th fiscal period.

Category(mm of yen)

Averageinterest
rate (%)

The Bank of Fukuoka

476,894(b) Asset custody fees

Balance as Balance as ofDrawdown of September 1, February 28,
date
2017
2016

FUKUOKA REIT CORPORATION

20

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundII. Semiannual Report

Acquisitions and Sales during the 25th Fiscal Period

Expenses and Liabilities
Balance as Balance as ofDrawdown of September 1, February 28,
date
2017
2016

Category
Lender(mm of yen)

Shinsei Bank
Sumitomo Mitsui Trust Bank

Long-term
debt(mm of yen)

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds
Refinance fund
Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

700

700

0.400

July 31, 2024

September 30, 2016

–

300

0.401

September 30, 2025

Lump-sum uponmaturity
Lump-sum uponmaturity

–

1,500

0.718

December 30, 2025

Lump-sum uponmaturity

December 30, 2016

The Bank of Fukuoka

December 30, 2016

Subtotal
Total

–

100

–

100

–

100

–

100

–

100

–

100

–

1,500

45,50040,80069,95064,675

Description

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

(Note 1)

July 29, 2016

Development Bank of JapanThe Oita Bank
The Kagoshima Bank
The Kitakyushu BankThe Eighteenth BankThe Shinwa Bank
The Hiroshima Bank

II. Semiannual Report

0.407

December 30, 2026

Lump-sum uponmaturity

Refinance fundNo 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 conductedinterest 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 debts were made based on the commitment line agreements between FRC and respective banks.
(Note 3) The debt is subject to repayment of 75 million yen on the final day of every 6 months following the final day of December 2009 as the initial repayment date, with 1,875 million yen to be repaid on the
final repayment date.

Acquisition
Property name

Disposition

Acquisition price(mm of yen)

Acquisition date

Disposition price(mm of yen)

Disposition date––

September 30, 2016

3,700

3,584

3

Aqualia Kego––

November 29, 2016

4,320

2,620

1,654

Sports Club NAS Park
Place Oita

September 1,2016

1,470

–

–

–

–

Silent partnership equity interests in
Limited Liability Company FRC1

November 30, 2016

100

–

–

–

–

–

1,570

–

8,020

6,204

1,657

Total

(Note) Acquisition price or disposition price are amounts (transaction price indicated in the sales agreement) excluding expenses (transaction brokerage fees, taxes and other public charges, etc.) required forthe acquisition or disposition of the relevant properties and silent partnership equity interests.

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

As of February 28, 2017, FRC has the following investment corporation bonds outstanding.

3. Survey on prices of specified assets, etc.

Issue

Issue date

(mm of yen)First Series ofUnsecured Bonds

December 30, 2013

2,000

Maturitydate

Maturity
methodUse

Description

December 29, 2023

Lump-sumupon maturity(Note 1)

Repayment of debt

No collateral/
No guarantee(Note 2)

Coupon(%)(1) Real estate, etc.

(mm of yen)

–

2,000

1.32

No relevant items.

5. Subscription rights to shares

Acquisition price ordisposition priceTransaction date
(Note 1)(mm of yen)

Real estateappraisal value(Note 2)(mm of yen)

September 30,2016

3,700

Trust beneficiaryinterest

November 29,2016

Trust beneficiaryinterest

September 1, 2016

Acquisition or
disposition

Property name

Type of asset

Disposition

AEON Hara
Shopping Center

Trust beneficiaryinterest

Disposition

Aqualia Kego

Acquisition

Sports Club NAS
Park Place Oita

(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

Gain or loss on sale
(mm of yen)

AEON Hara Shopping Center

3. Investment corporation bonds
Balance as of Decrease during Balance as of
September 1, the fiscal period February 28,
2017
2016
(mm of yen)Book value(mm of yen)

Real estateappraiser

Appraisal date

4,030

Japan Real Estate
Institute

August 1, 2016

4,320

3,670

Japan Real Estate
Institute

August 1, 2016

1,470

1,470

Japan Real Estate
Institute

August 1, 2016

(Note 1) Acquisition price or disposition price is the amount (transaction price indicated in the sales agreement) excluding related expenses (transaction brokerage fees, taxes and other public charges, etc.)
required for the acquisition or disposition of the relevant property.
(Note 2) The above appraisals were valuated by applying the “Real Estate Appraisal Standards, Chapter 3: Valuation for price of real estate for securitization.”

No relevant items.

(2) Silent partnership equity interests
Acquisition or
disposition

Property nameAcquisition date

Acquisition price(mm of yen)
(Note 1)

Survey value of
specified assets(mm of yen)
(Note 2)Acquisition

Silent partnership
equity interests in
Limited Liability
Company FRC1

November 30,2016

100

100

(Note 1) Acquisition price indicates the amount excluding related expenses incurred on the acquisition of the silent partnership equity interests.
(Note 2) The above survey on the value of specified assets was conducted by PricewaterhouseCoopers Aarata LLC based on the Survey on Prices of Specified Assets for Investment Trusts and Investment
Corporations, Committee Practical Guidelines No. 23, Japanese Institute of Certified Public Accountants. Moreover, aside from the above survey value, FRC has received a survey report on maters
required for identifying the items related to the business properties for the relevant silent partnership agreement.

(3) Other
FRC carried out no transaction that was required to have the value, etc. reviewed pursuant to the provisions of Article 201 of
the Investment Trusts Act.

FUKUOKA REIT CORPORATION21FUKUOKA REIT CORPORATION

22

II. Semiannual Report

Acquisitions and Sales during the 25th Fiscal Period

Acquisitions and Sales during the 25th Fiscal Period

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

4. Transactions with interested parties, etc.
(1) Transaction status

The asset management company (Fukuoka Realty Co., Ltd.) concurrently conducts land and building transaction business but
there was no relevant transaction conducted in the 25th fiscal period. Moreover, the asset management company does notconcurrently conduct any class 1 financial instruments transaction business, class 2 financial instruments transaction businessor real estate syndication business, and has no such transactions with FRC.

Transaction amount, etc.
Category

Purchase amount, etc.
(thousands of yen)

Total

1,570,000 (100.0%)

Sale amount, etc.
(thousands of yen)
8,020,000 (100.0%)

Breakdown of transactions with interested parties, etc.
Fukuoka Jisho Co., Ltd
Total

1,470,000 (93.6%)
1,470,000 (93.6%)

Overview of Accounting

– (–)
– (–)

(Note 1) The figures in the above table refer to the amounts shown in the sales contracts.
(Note 2) Interested parties, etc. refer to 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 above table indicates the business partners with which FRC conductedtransaction during the 25th fiscal period.

(2) Amount of fees paid, etc.
Category(thousands of yen)

Property leasing brokerage fees (Note 2)
Property management fees (Note 3)
Outsourcing fees (Note 2) (Note 5)

Other operating expenses (Note 2)

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

No relevant items.

(B)/(A)(%)(thousands of yen)

Fukuoka Jisho Co., Ltd.
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
285,745
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,280,971 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,213,873 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.

9,178
870
173,193
101,814930,200
190,152
59,913217,850
184,155555

16,296

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.

2. Changes in calculation method of depreciation

FRC paid the following fees to the interested parties, etc. during the 25th fiscal period.
Total paid fees(A)

1. Assets, liabilities, principal and profits/loss

56.3
5.3
60.6
35.6
72.6
14.8
4.7
17.9
15.2
0.0

(Note 1) Interested parties, etc. refer to the interested parties, etc. of the asset management company who has concluded an asset management agreement with FRC, as designated in Article 123 of the
Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of these interested parties, etc., the above table indicates the paid parties to which FRC paid fees during the 25th
fiscal period.
(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.
16,388 thousand yen
Park Place Oita Co., Ltd.
5,974 thousand yen(Note 4) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 25th fiscal period. The amounts include construction
work fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd.
1,600,590 thousand yen
Park Place Oita Co., Ltd.
151,478 thousand yen
Sunlife Co., Ltd.
52,799 thousand yen(Note 5) 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.

3. Changes in valuation method of real estate and infrastructure assets,
etc.
No relevant items.

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

5. Disclosure on corporation owning foreign real estate
No 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 CORPORATION23FUKUOKA REIT CORPORATION

24

III. Independent Auditor's Report

IV. Balance Sheet(thousands of yen)Account

24th fiscal period(as of August 31, 2016)

25th fiscal period(as of February 28, 2017)

AssetsCurrent assets
Cash and deposits

4,165,198

4,434,396

Cash and deposits in trust

4,775,377

4,513,353

Operating accounts receivable491,196376,449

Prepaid expenses

262,218

251,873

Deferred tax assets

26

9

7,859

3,836

9,701,876

9,579,918

OthersTotal current assets
Non-current assets
Property, plant and equipment
Buildings in trust

84,816,296*1*1

84,307,621(22,332,561)(23,045,241)

Buildings in trust, net

62,483,734

61,262,379

Structures in trust

1,486,567

1,473,234

Accumulated depreciation(597,379)(601,047)

Structures in trust, net

889,187

872,187

Machinery and equipment in trust

674,893

1,008,869

Accumulated depreciation(308,433)(308,501)

Machinery and equipment in trust, net

366,459

700,368

Vehicles and transport equipment in trust

747

747

Accumulated depreciation

(294)

(342)

Vehicles and transport equipment in trust, net

452

405

1,313,384

1,280,623(1,014,927)(1,005,845)

298,456

274,777

Accumulated depreciation

Tools and fixtures in trust
Accumulated depreciation
Tools and fixtures in trust, net
Lands in trust*1

103,095,432*1

99,631,188

206,478

178,535

167,340,202

162,919,841

1,765,318

1,765,318

3,610

20,605

1,768,928

1,785,924–

104,078

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

110,000

110,000

Long-term prepaid expenses

549,999

528,547

Total investment and other assets

669,999752,626

169,779,131

165,458,391

Investment corporation bond issuance expenses

14,41013,427

Investment unit issuance expenses

17,771

12,159Total deferred assets

32,181

25,587

179,513,189

175,063,897

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
Investment securities

Total non-current assets
Deferred assets

Total assets
FUKUOKA REIT CORPORATION25FUKUOKA REIT CORPORATION

26

IV. Balance Sheet

V. Statement of Income(thousands of yen)Account(thousands of yen)

25th fiscal period(as of February 28, 2017)24th fiscal period(as of August 31, 2016)

Account

Liabilities

24th fiscal period(March 1, 2016 to August 31, 2016)

25th fiscal period(September 1, 2016 to February 28, 2017)

Operating revenues

Current liabilities
Operating accounts payable

639,486595,539

Short-term debt

4,000,000–

Current maturities of long-term debt

Leasing revenues – real estate*1

7,701,123*1

7,603,068

Other leasing revenues – real estate*1533,107*1

469,211–*6

1,657,588

Gain on sales of real estate

20,450,000

23,875,000

Accounts payable-other

12,451

24,687

Accrued expenses

348,865

335,540

Income taxes payable

1,242

854

107,177

239,564

Asset management fees

492,164

476,894

Advances received

1,070,989

973,313

Asset custody fees

6,841

6,676

Deposits received

1,202,954

752,271

Administrative service fees

54,53751,646

Total current liabilities

27,833,167

26,796,772

Director’s compensations

9,600

9,600

Other operating expenses

61,153

83,042

Total operating expenses

5,165,100

5,145,355

3,069,130

4,585,487

Accrued consumption taxes

Non-current liabilities

Dividend income
Total operating revenues
Expenses related to leasing business

2,000,000

2,000,000

Long-term debt

45,500,000

40,800,000

371,765

368,897

Non-operating revenues

Tenant leasehold and security deposits received in trust*1*2

Operating income

4,540,803*1*2

4,517,495

11,416,934

Interest received

114

40

Total non-current liabilities

59,598,846

54,585,831

Others893

946

Total liabilities

87,432,014

81,382,604

1,007

987

Interest expenses

333,165

276,464

Interest expenses on investment corporation bonds

13,20013,200

Amortization of investment corporation bond issuance
expenses982

982

Amortization of investment unit issuance expenses

5,612

5,612

100,963

90,39115

15*111,727,080

974
9,730,842

Operating expenses

Investment corporation bonds
Tenant leasehold and security deposits–
8,234,231*1

Net assets
Unitholders’ equity
Unitholders’ capital

91,142,766

91,142,766

Deduction from unitholders’ capital
Reserve for temporary difference adjustments–

Total deduction from unitholders’ capital–(1,660,581)

91,142,766

89,482,185

Unappropriated surplus

938,409

4,199,108

Total surplus

938,409

4,199,108

92,081,175

93,681,293

Unitholders’ capital, net*4(1,660,581)

Surplus

Total unitholders’ equity
Total net assets

Total non-operating revenues
Non-operating expenses*3

Total liabilities and net assets

92,081,175
179,513,189*393,681,293
175,063,897

Financing related expenses
OthersTotal non-operating expenses
Ordinary income

453,938

386,664

2,616,200

4,199,809

75,052–75,052–

1,660,964–

Extraordinary income
Insurance income*3

Total extraordinary income
Extraordinary losses
Impairment loss

*4

Loss on disaster*2 *590,646–

Total extraordinary losses

1,751,611–

Net income before income taxes

939,641

4,199,809

Income taxes-current

1,259

860

Income taxes-deferred

(18)

17

Total income taxes

1,241

878

ProfitFUKUOKA REIT CORPORATION

27

938,400

4,198,931

Surplus brought forward

8

177

Unappropriated surplus

938,409

4,199,108

FUKUOKA REIT CORPORATION

28

VI. Statement of Changes in Net Assets(thousands of yen)

Unitholders’ capital

Balance as of March 1, 2016
Changes in the current fiscal period
Dividend of surplus
ProfitTotal of changes in the current fiscal period
Balance as of August 31, 2016

91,142,766

Unitholders’ Equity
Surplus
Unappropriated surplus
2,669,786

93,812,553(2,669,778)
938,400(1,731,377)
92,081,175(2,669,778)
938,400(1,731,377)
92,081,175

Net income before income taxes
Amortization of investment corporation bond issuance expenses
Amortization of investment unit issuance expenses(thousands of yen)

Unitholders’ Equity

Item

Balance as of
September 1,
2016
Changes in thecurrent fiscal
periodDividend of
surplusDividend inexcess of
earnings using
reserve fortemporarydifference
adjustments
ProfitTotal of changes
in the current
fiscal period
Balance as ofFebruary 28,
2017

Unitholders’ capital
Deduction from unitholders’ capital
Reserve for
Total deduction
Unitholders’ capital
temporaryfrom unitholders’difference
capitaladjustments
91,142,766––

Surplus
Unitholders’capital, net

Unappropriatedsurplus91,142,766

938,409(938,232)

Total surplus

938,409(938,232)

Total
unitholders’equity92,081,175(938,232)

Total
net assets

92,081,175(938,232)(1,660,581)(1,660,581)(1,660,581)(1,660,581)–(1,660,581)(1,660,581)(1,660,581)

4,198,931

4,198,931

4,198,931

3,260,699

3,260,699

1,600,118

1,600,118(1,660,581)(1,660,581)

89,482,185

4,199,108

4,199,108

93,681,293

93,681,293

982

982

5,612

5,612
–

(114)

(40)

Interest expenses

346,365289,664–(1,657,588)

Insurance income(75,052)–

Loss on disaster

90,646–

Decrease (increase) in operating accounts receivables(43,230)

39,693

Increase (decrease) in accrued consumption taxes(214,372)

132,386

Increase (decrease) in operating accounts payable(76,677)

3,547

Increase (decrease) in accounts payable-other(11,623)

11,659

Increase (decrease) in accrued expenses(3,346)(6,027)

Increase (decrease) in advances received

66,789(97,675)

Increase (decrease) in deposits expenses

425,087(450,682)

Decrease (increase) in prepaid expenses

22,919

9,282

Decrease (increase) in long-term prepaid expenses

83,034

17,379Others, net(2,310)20,251

Subtotal

4,686,229

3,974,151

Interest income received
Proceeds from Insurance income
Payments for loss on disasterNet cash provided by (used in) operating activities

114

40

(347,154)(296,961)–

75,052(1,857)(65,923)(753)(1,248)4,336,578

3,685,111

Net cash provided by (used in) investment activities
Proceeds from sales of property, plant and equipment in trust
Purchase of property, plant and equipment in trust

91,142,766

1,455,895

1,660,964

Income taxes paid
4,198,931

4,199,809

Impairment loss

Interest expenses paid
(1,660,581)

939,641
1,470,912

Interest received
Gain on sales of real estate

25th fiscal period (September 1, 2016 to February 28, 2017)

25th fiscal period(September 1, 2016 to
February 28, 2017)

Net cash provided by (used in) operating activities
Depreciation and amortization expenses

93,812,553(2,669,778)
938,400(1,731,377)
938,409–
91,142,766

Total net assets

Total unitholders’ equity(thousands of yen)
24th fiscal period(March 1, 2016 toAugust 31, 2016)

Account

24th fiscal period (March 1, 2016 to August 31, 2016)

Item

VII. Cash Flow Statement–

7,862,034(710,811)(3,250,588)

Proceeds from tenant leasehold and security deposits

87,1295,208

Repayments of tenant leasehold and security deposits(46,606)(8,077)

Proceeds from tenant leasehold and security deposits in trust

124,063

172,380

Repayments of tenant leasehold and security deposits in trust(225,255)(482,527)–(103,928)

5,569

29,511

Purchase of investment securities
Proceeds from restricted trust deposits
Payments for restricted trust deposits
Net cash provided by (used in) investment activities(6,972)(4,010)(772,883)

4,220,004

4,000,000

3,000,000

Net cash provided by (used in) financial activities
Proceeds from short-term debt payable
Repayments of short-term debt payable–(7,000,000)

Proceeds from long-term debt payable

700,000

3,900,000

Repayments of long-term debt payable(5,075,000)(5,175,000)

Dividends paid

(2,668,773)(2,597,440)

Net cash provided by (used in) financial activities(3,043,773)(7,872,440)

Net increase (decrease) in cash and cash equivalents

519,920

32,676

8,353,226

8,873,147

Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period
FUKUOKA REIT CORPORATION

29

8,873,147*1

FUKUOKA REIT CORPORATION

30*18,905,823

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Significant accounting policies)
1. Valuation standard and method for assets

2. Depreciation method for non-current assets

Securities
Other securities
Securities without fair value
Silent partnership equity interests are stated at their net asset value corresponding to the equity interestsin the silent partnership.
(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The useful lives of major categories of property, plant and equipment are as follows:
Buildings in trust:
10 – 60 years
Structures in trust:
15 – 60 years
Machinery and equipment in trust:
15 – 30 years
Vehicles and transport equipment in trust:
7 years
Tools and fixtures in trust: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.

3. Accounting for deferred assets

4. Standards for recognition of revenues and expenses

5. Method of hedge accounting

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 overthe period through redemption.
Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses themethod of 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. No amountequivalent to property taxes, etc. was capitalized in the acquisition cost of real estate, etc. for the 24th
fiscal period. The amount equivalent to property taxes, etc. capitalized in the acquisition cost of realestate, etc. was 3,310 thousand yen for the 25th fiscal period.
(1) Method of hedge accounting
Deferred hedge accounting is applied for interest rate swap transactions. However, special accounting
is applied 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.

6. Scope of funds (cash and cash equivalents) in cash
flow statement

The funds (cash and cash equivalents) in the cash flow statement consist of cash on hand and cash intrust; deposits that can be withdrawn at any time and deposits in trust; and short-term investments witha maturity 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.

7. 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 theentrusted 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.
① Cash and deposits in trust② 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 trust③ Leasehold right in trust④ Other intangible assets in trust⑤ Lease and guarantee deposits in trust⑥ 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

31[Additional information](Notes to provision and reversal of reserve for temporary difference adjustments)
24th fiscal period (from March 1, 2016 to August 31, 2016)
In accordance with the FRC incurred reserve for temporary difference adjustments (1,660,581 thousand yen) in accordance with the recording of
impairment loss for land in trust of AEON Hara Shopping Center.
For the reserve for temporary difference adjustments, FRC plans to reverse the due amount upon the transfer of the said property as of September 30, 2016.
25th fiscal period (from September 1, 2016 to February 28, 2017)
In accordance with the sale of AEON Hara Shopping Center, FRC will reverse the reserve for temporary difference adjustments amounting to
1,660,581 thousand yen.

(Notes to balance sheet)*1. Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:(thousands of yen)
24th fiscal period

25th fiscal period

as of August 31, 2016

Buildings in trust
Lands in trust

as of February 28, 2017

6,459,725
16,101,020
22,560,746

Total

6,324,579
16,101,020
22,425,600

Secured liabilities are as follows:(thousands of yen)
24th fiscal period

25th fiscal period

as of August 31, 2016

Tenant leasehold and security deposits
received in trust

as of February 28, 2017

1,803,529

1,794,675

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)
24th fiscal period

25th fiscal period

as of August 31, 2016

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of February 28, 2017

6,000,000
1,800,000

6,000,000–

4,200,000

6,000,000[Committed line of credit agreement 2](thousands of yen)
24th fiscal period

25th fiscal period

as of August 31, 2016

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of February 28, 2017

7,000,000
2,200,000

7,000,000–

4,800,000

7,000,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
(thousands of yen)
24th fiscal period

25th fiscal period

as of August 31, 2016as of February 28, 2017

50,00050,000*4. 24th fiscal period (from March 1, 2016 to August 31, 2016)
Not applicable.
25th fiscal period (from September 1, 2016 to February 28, 2017)(1) Reason for recording reserve, relevant assets, initial difference and reserve amount
Relevant assets Reason for recording

Land in trust

Incurrence ofimpairment
loss

Initial difference

1,660,581(thousands of yen)

Balance as ofReserve for the 25th Reversal for the 25th
Balance as of
September 1, 2016
fiscal period
fiscal period
February 28, 2017––

1,660,581

FUKUOKA REIT CORPORATION

32

1,660,581

Reason for reversal–

VIII. Notes to Financial Statements(2) Specific method of reversal
Item

25th fiscal period (from September 1, 2016 to February 28, 2017)
Specific method of reversal(1) AEON Hara Shopping Center

FRC plans to reverse the corresponding
amount when it disposes the land intrust.

Land in trust(Notes to statement of income)(thousands of yen)

Proceeds from sales of real estate

3,700,000

Costs of sale of real estate

3,584,343

Other selling expenses

112,157

Gain on sales of real estate*1. Breakdown of revenues and expenses related to real estate leasing business.

(thousands of yen)
25th fiscal period

24th fiscal period(March 1, 2016 toAugust 31, 2016)

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 businessOutsourcing 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)

(September 1, 2016 to
February 28, 2017)(2) Aqualia Kego

3,498(thousands of yen)

Proceeds from sales of real estate

4,320,000

Costs of sale of real estate

2,620,102

Other selling expenses

6,197,134
1,072,028
431,961

6,115,241
1,069,876
417,950

7,701,123

481,292
51,814437,21132,000533,1078,234,231

1,601,187
148,457
650,839
58,054
437,664
1,470,912
173,687

1,566,717
222,809643,149
57,483401,794
1,455,895
169,646

4,540,803
4,540,803
3,693,427

45,807

Gain on sales of real estate

7,603,068

1,654,089(Notes to statement of changes in net assets)
24th fiscal period

469,211
8,072,279

25th fiscal period(March 1, 2016 to August 31, 2016)
Total number of authorized investment units and total number ofinvestment units issued
Total number of authorized investment units
Total number of investment units issued(September 1, 2016 to February 28, 2017)

10,000,000 units
747,000 units

10,000,000 units
747,000 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)
24th fiscal period

25th fiscal period(March 1, 2016 to August 31, 2016)

4,517,495
4,517,495
3,554,784

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents(September 1, 2016 to February 28, 2017)

4,165,198
4,775,377(67,428)
8,873,147

4,434,396
4,513,353(41,926)
8,905,823(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

*2. Transactions with affiliated companies.

(thousands of yen)
25th fiscal period

24th fiscal period

Item(March 1, 2016 to August 31, 2016)

Expenses related to real estate leasing business
Loss on disaster(September 1, 2016 to February 28, 2017)

1,470,349
90,561

The future lease revenues under the non-cancellable operating leases are as follows:(thousands of yen)
24th fiscal period

25th fiscal period(as of August 31, 2016)

Due within 1 year
Due after 1 year

(as of February 28, 2017)

5,614,647
26,684,202
32,298,850

Total

25th fiscal period (from September 1, 2016 to February 28, 2017)
Not applicable.

5,283,926
25,843,983
31,127,909(Notes to financial instruments)*4.Impairment loss
24th fiscal period (from March 1, 2016 to August 31, 2016)(thousands of yen)

Location
Sawara Ward, Fukuoka City

(Notes to leases)

1,410,591–*3. Insurance income
24th fiscal period (from March 1, 2016 to August 31, 2016)
FRC recorded the insurance claim settled for the damage caused by the Kumamoto Earthquake as insurance income.

Use
RetailVIII. Notes to Financial Statements

TypeLand in trust

Impairment loss
1,660,964

In calculating impairment loss, each property is classified as a single asset group. For the single asset group that FRC plans to dispose, RRC reduced the book value toa recoverable amount and recorded an impairment loss on the land in trust under extraordinary losses. The recoverable amount was estimated based on the net saleprice, which is calculated by deducting the estimated disposal expenses from the actual sale price25th fiscal period (from September 1, 2016 to February 28, 2017)
Not applicable.
*5. Loss on disaster24th fiscal period (from March 1, 2016 to August 31, 2016)
FRC recorded the costs for restoration work for the assets damaged by the Kumamoto Earthquake as loss on disaster25th fiscal period (from September 1, 2016 to February 28, 2017)
Not applicable.
*6. Breakdown of gain on sales of real estate
24th fiscal period (from March 1, 2016 to August 31, 2016)
Not applicable.

FUKUOKA REIT CORPORATION

33

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 forproperty 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 andliquidity 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
for the 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-hand liquidity.
FUKUOKA REIT CORPORATION

34

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

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 tototal borrowings 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 future fluctuations in the rates of interest payable. Furthermore, assessment of the effectiveness of these interest rate
swaps is omitted as it has been determined that they have met the requirements for special accounting. FRC executes andmanages its derivative transactions in accordance with its financial derivative transaction management policies and, it does
so only with financial institutions it determines to have a certain level of creditworthiness, by reference to their credit ratings,
to reduce counterparty 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.
Investment securities are exposed to credit risks of the issuer and value fluctuation risks of the real estate, etc. owned by
the issuer. FRC mitigates these risks by periodically investigating the financial situation of the issuer and the value of thereal estate, etc., among other measures.
(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.

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding
fair values and the difference between these amounts as of February 28, 2017. Please note that the following table does notinclude 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
4,434,396
4,513,353
8,947,750–
23,875,000
2,000,000
40,800,000
1,027,991
67,702,991––

Fair value

Difference(Note 1)

4,434,396
4,513,353
8,947,750–
23,941,727
2,093,670
41,143,636
1,026,108
68,205,143
–
–

–
–
–
–
66,727
93,670343,636(1,882)502,152––(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)
and thus 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)

2. Matters concerning fair value of financial instruments

24th fiscal period

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding
fair values and the difference between these amounts as of August 31, 2016. Please note that the following table does notinclude 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
4,165,198
4,775,377
8,940,576
4,000,000
20,450,000
2,000,000
45,500,000
1,045,178
72,995,178––

Fair value(Note 1)

4,165,198
4,775,377
8,940,576
4,000,000
20,576,623
2,115,549
45,927,020
1,043,654
73,662,847––

Difference––––
126,623
115,549
427,020(1,523)
667,670––(as of August 31, 2016)(1) Investment securities(2) Tenant leasehold and security deposits
received in trust35(as of February 28, 2017)–

104,078

10,681,902

10,388,943(1) Investment securities are not subject to the requirement to disclose fair value, as it is considered extremely difficult to determine the fair value. This is because there isno market price for investment securities and future cash flows cannot be estimated.
(2) 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 thepossibility of cancellation, renewal and re-execution of lease contracts by lessees even if the contract terms are fixed, and because the past rate of tenants moving outof the properties owned by FRC may not be indicative of future move out rates as they are too specific to individual circumstances.
(Note 3) Amount of redemption of monetary claims scheduled to be due after closing of accounts (August 31, 2016)(thousands of yen)
Cash and deposits
Cash and deposits in trust
Total

Due in 1 year or less
4,165,198
4,775,377
8,940,576

Amount of redemption of monetary claims scheduled to be due after closing of accounts (February 28, 2017)(thousands of yen)
Cash and deposits
Cash and deposits in trust
Total

FUKUOKA REIT CORPORATION

25th fiscal period

Due in 1 year or less
4,434,396
4,513,353
8,947,750

FUKUOKA REIT CORPORATION

36

VIII. Notes to Financial Statements(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, 2016).

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

Due in 1 year or less
20,450,000–

1 to 2 years
10,200,000

2 to 3 years
4,200,000–

3 to 4 years
5,700,000–

4 to 5 years
6,300,000–

Due after 5 years
19,100,000–(thousands of yen)
Long-term debt
Investment
corporation bonds–

1 to 2 years
2,100,000

2 to 3 years
8,400,000–

3 to 4 years
1,000,000––

4 to 5 years
6,300,000(Notes to tax effect accounting)
1. Breakdown of primary causes for occurrence of deferred tax assets and deferred tax liabilities.


Due after 5 years
23,000,000–

2,000,000

as of August 31, 2016

Deferred tax assets
Amount of accrued business taxes not deductible from taxable income
Impairment loss
Subtotal deferred tax assets
Valuation reserve
Total deferred tax assets
Deferred tax assets, net

Silent partnership equity interests (recorded on the balance sheet at 104,078 thousand yen) are not described, as it isconsidered extremely difficult to determine the fair value. This is because there is no market price and future cash flows cannot
be estimated.

(Notes to derivative transactions)

Effective statutory income tax rate (Note)
Deductible dividend amount
Increase (decrease) in valuation reserve
Other
Effective income tax rate after application of tax effect accounting

32.11(88.79)
56.75
0.07
0.13

31.53
(19.06)(12.47)0.02
0.02(Note) With the Prefectural Ordinance to Partially Amend the Fukuoka Prefectural Tax Ordinance (Fukuoka Prefectural Ordinance No. 38 of 2016) disclosed on October 11, 2016, the applicable period of
the excessive taxation of prefectural tax on corporations was extended from the period covering through the end of the fiscal year starting on January 31, 2017 to the period covering through the fiscal
year starting on January 31, 2022. In accordance with this, the effective statutory tax rate used for the fiscal year starting on September 1, 2016 and thereafter is 31.53%.

1. Transactions with related parties(1) Parent company and major corporate unitholders

24th fiscal period (as of August 31, 2016)
Not applicable.

24th fiscal period (from March 1, 2016 to August 31, 2016)

25th fiscal period (as of February 28, 2017)
Not applicable.

Classification

Name

Location

Capital2. Derivatives to which hedge accounting is applied
24th fiscal period (as of August 31, 2016)
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing ofaccounts for each method of hedge accounting.

Fukuoka Jisho Hakata Ward,
4,000,000
Other affiliates
Co., Ltd.
Fukuoka City
(Note 2)Business
description

Generalreal estatebusiness(thousands of yen)Contract amount, etc.
Calculation
Fair value method for theOf which,fair value
exceeding 1 year

Type of derivative transactions, etc. Main hedged item
Long-term debt

24,500,000

18,500,000(*)–(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt payable for accounting purposes. Accordingly, their fair value is included in the fair value of therelevant long-term debt payable (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing ofaccounts for each method of hedge accounting.
Contract amount, etc.
Calculation
Fair value method for theOf which,fair value
exceeding 1 year

Long-term debt

24,500,000

18,500,000(*)–(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt payable for accounting purposes. Accordingly, their fair value is included in the fair value of therelevant long-term debt payable (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

FUKUOKA REIT CORPORATION

37[or ownership ofsuch in FRC]

Ownership in
FRC
Direct[8.85%]

IndirectDescription ofrelationship

Description of Transaction
Categorytransaction
amountConsignment
Consignmentof real estate 1,560,911
of real estate
management,(Note 3)management, etc. etc. (Note 1)

Operatingaccounts
payableBalanceat end ofperiod197,206(Note 3)[1.00%]

25th fiscal period (from September 1, 2016 to February 28, 2017)Classification

Name

Location

CapitalBusiness
description(thousands of yen)Type of derivative transactions, etc. Main hedged item

FRC’s share of
voting rights,
etc.

(thousands of yen)

(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 Canal City Hakata, Canal City Hakata·B, Canal City Business Center and Taihaku Street
Business Center. The lease contract is a 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 properties covered by the said type of agreements, 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.

25th fiscal period (as of February 28, 2017)

Interest rate swap transaction
Payable fixed; Receivable floating

as of February 28, 2017

(Notes to transactions with related parties)

1. Derivatives to which hedge accounting is not applied

Special accounting for interest rate swaps

25th fiscal period

as of August 31, 2016

25th fiscal period (as of February 28, 2017)

Method of hedge accounting

9
–
9
–
9
9

520,774(520,747)
26
26

24th fiscal period

Not applicable as FRC does not conduct any transaction of securities.

Interest rate swap transaction
Payable fixed; Receivable floating

as of February 28, 2017

26
520,747

24th fiscal period (as of August 31, 2016)

Special accounting for interest rate swaps

25th fiscal period

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 effectaccounting.
(%)(Notes to investment securities)

Method of hedge accounting(thousands of yen)

24th fiscal period

2,000,000

Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of February 28, 2017).

Due in 1 year or less
23,875,000

VIII. Notes to Financial Statements

Fukuoka Jisho Hakata Ward,
4,000,000
Other affiliates
Co., Ltd.
Fukuoka City
(Note 3)Generalreal estatebusiness

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

Ownership in
FRC
Direct[8.85%]

Indirect[1.00%]

Description ofrelationship

Description of Transaction
Categorytransaction
amountPurchase ofreal estate(Note 1)
Consignmentof real estateConsignment
management, etc. of real estate
management,
etc. (Note 2)

FUKUOKA REIT CORPORATION

38(thousands of yen)
Balanceat end ofperiod1,470,000––

1,410,591

Operatingaccounts
payable115,601(Note 4)(Note 4)

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(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 Canal City Hakata, Canal City Hakata·B, Canal City Business Center and Taihaku
Street Business Center. The lease contract is a 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 properties covered by the said type of agreements, 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.

(4) Directors and major individual unitholders(2) Affiliated companies, etc.

25th fiscal period (from September 1, 2016 to February 28, 2017)24th fiscal period (from March 1, 2016 to August 31, 2016)

Not applicable.

24th fiscal period (from March 1, 2016 to August 31, 2016)
Not applicable.

Not applicable.

2. Parent company and major affiliated companies

25th fiscal period (from September 1, 2016 to February 28, 2017)24th fiscal period (from March 1, 2016 to August 31, 2016)

Not applicable.

Not applicable.

(3) Sister companies

25th fiscal period (from September 1, 2016 to February 28, 2017)24th fiscal period (from March 1, 2016 to August 31, 2016)

Not applicable.

(thousands of yen)Classification

Name

Location

CapitalBusiness
description

Subsidiaries of Park Place Oita
Oita City, Oita
Co., Ltdother affiliates(Note 2)400,000

Subsidiaries of Fukuoka Realty Hakata Ward,other affiliates
Co., Ltd.
Fukuoka City

Asset
management
200,000of FRCand otherbusinesses

Real estatebusiness

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

Description ofrelationship

Description of Transaction
Categorytransaction
amount–Consignment
Consignmentof real estateof real estate
management,
management, etc. etc. (Note 1)

–

Asset
Payment
management ofof asset
FRC, etc. andmanagement
concurrent service fees (Note 4)of officer (Note 3)

531,305(Note 5)

Operatingaccounts
payableBalanceat end ofperiod109,567(Note 5)(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)
24th fiscal periodUse
492,164(Note 5)

Accruedexpenses

235,178(Note 5)Retail(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 real estate lease and management consignment agreement with Park Place Oita Co., Ltd. for Park Place Oita. The lease contract is a 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 property covered by the said type of agreement, the above table shows
figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a 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.

(March 1, 2016 toAugust 31, 2016)

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

Office buildings

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

25th fiscal period (from September 1, 2016 to February 28, 2017)(thousands of yen)Classification

Name

Location

CapitalBusiness
description

Subsidiaries of Park Place Oita
Oita City, Oita
Co., Ltdother affiliates(Note 2)400,000

Subsidiaries of Fukuoka Realty Hakata Ward,other affiliates
Co., Ltd.
Fukuoka City

Asset
management
200,000of FRCand otherbusinesses

Real estatebusiness

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

Description ofrelationship

Description of Transaction
Categorytransaction
amount–Consignment
Consignmentof real estateof real estate
management,
management, etc. etc. (Note 1)

–

Asset
Payment
management ofof asset
FRC, etc. andmanagement
concurrent service fees (Note 4)of officer (Note 3)

570,992(Note 5)476,894(Note 5)

Operatingaccounts
payableOperatingaccounts
payableBalanceat end ofperiod143,179(Note 5)

230,340(Note 5)

OthersAmount 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

Total

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(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.
39(September 1, 2016 to
February 28, 2017)

106,454,683(1,992,971)
104,461,711
114,038,000

104,461,711(1,526,262)
102,935,449
110,280,000

43,635,457(330,267)
43,308,190
54,250,000

43,308,190(126,420)
43,181,769
54,150,000

21,482,301(143,071)
21,339,229
25,190,000

21,339,229(2,750,683)
18,588,546
21,250,000

171,575,442(2,466,311)
169,109,131
193,478,000

169,109,131(4,403,366)
164,705,765
185,680,000(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 24th fiscal period, the amount of increase is primarily attributable to capital expenditures (665 million yen), and the amount of decrease is primarily attributable
to impairment loss (1,660 million yen) and depreciation and amortization expenses (1,470 million yen). Of the amount of change during the 25th fiscal period, the amount of increase is primarily
attributable to acquisition of Sports Club NAS Park Place Oita (1,484 million yen) and capital expenditures (1,789 million yen), and the amount of decrease is primarily attributable to disposition of two
properties (AEON Hara Shopping Center and Aqualia Kego) (6,204 million yen in total) and depreciation and amortization expenses (1,455 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers. The fair values of AEON Hara Shopping Center and Aqualia Kego for the 24th fiscal period are based on
the transfer prices stated in the sales agreements dated August 31, 2016.

(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 real estate lease and management consignment agreement with Park Place Oita Co., Ltd. for Park Place Oita. The lease contract is a 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 property covered by the said type of agreement, the above table shows
figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a 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.

FUKUOKA REIT CORPORATION

25th fiscal period

FUKUOKA REIT CORPORATION

40

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(3) Information by major customer(thousands of yen)

Customer’s name

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

Undisclosed (Note)(thousands of yen)
24th fiscal period

Use

RetailOffice buildings

Others

Total

Operating revenues(March 1, 2016 toAugust 31, 2016)

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 business25th fiscal period(September 1, 2016 to
February 28, 2017)

5,240,380
3,002,665
2,237,714

5,138,156
3,030,216
2,107,940

2,207,157
1,162,679
1,044,477

2,210,415
1,165,023
1,045,392

1,654,089

786,693375,458
411,235

723,707322,256
401,451

8,234,231
4,540,803
3,693,427

8,072,279
4,517,495
3,554,784

respectively.

(Notes to per unit information)
24th fiscal period(March 1, 2016 to August 31, 2016)

Net assets per unit (yen)Profit per unit (yen)Descriptions omitted as FRC has a single business segment of real estate leasing business.

24th fiscal period (from March 1, 2016 to August 31, 2016)(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.

24th fiscal period

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)

Account

938,400–
938,400
747,000

25th fiscal period

24th fiscal period(March 1, 2016 to August 31, 2016)(September 1, 2016 to February 28, 2017)938,409

4,199,108

1,660,581–

1,660,581––

1,660,581–

1,660,581

Of which, reversal of reserve for temporary
difference adjustments
IV. Total dividend[Dividend per investment unit]
Of which, earnings dividend[Of which, earnings dividend per unit]
Of which, dividend in excess of earnings[Of which, dividend in excess of earnings perunit (using reserve for temporary difference
adjustments)]

2,598,813

2,538,306[3,479 yen]

[3,398 yen]

938,232

2,538,306[1,256 yen]

[3,398 yen]

1,660,581–[2,223 yen]

[–]

177

221

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90%
of FRC’s distributable profits as stipulated in Article 6715-1 of the Special Taxation Measures Act. Following
the above policy, FRC proposed to distribute 938,232
thousand yen, which is almost the entire amount of
unappropriated surplus, as earnings dividends.
Moreover, FRC proposed to provide dividend in excessof earnings as stipulated in Article 38-2 of its Articles
of Incorporation, using reserve for temporary difference
adjustments totaling 1,660,581 thousand yen, which is
the maximum value arrived at when the total number ofinvestment units outstanding (747,000 units) is multipliedby an integer, to the extent not surpassing the amountequivalent to the impairment loss recorded for the fiscal
period.

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90% of
FRC’s distributable profits as stipulated in Article 67-151 of the Special Taxation Measures Act.
Following the above policy, FRC proposed to distribute2,538,306 thousand yen, which is almost the entire
amount obtained by deducting the reversal of reserve fortemporary difference adjustments from unappropriatedsurplus (4,199,108 thousand yen), as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

V. Surplus brought forward

Method for calculating dividends(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

41

4,198,931–
4,198,931
747,000(thousands of yen)

III. Addition to unitholders’ capital

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.

(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.

25th fiscal period(September 1, 2016 to February 28, 2017)(Notes to cash distributions)(3) Information by major customer

25th fiscal period (from September 1, 2016 to February 28, 2017)

125,410
5,621(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:

II. Addition of dividend in excess of earnings
Of which, reserve for temporary difference
adjustments[Segment information]

25th fiscal period(September 1, 2016 to February 28, 2017)

123,267
1,256

I. Unappropriated surplus(Notes to segment information)

Real estate leasing business(Note) The customer’s name is not disclosed as no consent to disclosure has been obtained from the customer. Furthermore, the customer does not fall under the category of related parties or interested
parties, etc. under the Investment Trusts Act.

(March 1, 2016 to August 31, 2016)(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
and amortization 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,

FUKUOKA REIT CORPORATION

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

(Notes to significant subsequent events)
No relevant items.
FUKUOKA REIT CORPORATION

42

VIII. Notes to Financial Statements(Schedule of securities)

VIII. Notes to Financial Statements(Schedule of debt)(1) Stocks
Not applicable.

Category(2) Securities other than stocks
Type

Issue

(thousands of yen)

Total face value

Silent partnershipSilent partnership equity interests inequity interests Limited Liability
Company FRC1
Total

Book value

Interest
receivable

Prepaid accrued Appraisal value Profit or loss frominterest(Note 2)
valuation

LenderRemarks–

104,078––

100,000(4,078)––104,078––

100,000(4,078)–(Schedule of contract amount, etc. and fair value of derivative transactions
and forward exchange transactions)(thousands of yen)(thousands of yen)

Use of funds

Description(thousands of yen)

The Bank of Fukuoka

1,500,000–

1,500,000–

Resona Bank (Note 2)

300,000–

300,000–

The Nishi-Nippon City
Bank (Note 2)

1,571,428–

1,571,428–

Resona Bank (Note 2)

220,000–

220,000–

The Bank of Nagasaki(Note 2)

157,142–

157,142–The Oita Bank (Note 2)

157,142–

157,142–

The Bank of Saga

(Note 2)

(Note 1) The silent partnership equity interests represent FRC’s equity investment in an SPC (Limited Liability Company FRC 1) that operates with LOGICITY Hisayama as the investment property.
(Note 2) The appraisal value indicates the value provided by the operator of the silent partnership, based on the rules stipulated by The Investment Trusts Association, Japan.

Balance as of
Balance as of
Average
September 1,
February 28,
Increase
Decreaseinterest rate Repayment date(thousands of yen) (thousands of yen)
2016
2017
(%) (Note 1)

0.382

September 30, 2016

Refinance fundNo collateral/
No guarantee

0.382

September 30, 2016

Refinance fundNo collateral/
No guarantee

0.380

November 30, 2016

Refinance fundNo collateral/
No guarantee

0.380

November 30, 2016

Refinance fundNo collateral/
No guarantee

94,285–94,285–

Short-term The Bank of Fukuoka(Note 2)
debt–

583,333

583,333–

Resona Bank (Note 2)–

116,666

116,666–

The Nishi-Nippon City
Bank (Note 2)–

571,428

571,428–

Resona Bank (Note 2)–

80,00080,000–

The Bank of Nagasaki(Note 2)–

57,142

57,142–The Oita Bank (Note 2)–

57,142

57,142–The Bank of Saga–

34,28534,285–

Subtotal

4,000,000

1,500,000

5,500,000–

The Bank of Fukuoka

1,500,000–

1,500,000

–

0.508

December 30, 2016

Refinance fundNo collateral/
No guarantee

The Hiroshima Bank

500,000–

500,000–

1.182

December 30, 2016

Refinance fundNo collateral/
No guarantee

The Oita Bank

500,000–

500,000–

1.182

December 30, 2016

Refinance fundNo collateral/
No guarantee

The Eighteenth Bank

500,000–

500,000–

1.182

December 30, 2016

Refinance fundNo collateral/
No guarantee

The Shinwa Bank

500,000–

500,000–

1.182

December 30, 2016

Refinance fundNo collateral/
No guarantee

The Kitakyushu Bank

500,000–

500,000–

1.182

December 30, 2016

Refinance fundNo collateral/
No guarantee

The Kagoshima Bank

100,000–

100,000–

1.168

January 31, 2017

Refinance fundNo collateral/
No guarantee

Resona Bank

400,000–

400,000–

1.218

January 31, 2017

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui TrustBank
Development Bank ofJapan

600,000–

600,000–

0.462

September 30, 2016

Refinance fundNo collateral/
No guarantee

1,950,000–

75,0001,875,000

2.200(Note 3)

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

2,000,000––

2,000,000

1.305

July 31, 2017

Refinance fundNo collateral/
No guarantee

The Nishi-Nippon CityBank
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation

2,000,000––

2,000,000

1.305

July 31, 2017

Refinance fundNo collateral/
No guarantee

2,000,000––

2,000,000

1.170

March 31, 2017

Acquisition fundNo collateral/
No guarantee

500,000––

500,000

1.203

March 31, 2017

Refinance fundNo collateral/
No guarantee

Resona Bank

600,000––

600,000

1.253

March 31, 2017

Refinance fundNo collateral/
No guarantee

The Higo Bank

300,000––

300,000

1.203

March 31, 2017

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

1,000,000––

1,000,000(Note 1) The main increase in the 25th fiscal period is due to construction work at properties and acquisition of Sports Club NAS Park Place Oita.
(Note 2) The main decrease in the 25th fiscal period is due to disposition of AEON Hara Shopping Center and Aqualia Kego.

The Nishi-Nippon CityBank

1,000,000––

1,000,000(Schedule of other specified assets)

The Oita Bank

700,000––

700,000

No relevant items.

The Miyazaki Bank

700,000––

700,000(Schedule of investment corporation bonds)

The Shinwa Bank

600,000––

600,000

0.858

June 30, 2017

Refinance fundNo collateral/
No guarantee

The Iyo Bank

500,000––

500,000

The Bank of Saga

500,000––

500,000

The Eighteenth Bank

500,000––

500,000

No collateral/
No guarantee

The Kitakyushu Bank

500,000––

500,000(Note 2)The Bank of Fukuoka–

1,500,000–

1,500,000

0.658

December 30, 2017

Refinance fundNo collateral/
No guarantee(Note 2)Contract amount, etc.
Fair value
Of which,(Note 2)exceeding 1 year

Category

Type

Special accounting for interest rate swaps

Interest rate swap transaction
Payable fixed; Receivable floating(Note 1)

24,500,000

Total

18,500,000

24,500,000(166,841)

18,500,000(166,841)(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 2)

(Schedule of property, plant and equipment, and intangible assets)(thousands of yen)Type of asset

Balance as of
September 1,
2016

Increase

Decrease(Note 1)

(Note 2)

Balance as ofFebruary 28,
2017

Accumulated
depreciation

Depreciation for Net property andthe period
equipment

Buildings in trust

84,816,296

2,158,576

2,667,251

84,307,621

23,045,241

1,347,034

61,262,379

Structures in trust

1,486,567

35,97349,305

1,473,234

601,047

37,893872,187

Machinery andequipment in trust

674,893405,310

71,334

1,008,869

308,501

30,641

700,368

Vehicles andTotal property, transport
plant and equipment in trust

747

–

–

747

342

47

405

Tools and fixturesin trust

1,313,384

26,89559,656

1,280,623

1,005,845

38,588274,777

103,095,432

658,184

4,122,429

99,631,188––

99,631,188

206,478

175,664

203,608

178,535––

178,535

191,593,799

3,460,604

7,173,584

187,880,819

24,960,978

1,454,206

162,919,841

Leasehold right in
trust

1,765,318––

1,765,318––

1,765,318

Other intangible
assets in trust

33,426

18,683

6,752

45,35724,752

1,688

20,605

1,798,744

18,6836,752

1,810,676

24,752

1,688

1,785,924

193,392,544

3,479,288

7,180,336

189,691,496

24,985,730

1,455,895

164,705,765

equipment

Land in trust
Construction inprogress in trust
Subtotal

Total
intangible
assetsSubtotal
Total

Issue

Issue date

Balance as of
Decrease
Balance as of
September 1, during the fiscal February 28,
2016
period2017(thousands of yen)First Series ofUnsecured Bonds

December 30,
2013

2,000,000(thousands of yen)–

Coupon(%)

Maturity date

Maturity
methodUse

Description(thousands of yen)

2,000,000

1.32

December 29,
2023

Lump-sumupon maturity(Note 1)

Repayment of
debt

Current
maturities
of longterm debt

(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.

FUKUOKA REIT CORPORATION43FUKUOKA REIT CORPORATION

44

VIII. Notes to Financial Statements

Category
LenderCurrent
maturities
of longterm debt

(thousands of yen)

Category
Use of funds

Description
Lender(thousands of yen))

Balance as of
Balance as of
Average
September 1,
February 28,
Increase
Decreaseinterest
rate Repayment date(thousandsofyen)(thousands
of
yen)
2016
2017
(%) (Note 1)(thousands of yen)–

2,000,000–

2,000,000

1.033

September 29, 2017

Refinance fundNo collateral/
No guarantee

Development Bank of
Japan

–

1,500,000–

1,500,000

The Nishi-Nippon City
Bank
Sumitomo Mitsui TrustBank
Mitsubishi UFJ Trust andBanking Corporation–

1,900,000–

1,900,000

0.559

February 28, 2018

Refinance fundNo collateral/
No guarantee

The Oita Bank–

100,000–

100,000

Refinance fundNo collateral/
No guarantee

The Kagoshima Ban–

100,000–

100,000–

1,500,000–

1,500,000

0.409

February 28, 2018

Refinance fundNo collateral/
No guarantee

The Kitakyushu Bank–

100,000–

100,000

Aozora Bank–

600,000–

600,000

0.409

February 28, 2018

Refinance fundNo collateral/
No guarantee

The Eighteenth Bank–

100,000–

100,000

20,450,000

8,600,000

5,175,000

23,875,000

The Shinwa Bank–

100,000–

100,000

Refinance fundNo collateral/
No guarantee

The Hiroshima Bank–

100,000–

100,000

The Bank of Fukuoka–

1,500,000–

1,500,000

45,500,000

3,900,000

8,600,000

40,800,000

69,950,000

14,000,000

19,275,000

64,675,000

Subtotal–

1,000,000

1,100,000–––

1,100,000

1,000,000

0.609

1.800

February 28, 2018

July 31, 2018

1,500,000–

1,500,000

–

0.658

December 30, 2017

Refinance fundNo collateral/
No guarantee

500,000––

500,000

1.338

January 31, 2019

Refinance fundNo collateral/
No guarantee

Resona Bank

2,000,000–

2,000,000

–

1.033

September 29, 2017

Refinance fundNo collateral/
No guarantee

The Nishi-Nippon CityBank
The Nishi-Nippon CityBank

2,500,000––

2,500,000

0.775

February 29, 2020

Acquisition fundNo collateral/
No guarantee

1,900,000–

1,900,000

–

0.559

February 28, 2018

Refinance fundNo collateral/
No guarantee

Mizuho Bank

1,700,000––

1,700,000

0.559

February 29, 2020

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui TrustBank
Mitsubishi UFJ Trust andBanking Corporation

1,100,000–

1,100,000

–

0.609

February 28, 2018

Refinance fundNo collateral/
No guarantee

1,500,000–

1,500,000

–

0.409

February 28, 2018

Refinance fundNo collateral/
No guarantee

600,000–

600,000–

0.409

February 28, 2018

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka
Sumitomo Mitsui Banking
Corporation

Aozora Bank
Mitsubishi UFJ Trust andBanking Corporation

600,000––

600,000

0.408

March 30, 2018

Refinance fundNo collateral/
No guarantee

Aozora Bank

1,000,000––

1,000,000

0.458

June 30, 2020

Refinance fundNo collateral/
No guarantee

Mizuho Bank

200,000––

200,000

3,000,000––

3,000,000

0.538

July 31, 2019

Refinance fundNo collateral/
No guarantee

500,000––

500,000

Mizuho Bank

2,300,000––

2,300,000

The Norinchukin Bank

1,000,000––

1,000,000

The Hiroshima Bank

1,400,000––

1,400,000

July 30, 2021

Refinance fund

800,000––

800,000

0.835

The Kitakyushu Bank

No collateral/
No guarantee

The Iyo Bank

500,000––

500,000

The Higo Bank

300,000––

300,000

4,000,000––

4,000,000

1.010

August 31, 2022

Refinance fundNo collateral/
No guarantee

500,000––

500,000

0.520

September 25, 2019

Refinance fundNo collateral/
No guarantee

1,600,000––

1,600,000

0.790

June 30, 2022

Refinance fundNo collateral/
No guarantee

1,500,000––

1,500,000

0.564

July 31, 2023

Refinance fundNo collateral/
No guarantee

4,000,000––

4,000,000

0.880

August 31, 2023

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

400,000––

400,000

0.409

August 31, 2022

Refinance fundNo collateral/
No guarantee

The Nishi-Nippon City
Bank

400,000––

400,000

0.870

August 31, 2023

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

2,000,000––

2,000,000

0.409

February 29, 2024

Refinance fundNo collateral/
No guarantee

The Nishi-Nippon CityBank
Development Bank ofJapan

2,000,000––

2,000,000

0.440

February 29, 2024

Refinance fundNo collateral/
No guarantee

2,000,000––

2,000,000

0.620

February 28, 2025

Refinance fundNo collateral/
No guarantee

Mizuho Bank

500,000––

500,000

0.440

February 29, 2024

Refinance fundNo collateral/
No guarantee

Shinsei Bank

700,000––

700,000

0.400

July 31, 2024

Refinance fundNo collateral/
No guarantee–

300,000–

300,000

0.401

September 30, 2025

Refinance fundNo collateral/
No guarantee

The Norinchukin Bank
The Bank of Saga

Development Bank ofJapan
The Bank of TokyoMitsubishi UFJ
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui TrustBank
Development Bank ofJapan

Sumitomo Mitsui TrustBankFUKUOKA REIT CORPORATION

45

Long-term
debt

Subtotal
Total

Use of funds

Description(thousands of yen))

Resona BankThe Dai-Ichi Life
Insurance Company

Long-term
debt

Balance as of
Balance as of
Average
September 1,
February 28,
Increase
Decreaseinterest
rate Repayment date(thousandsofyen)(thousands
of
yen)
2016
2017
(%) (Note 1)

VIII. Notes to Financial Statements

0.718

December 30, 2025

Refinance fundNo collateral/
No guarantee

0.407

December 30, 2026

Refinance fundNo 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 conductedinterest rate swap transactions is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The debts were made based on the commitment line agreements between FRC and respective banks.
(Note 3) The debt is subject to repayment of 75 million yen on the final day of every 6 months following the final day of December 2009 as the initial repayment date, with 1,875 million yen to be repaid on
June 30, 2017, the final repayment date.
(Note 4) 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
2,100,000

2 to 3 years
8,400,000

3 to 4 years
1,000,000

FUKUOKA REIT CORPORATION

4 to 5 years
6,300,000

46