Provisional translation only
October 16, 2020

EARNINGS BRIEFING FOR THE PERIOD ENDED AUGUST 2020
Name of issuer:
Code number:
URL:
Stock listings:

Fukuoka REIT Corporation (FRC)8968
https://www.fukuoka-reit.jp/eng/
Tokyo Stock Exchange, and Fukuoka Stock Exchange

Representative:

Etsuo Matsuyuki Executive Director

Asset manager:
Representative:
Contact:

Fukuoka Realty Co., Ltd.
Etsuo Matsuyuki CEO & Representative Director
Akira Eguchi
Executive Managing Director and General Manager ofPlanning Dept.
Phone: +81-92-272-3900

Expected date for submitting securities report:
November 30, 2020
Expected commencement date of dividend payments: November 18, 2020
Supplementary documents for earnings briefing
Yes
Analyst meeting (for institutional investors and analysts) Yes(Figures rounded down to nearest mm yen)

1. Performance and situation of assets for the period ended August 2020
(March 1, 2020 to August 31, 2020)(1) Performance(% shows percentage change from previous period)

Operating revenues
mm of yen
Period ended

August 2020
Period ended

February 2020

Operating income%

mm of yen

Ordinary income%

mm of yen

Profit%mm of yen

%

8,518

(7.0)

2,966

(9.4)

2,587

(10.8)

2,586(10.8)

9,162

(0.7)

3,273

(1.3)

2,900

(1.4)

2,899

(1.4)

Profit per unit
Period ended

August 2020
Period ended

February 2020

Return on net assets

Ratio of ordinary income Ratio of ordinary income
to total assets
to operating revenues

3,249 yen

2.5%

1.3%

30.4%

3,642 yen

2.8%

1.5%

31.7%

(2) Dividends

Period ended

August 2020
Period ended

February 2020

Dividend
per unit

Total
dividend(excl. dividendin excess ofearnings)(excl. dividendin excess ofearnings)

Dividendin excess ofearnings
per unit

Total
dividendin excess ofearnings

Dividend
per unit

Total
dividend(incl. dividendin excess ofearnings)(incl. dividendin excess ofearnings)

Ratio of

Payout dividend
to netratio
assets3,250 yen 2,587 mm yen— yen — mm yen

3,250 yen 2,587 mm yen 100.0%

2.5%

3,642 yen 2,899 mm yen— yen — mm yen

3,642 yen 2,899 mm yen 100.0%

2.8%(3) Financial condition

Period ended

August 2020
Period ended

February 2020

Ratio of net assets tototal assets

Net assets per unit

101,525 mm yen

51.0%

127,544 yen

101,837 mm yen

52.3%

127,937 yen

Total assets

Net assets

199,004 mm yen
194,795 mm yen(4) Cash flows condition
Cash flows fromoperating activities
Period ended

August 2020
Period ended

February 2020

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of cash andcash equivalents at
end of period

3,450 mm yen(7,136) mm yen

2,000 mm yen

8,348 mm yen

3,985 mm yen(220) mm yen(2,938) mm yen

10,032 mm yen

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

2. Forecast of performance for the period ending February 2021 (September 1, 2020 to February 28,2021) and the period ending August 2021 (March 1, 2021 to August 31, 2021)(% shows percentage change from previous period)

Operating revenues Operating income

Period ending

February 2021
Period ending

August 2021

Ordinary income

ProfitDividend
per unit

Dividendin excess ofearnings
per unit

mm of yen%

mm of yen%

mm of yen%

mm of yen(excl. dividend% in excess ofearnings)

8,903

4.5

3,013

1.6

2,628

1.6

2,627

1.6 3,300 yen

— yen

9,127

2.5

3,174

5.3

2,787

6.1

2,786

6.1 3,500 yen— yen(Reference) Forecast profit per unit: Period ending February 2021
Forecast profit per unit: Period ending August 2021

3,300 yen
3,500 yen

3. Other(1) Changes in accounting policies, changes in accounting estimates and restatement of accounting errors(i) Changes in accounting policies accompanying amendments to accounting standards, etc.: No(ii) Changes in accounting policies other than above (i):No
(iii) Changes in accounting estimates:No(iv) Restatement of accounting errors:No(2) Number of investment units outstanding(i) Number of investment units outstanding at end of period (including treasury investment units):
As of August 2020
796,000 units
As of February 2020
796,000 units(ii) Treasury investment units at end of period:
As of August 2020
0 unitAs of February 2020
0 unitNote: Regarding the number of investment units, a basis for calculating profit per unit, please refer to “Per unit information,” on page11.

* Statement on Implementation Status of Audit Procedure
This Earnings Briefing (“Kessan Tanshin” in Japanese) report is not subject to audit procedures by public
accountants or audit corporations.
* On the adequate use of performance forecasts and other items warranting special mention
Forecast figures are calculated based on information available on the date of release of the forecast and contain
uncertain factors to a large extent. Actual operating revenues, operating income, ordinary income, profit, anddividend per unit may differ due to changes in the business environment. The forecast should not be construed
as a guarantee of actual dividend. Concerning details of the preconditions for the above forecast figures pleaserefer to “1. Management Situation, (2) Forecast for the next fiscal period – Preconditions for the performance
forecast for the period ending February 2021 (September 1, 2020 to February 28, 2021) and the period ending
August 2021 (March 1, 2021 to August 31, 2021)” on page 3 and “Notice Concerning Revision to the Forecastsof Financial Results and Dividend for the Fiscal Period Ending February 2021 and Forecasts of Financial Resultsand Dividend for the Fiscal Period Ending August 2021” announced on October 16, 2020.

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

1. Management Situation(1) Summary of the current fiscal period(a) Brief history of the investment corporation
Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on Investment
Trusts and Investment Corporations” (Act No. 198 in 1951 including later revisions) and listed on the Tokyo Stock
Exchange Group 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 allof Kyushu (including Okinawa Prefecture) with a central focus on Fukuoka City and Yamaguchi Prefecture(hereinafter the “Fukuoka/Kyushu area) by turning regional characteristics in the real estate industry into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retailin 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”). In the fiscal period under review, FRC acquired threeproperties in total (Higashi Hie Business Center III on May 29, 2020, LOGICITY Wakamiya on June 30, 2020 andHome Plaza NAFCO at Park Place Oita on July 1, 2020). As of the end of the 32nd fiscal period (August 31, 2020),
FRC manages a total of 31 properties comprising 11 Retail, 9 Office buildings and 11 Others.
(b) Investment environment and portfolio performance
During the fiscal period under review (the 32nd fiscal period), the Japanese economy continued to stay in a severe
situation under the impact of the novel coronavirus (COVID-19) infection. Looking ahead, the economy isexpected to continue picking up partly due to various political measures proving effective, although full attention
should be paid to the COVID-19 trends as well as fluctuations in the financial and capital markets.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy was in a situation inwhich consumer spending was starting to pick up but exports and production decreased while labor supply demand conditions and compensation of employees were both on a somewhat weak note. With regard to theoutlook, attention should be paid to the impact of the COVID-19 trends on the corporate and household sentiments,
among other factors.
As for land price trends, the national average price in combined average for residential and commercial land took
a downward turn for the first time in 3 years, according to the 2020 Land Market Value Publication. By land type,residential land price showed a higher rate of decrease and commercial land price dropped for the first time in 5
years. Meanwhile, in Fukuoka City, the central area of FRC’s investment targets, land prices continued rising foreight consecutive years, up 7.5% year-on-year for commercial land and up 3.5% year-on-year for residential land.
Under such circumstances, FRC’s portfolio achieved a solid performance in the asset types of office buildings,
logistics facilities and residential properties. On the other hand, monthly sales of Canal City Hakata and othermajor retail properties as well as hotels have kept falling below the year-earlier level since March 2020.
When analyzing FRC’s portfolio (on an acquisition price basis) as of the end of the 32nd fiscal period by investment
target area, the investment ratio in the Fukuoka urban area accounted for 76.6%; when analyzing by property
type, Retail, Office buildings, and Others accounted for 58.0%, 27.7% and 14.3%, respectively.
On top of these efforts, FRC is engaged in promoting sustainability through environment, social and governance(ESG) considerations based on its Sustainability Policy. For this purpose, it has established the Sustainability
Promotion Committee (comprising President/CEO and general managers, Property Management Department,
Investment Department, Finance Department, Planning Department and Compliance Department of the AssetManager), which investigates specific targets and measures and supervises the progress in implementation of
the measures with regard to the internal system, cooperation with related parties outside the company andinformation disclosure policy, etc. On the implementation side, FRC has established the Sustainability Promotion
Office under the sustainability officer (general manager of the Planning Department), who is the person
responsible for the practical aspects concerning the targets set at the Sustainability Committee, and the Office isengaged in continuous operations related to the GRESB Real Estate Assessment (with Green Star rating), thePrinciples for Responsible Investment (PRI) and the Principles for Financial Action for the 21st Century (PFA21)
continuing operations and other initiatives.
(c) Summary of fundraising
As FRC conducted refinancing of 1,000 mm yen as well as new financing of 4,900 mm yen in the 32nd fiscal
period, the balance of its interest-bearing debt outstanding (including investment corporation bonds) at the endof the period totaled 82,400 mm yen, with the loan-to-value ratio (ratio of interest-bearing debt (including
investment corporation bonds) to total assets) at 41.4% and the ratio of fixed-interest rate debt (ratio of interestbearing debt with fixed interest rates (including investment corporation bonds) to total interest-bearing debt) at
94.1% as of the same date. In addition, with regard to the commitment line agreement (credit limit: 6,000 mmyen) with The Bank of Fukuoka, Ltd. serving as the agent, FRC extended the commitment period by two years,
lengthening the remaining term of commitment to three years.
Going forward, FRC will continue its endeavors to reduce refinancing risks by dispersing debt repayment dates
and extending debt duration. At the same time, FRC will work to mitigate risks of rising interest rates by shifting
to fixed-interest rate borrowings and through other measures.

1

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

Moreover, the credit ratings assigned to FRC as of the end of the current fiscal period are as follows.
Credit Rating Agency
Rating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)

Rating Type
Issuer Rating
Long-term Issuer Rating

RatingA+
AA−

Rating Outlook
StableStable(d) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 8,518 mm yen and operating income after
excluding operating expenses such as expenses related to leasing business and asset management fees totaled
2,966 mm yen. Ordinary income was 2,587 mm yen and profit amounted to 2,586 mm yen. Management decided
to make a dividend of 3,250 yen per unit to meet the requirements of special tax measures for an investment
corporation (as stipulated in Article 67-15 of the Act on Special Measures Concerning Taxation of Japan [Act No.
26 in 1957 including later revisions]). Under this act, an investment corporation is allowed to deduct the maximum
amount of dividends paid to investors from its taxable income.
(2) Forecast for the next fiscal period(a) Portfolio management policy
FRC will further reinforce management and leasing capabilities by cooperating with property managementcompanies including sponsor companies, and secure and maintain the stable operation of the properties bymaking the most use of their advantages.
FRC will 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 “highgrowth potential markets.” By geographic location, of 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 or properties where FRC can generate investment merits from
community-oriented viewpoints. FRC will acquire high-quality properties with adequate use of its advantages,
such as information gathering ability in the areas, good knowledge of regional properties and close relations withthe local business community and governments, so that investors can continue to invest in FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try tomaintain a solid financial structure.
(b)

Significant events that have occurred after the end of the current fiscal period:
No relevant items.

(c)Performance forecast for the next fiscal period
FRC aims to achieve the following performance goals for the period ending February 2021 (September 1, 2020
to February 28, 2021) and the period ending August 2021 (March 1, 2021 to August 31, 2021). Concerning
preconditions for the forecast, please refer to “Preconditions for the performance forecast for the period ending
February 2021 (September 1, 2020 to February 28, 2021) and the period ending August 2021 (March 1, 2021 toAugust 31, 2021)” on page 3 and “Notice Concerning Revision to the Forecasts of Financial Results and Dividend
for the Fiscal Period Ending February 2021 and Forecasts of Financial Results and Dividend for the Fiscal PeriodEnding August 2021” announced on October 16, 2020.
Period ending February 2021
Period ending August 2021
Operating revenues
8,903 mm yen
9,127 mm yen
Operating income
3,013 mm yen
3,174 mm yen
Ordinary income
2,628 mm yen
2,787 mm yen
Profit2,627 mm yen
2,786 mm yen
Dividend per unit
3,300 yen
3,500 yen
Dividend in excess of earnings per
— yen
— yen
unit
Note:

The above forecast figures are calculated based on certain preconditions. The forecast should not be construed as aguarantee of actual performance since actual operating revenues, operating income, ordinary income, profit, dividend
per unit and dividend in excess of earnings per unit may differ due to changes in the business environment.

2

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

Preconditions for the performance forecast for the period ending February 2021 (September 1, 2020 to February 28,2021) and the period ending August 2021 (March 1, 2021 to August 31, 2021)
Item
Preconditions
33rd fiscal period: September 1, 2020 to February 28, 2021 (181 days)
Calculation period
34th fiscal period: March 1, 2021 to August 31, 2021 (184 days)
Assets under• It is assumed that there will be 31 properties FRC owns as of August 31, 2020.
management• In practice, the number may fluctuate due to changes in assets under management.
Total number ofinvestment units• It is assumed that there will be no issuance of new investment units until August 31, 2021.
outstanding• The balance of interest-bearing debt outstanding at the end of the 33rd fiscal period (February 28,2021) is expected to total 82,400 mm yen. The loan-to-value ratio (interest-bearing debt / total assets
× 100) is expected to stand at around 41.4% (as of August 31, 2020, the loan-to-value ratio stands
at 41.4%).
Interest-bearing debt
and refinancing• The balance of interest-bearing debt outstanding at the end of the 34th fiscal period (August 31,2021) is expected to total 82,400 mm yen, the same as the end of the 33rd fiscal period (February
28, 2021). The loan-to-value ratio (interest-bearing debt / total assets × 100) is expected to stand ataround 41.4%.
• Of leasing revenues – real estate, revenues from properties FRC has already acquired are calculated
based on tenancy agreements that are valid as of October 16, 2020 by taking into account thecompetitiveness of the properties and the market environment, etc.
Of leasing revenues– real estate, revenues from lease contracts with variable rent such as
percentage-of-sales rent and percentage-of-GOP rent are calculated based on past results by taking
into account such fluctuation factors as sales and GOP of the relevant tenants.
• For leasing revenues – real estate, tenant vacancies are taken into account to a certain extent. It is
Operating revenues
assumed that there will be no rent arrears or non-payments by tenants.
• With the impact of the spread of COVID-19 in Japan and abroad prolonging, the situation requires
FRC to anticipate that a certain degree of impact will continue in the 33rd and 34th fiscal periods on
its retail properties and hotels for which percentage-of-sales rents, etc. are established. In estimating
the sales, etc. of such properties, FRC assumes that, while domestic tourism will recover gradually,
inbound tourism will not recover until the 34th fiscal period. However, actual sales may fluctuate
depending on when the COVID-19 pandemic is contained.
• When acquiring properties, the property taxes and city planning taxes for the assets will be
proportionally calculated according to the holding period and adjusted with the former owner.
However, the adjusted amount of the property taxes and city planning taxes to be borne by FRC for
the initial year will not be written off since they will be included in the acquisition cost.
• FRC writes off estimated repair costs expected to be required for buildings for the calculation periods(the 33rd and 34th fiscal periods). Actual repair costs may differ significantly from the estimatedamounts since there is the possibility that repair costs are incurred urgently due to damages tobuildings caused by unforeseeable factors, repair costs generally differ largely from period to period,
Operating expenses
and repair costs are not regularly incurred.
• Concerning outsourcing expenses, FRC anticipates 1,886 mm yen for the 33rd fiscal period and1,894 mm yen for the 34th fiscal period.
• Concerning taxes and other public charges, FRC anticipates 743 mm yen for the 33rd fiscal period
and 777 mm yen for the 34th fiscal period.
• Concerning depreciation and amortization expenses, FRC anticipates 1,631 mm yen for the 33rd
fiscal period and 1,607 mm yen for the 34th fiscal period.
• Concerning interest expenses (including interest expenses on investment corporation bonds) andNon-operating
expenses related to financing, FRC anticipates 379 mm yen for the 33rd fiscal period and 384 mm
expenses
yen for the 34th fiscal period.
• Dividend (dividend per unit) is calculated based on the dividend policy stipulated in FRC’s Articles ofIncorporation.
Dividend per unit
• Dividend per unit may fluctuate due to fluctuations in leasing revenues caused by changes in assets
under management and tenants or various factors including unexpected occurrences of repair.
• Dividend per unit may fluctuate depending on when the spread will actually be contained.
Dividend in excess• Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned at the moment.
of earnings per unit
• It is assumed that there will be no significant revisions to laws and regulations, the tax system, andaccounting standards that may influence the forecast figures.
Other• It is also assumed that there will be no significant unexpected changes in general economic
conditions and the real estate market.

3

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

2. Financial Statements(1) Balance sheet(thousands of yen)Account

31st fiscal period

32nd fiscal period(as of February 29, 2020)(as of August 31, 2020)

AssetsCurrent assets
Cash and deposits

5,417,020

3,733,612

Cash and deposits in trust

4,664,012

4,660,047

Operating accounts receivable

659,262

1,043,924

Prepaid expenses

288,251

282,717

Consumption taxes receivable
OthersTotal current assets—

177,613

19,263

3,570

11,047,811

9,901,484

Non-current assets
Property, plant and equipment—

Buildings—

Accumulated depreciation—

Structures—

Accumulated depreciation
Lands
Buildings in trust
Accumulated depreciation
Structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation(31,914,629)——

931,204

Lands in trust
Construction in progress in trust
Total property, plant and equipment(817,728)

1,229,539(595,564)

891,831

747
118

1,388,990(1,170,941)

70,403,492

1,487,396

747
(628)

(33,495,971)
2,047,268

1,101,295

1,480,805(549,601)

17,045830,254

103,899,463
69,586,959

1,888,802(787,507)

974,393

17,045

101,501,588

Accumulated depreciation
Accumulated depreciation——

Vehicles and transport equipment in trust

Tools and fixtures in trust

974,393
—

(676)

70

1,391,058
218,048(1,194,239)

196,818

104,918,451

107,452,281

15,66918,319176,771,746

182,014,046

5,545,883

5,545,883

Intangible assets
Leasehold right in trust
Other intangible assets in trust
Total intangible assets

34,99329,5195,580,876

5,575,402

Investment and other assets
Deferred tax assets
Lease and guarantee deposits

17

14

10,00010,000327,135

327,135

Long-term prepaid expenses

1,014,438

1,138,352

Total investment and other assets

1,351,591

1,475,502

183,704,215

189,064,950

36,24434,142

7,671

3,835

Lease and guarantee deposits in trust

Total non-current assets
Deferred assets
Investment corporation bond issuance
expenses
Investment unit issuance expenses
Total deferred assets
Total assets
4

43,91537,978

194,795,942

199,004,413

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020
(thousands of yen)Account

31st fiscal period

32nd fiscal period(as of February 29, 2020)(as of August 31, 2020)

Liabilities
Current liabilities
Operating accounts payable

614,394

340,991

1,000,000

6,300,000

Accounts payable-other

19,45012,612

Accrued expenses

372,025355,374

1,041

967

191,370—

Advances received

1,082,899

1,123,558

Deposits received

867,707894,072

4,148,889

9,027,577

Investment corporation bonds

5,000,000

5,000,000

Long-term debt

71,500,000

71,100,000

403,248366,654

11,905,875

11,984,384

88,809,124

88,451,039

92,958,013

97,478,617

98,938,764

98,938,764

Unappropriated surplus

2,899,164

2,587,031

Total surplus

2,899,164

2,587,031

101,837,928

101,525,796

101,837,928

101,525,796

194,795,942

199,004,413

Current maturities of long-term debt

Income taxes payable
Accrued consumption taxes

Total current liabilities
Non-current liabilities

Tenant leasehold and security deposits
Tenant leasehold and security deposits
received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus

Total unitholders’ equity
Total net assets
Total liabilities and net assets

5

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

(2) Statement of income(thousands of yen)Account

31st fiscal period

32nd fiscal period(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

Operating revenues
Leasing revenues – real estate
Other leasing revenues – real estate*1*18,515,052
647,685*1

9,162,738*1

7,912,804
605,527

8,518,332

Operating expenses
Expenses related to leasing business*1, *25,226,888*1, *2

4,897,107

534,300

520,263

Asset custody fees

7,276

7,344

Administrative service fees

55,03057,100

Director’s compensations

9,600

9,600

Other operating expenses

55,888Asset management fees

Operating income

5,888,984

60,3083,273,754

5,551,725
2,966,606

Non-operating revenues
Interest received

47

Others

674

44
722

502

546

Non-operating expenses
Interest expenses
Interest expenses on investment
corporation bonds
Amortization of investment
corporation bond issuance expenses
Amortization of investment unit
issuance expenses
Financing related expenses

246,018

249,252

29,20029,200

2,102

2,102

3,835

3,835

93,136

94,84837

Others374,33037379,275

Ordinary income

2,900,146

2,587,877

Profit before income taxes

2,900,146

2,587,877

Income taxes-current

1,048

Income taxes-deferred

(14)

974
1,033

3

978

2,899,112

2,586,899

Surplus brought forward

51

132

Unappropriated surplus

2,899,164

2,587,031

Profit6

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

(3) Statement of changes in net assets
31st fiscal period (September 1, 2019 to February 29, 2020)(thousands of yen)
Unitholders’ Equity
Surplus
Item

Balance as of
September 1, 2019
Changes in thecurrent fiscal period

Unitholders’ capital

Unappropriated surplus

Total
net assets

2,939,679

101,878,444

101,878,444

Dividend of surplus(2,939,628)(2,939,628)(2,939,628)

Profit2,899,112

2,899,112

2,899,112—(40,515)(40,515)(40,515)

98,938,764

2,899,164

101,837,928

101,837,928

Total of changes in thecurrent fiscal period
Balance as ofFebruary 29, 2020

98,938,764

Total
unitholders’ equity

32nd fiscal period (March 1, 2020 to August 31, 2020)(thousands of yen)
Unitholders’ Equity
Surplus
Item

Balance as ofMarch 1, 2020
Changes in thecurrent fiscal period

Unitholders’ capital

Unappropriated surplus

Total
net assets

2,899,164

101,837,928

101,837,928

Dividend of surplus(2,899,032)(2,899,032)(2,899,032)

Profit2,586,899

2,586,899

2,586,899—(312,132)(312,132)(312,132)

98,938,764

2,587,031

101,525,796

101,525,796

Total of changes in thecurrent fiscal period
Balance as ofAugust 31, 2020

98,938,764

Total
unitholders’ equity

7

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

(4) Dividend statement

Account

31st fiscal period

32nd fiscal period(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

I.

Unappropriated surplus

2,899,164 thousand yen

2,587,031 thousand yen

II.

Total

2,899,032 thousand yen

2,587,000 thousand yen[Dividend per investment
unit][3,642 yen]

[3,250 yen]

III. Surplus brought forward

132 thousand yen

31 thousand yen

Method for calculating dividends

The amount of dividends shall be decided in The amount of dividends shall be decided inaccordance with the dividend policy accordance with the dividend policy
stipulated in Article 38-1-1 of FRC’s Articles stipulated in Article 38-1-1 of FRC’s Articles
of Incorporation and must exceed 90% of of Incorporation and must exceed 90% of
FRC’s distributable profits as stipulated in FRC’s distributable profits as stipulated in
Article 67-15-1 of the Special Taxation Article 67-15-1 of the Special Taxation
Measures Act. Following the above policy, Measures Act. Following the above policy,
FRC shall decide to distribute 2,899,032 FRC shall decide to distribute 2,587,000
thousand yen, which is almost the entire thousand yen, which is almost the entire
amount of unappropriated surplus, as amount of unappropriated surplus, asearnings dividends. Moreover, dividend in earnings dividends. Moreover, dividend inexcess of earnings as stipulated in Article 38- excess of earnings as stipulated in Article
2 of FRC’s Articles of Incorporation will not be 38-2 of FRC’s Articles of Incorporation will
provided.
not be provided.

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

8

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

(5) Cash flows statement(thousands of yen)Account
Net cash provided by (used in) operating activities
Profit before income taxes
Depreciation and amortization expenses
Amortization of investment corporation bond issuance
expenses
Amortization of investment unit issuance expenses
Interest received
Interest expenses
Decrease (increase) in operating accounts receivables
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits expenses
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investment activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Proceeds from restricted trust deposits
Payments for restricted trust deposits
Net cash provided by (used in) investment activities
Net cash provided by (used in) financial activities
Proceeds from short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Net cash provided by (used in) financial activities
Net increase (decrease) in cash and cash equivalents
Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period9

31st fiscal period

32nd fiscal period(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

2,900,146
1,660,510

2,587,877
1,686,347

2,102

2,102

3,835
(47)
275,218
45,437—(70,509)
9,652
8,530
2,509
28,440(493,780)(16,638)(76,811)(14,848)
4,263,749
47(277,320)(733)
3,985,742

3,835
(44)
278,452(384,662)(177,613)(191,370)(3,385)(6,241)(20,452)
40,65926,365
5,534(123,914)
3,154
3,726,644
44(274,651)(1,048)3,450,990—(289,074)
24,513(13,906)
198,619(139,812)
1,315(2,339)(220,683)(1,809,655)(5,371,496)
29,788(66,382)
316,851(238,343)
5,296(2,074)(7,136,015)——
4,700,000(4,700,000)(2,938,346)(2,938,346)
826,7119,205,877
10,032,589

6,400,000(6,400,000)
5,900,000(1,000,000)(2,899,126)
2,000,873(1,684,151)
10,032,589
8,348,438

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

(6) Notes on the going concern assumption
No relevant items.
(7) Significant accounting policies
The disclosure is omitted, since there are no significant changes from contents disclosed by the latest securities report(submitted on May 29, 2020).
(8) Notes to financial statements
FRC omits the disclosure of notes to balance sheet, statement of changes in net assets, and cash flows statement,
as well as notes on lease transactions, financial instruments, securities, derivative transactions, related-party
transactions, tax-effect accounting, retirement benefits, asset retirement obligations, rental properties, segment
information and equity method income, etc. since it does not find substantial need for disclosure in the earnings briefing.
(Notes to statement of income)*1. Breakdown of revenues and expenses related to real estate leasing business(thousands of yen)

31st fiscal period

32nd fiscal period(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

A. Real estate leasing business revenues
Leasing revenues – real estate
Rents

6,968,555

6,531,941

Common charges

1,095,890

1,056,349

Parking revenues

450,606

8,515,052

324,513

7,912,804

Other leasing revenues – real estate
Incidental income

610,648

Other miscellaneous income

37,037

Total real estate leasing business revenues

568,375
647,685

37,152

9,162,738

605,527
8,518,332

B. Expenses related to real estate leasing business
Expenses related to leasing businessOutsourcing fees

1,898,749

1,611,755

Repair and maintenance expenses

116,285

92,463

Taxes and other public charges

734,254743,726

Insurance premiums and trust compensation

51,67649,290Utilities expenses

505,975

479,907

1,660,510

1,686,347

Depreciation and amortization expenses
Other expenses related to real estate leasing
business
Total expenses related to real estateleasing business
C. Revenues and expenses related to real estateleasing business (A - B)

259,435

5,226,888

233,617

4,897,107

5,226,888

4,897,107

3,935,850

3,621,224*2. Transactions with affiliated companies(thousands of yen)

Item
Expenses related to real estate leasing business

31st fiscal period

32nd fiscal period(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

1,430,201

10

970,797

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

(Per unit information)
31st fiscal period

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

Net assets per investment unit:
Profit per investment unit:(March 1, 2020 to August 31, 2020)

127,937 yen
3,642 yen

Net assets per investment unit:
Profit per investment unit:

127,544 yen
3,249 yen

Note 1: Profit per investment unit is calculated by dividing profit by the day-weighted average number of investment units
outstanding during the fiscal period. Diluted profit per investment unit is not shown since there are no potential
investment units.
Note 2: Calculation of profit per investment unit is based on the following.

Account
Profit (thousands of yen)Amount not attributable to common unitholders(thousands of yen)
Profit attributable to common investment units(thousands of yen)
Average number of investment units during the fiscal
period (units)(Significant subsequent events)
No relevant items.
(9) Change in the number of investment units outstanding
No relevant items.

11

31st fiscal period

32nd fiscal period(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

2,899,112

2,586,899——

2,899,112

2,586,899

796,000

796,000

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

3. Reference Information(1) Information on the prices, etc. of investment assets
1) Investment situation(as of August 31, 2020)

Type ofasset

Location

Use(Note 1)

Total value of
properties owned

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

Fukuoka urban area——

Other Kyushu areas——

Fukuoka urban area——

Other Kyushu areas——

Fukuoka urban area——

Other Kyushu areas

1,821

0.9

1,821

0.9

Fukuoka urban area

74,852

37.6

Other Kyushu areas

37,033

18.6

Fukuoka urban area

48,283

24.3

Other Kyushu areas——

Fukuoka urban area

20,171

10.1

Other Kyushu areas

5,408

2.7

185,749

93.3

11,433

5.7

199,004

100.0[187,589][94.3]

RetailOffice buildings
Real estate
OthersSubtotal
RetailReal estatein trust

Office buildings

OthersSubtotal
Deposits and other assets
Total amount of assets (Note 4)

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 2015 census, which states “the number of workers and students aged 15 years orolder (students including those aged 14 years or younger: particular reference) including commuting between their homes
and places of work or school” conducted by Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs andCommunications. “Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area).
Note 2: “Total value of properties owned” is based on the value on the balance sheet (the value of real estate and real estate intrust is the book value after depreciation).
Note 3: Concerning the “Percentage of total assets,” the figures are rounded off to one decimal place. The total of individual
percentages in the above table may not equal 100%.
Note 4: Figures in parentheses for “Total amount of assets” refer to the value and percentage of real estate owned in effect tothe total amount of assets.
(as of August 31, 2020)

Value on balance sheet

Percentage of total amount of assets(mm of yen)(%)

Total amount of liabilities

97,47849.0

Total amount of net assets

101,525

51.0

12

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020

2) Investment assets(A) Values and investment ratios at end of period are as follows.
(as of August 31, 2020)

Acquisitionvalue(mm of yen)
(Note 1)

Value onbalance sheet(mm of yen)

Period-end
appraisal value(mm of yen)
(Note 2)

Canal City Hakata

32,00029,61631,500Canal City Hakata･B

28,70028,85829,700Park Place Oita (Note 4)

19,61020,29021,300SunLive City Kokura

6,633

5,487

8,440

Konoha Mall Hashimoto

10,0009,979

10,400

Square Mall Kagoshima Usuki

5,300

4,307

4,940

Kumamoto Intercommunity SC

2,400

1,968

2,750

Hanahata SC

1,130

973

1,250

Kurume Higashi Kushiwara SC

2,500

2,026

2,790

K’s Denki Kagoshima

3,550

2,952

3,710

Real estate property nameMarinoa City Fukuoka (Marina
Side Building)Retail subtotal:
Canal City Business Center
Building

5,250

5,425

6,080

117,073

111,885

122,860

14,60012,98916,600Gofukumachi Business Center

11,2008,819

14,900Sanix Hakata Building

4,400

3,756

6,410

Taihaku Street Business Center

7,000

5,774

9,090

Higashi Hie Business Center

5,900

4,444

8,030

Tenjin Nishi-Dori Center Building

2,600

2,669

3,100

Tenjin North Front Building

2,800

2,469

4,380

Higashi Hie Business Center II

4,230

4,064

4,600

Higashi Hie Business Center III

3,290

3,294

3,300

Office buildings subtotal:

56,02048,28370,410Amex Akasakamon Tower

2,060

1,668

1,840

City House Keyaki Dori

1,111

901

1,140

Aqualia Chihaya

1,280

1,169

1,860

D-Wing Tower

2,800

2,669

3,500

Granfore Yakuin Minami

1,100

1,098

1,320

Hotel FORZA Oita

1,530

1,386

1,890

Tissage Hotel Naha

2,835

2,853

2,880

Tosu Logistics Center

1,250

1,168

1,300

LOGICITY Minato Kashii

8,150

7,824

8,910

LOGICITY Hisayama

5,050

4,838

5,270

LOGICITY Wakamiya

1,700

1,821

(Note 5) 2,360

Others subtotal:
Total

28,866201,959

27,401
187,571

32,270225,540

13

Investment
ratio
(%)
(Note 3)

Real estate appraiser

Tanizawa Sogo
Appraisal Co., Ltd.
Tanizawa Sogo
14.2
Appraisal Co., Ltd.
Japan Real Estate
9.7
InstituteJapan Real Estate
3.3
InstituteTanizawa Sogo
5.0
Appraisal Co., Ltd.
Japan Real Estate
2.6
InstituteJapan Real Estate
1.2
InstituteTanizawa Sogo
0.6
Appraisal Co., Ltd.
Tanizawa Sogo
1.2
Appraisal Co., Ltd.
Tanizawa Sogo
1.8
Appraisal Co., Ltd.
Tanizawa Sogo
2.6
Appraisal Co., Ltd.
58.0
Tanizawa Sogo
7.2
Appraisal Co., Ltd.
Tanizawa Sogo
5.5
Appraisal Co., Ltd.
Japan Real Estate
2.2
InstituteJapan Real Estate
3.5
InstituteTanizawa Sogo
2.9
Appraisal Co., Ltd.
Japan Real Estate
1.3
InstituteJapan Real Estate
1.4
InstituteTanizawa Sogo
2.1
Appraisal Co., Ltd.
Tanizawa Sogo
1.6
Appraisal Co., Ltd.
27.7
Daiwa Real Estate
1.0
Appraisal Co., Ltd.
Daiwa Real Estate
0.6
Appraisal Co., Ltd.
Japan Real Estate
0.6
InstituteTanizawa Sogo
1.4
Appraisal Co., Ltd.
Tanizawa Sogo
0.5
Appraisal Co., Ltd.
Japan Real Estate
0.8
InstituteTanizawa Sogo
1.4
Appraisal Co., Ltd.
Japan Real Estate
0.6
InstituteTanizawa Sogo
4.0
Appraisal Co., Ltd.
Tanizawa Sogo
2.5
Appraisal Co., Ltd.
Tanizawa Sogo
0.8
Appraisal Co., Ltd.
14.3
100.0
15.8

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020
Note 1:
Note 2:
Note 3:Note 4:Note 5:“Acquisition value” refers to the amount (purchasing prices shown on the purchasing contracts) not including expenses forthe acquisition of relevant properties (agency fees and taxes and other public charges).
“Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity withthe method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation and rules stipulated by theInvestment Trusts Association, Japan.
“Investment ratio” is obtained by dividing each property’s acquisition value by the total acquisition value. The total ofindividual percentages in the above table may not equal 100%, since the figures are rounded off to one decimal place.
The figure Includes Home Plaza NAFCO at Park Place Oita, which FRC acquired on July 1, 2020. The same shall apply
hereafter.
It is assumed that the repair work which was under way at the time of appraisal has been completed and the lease agreement
based on the fixed-term lease option agreement has come into effect.

(B) Summary of the real estate leasing business(as of August 31, 2020)

Real estate property name

Canal City Hakata

46,604.75

Total
leasingrevenues(mm of yen)
(Note 4)
1,016

Percentage of
total
leasingrevenues(%) (Note 5)
11.9

Number oftenants(Note 1)

Occupancy
rate(%)(Note 3)Total
leasable floor
space
(m2)

Total
leased floor
space
(m2)

1 [50]

100.0

46,604.75

Canal City Hakata･B

1 [45]

99.5

68,825.90

68,474.76

1,306

15.3

Park Place Oita

1 [106]100.0

121,212.26

121,212.26

1,113

13.1

1

100.0

61,450.22

61,450.22

262

3.1

SunLive City Kokura
Konoha Mall Hashimoto

1 [126]100.0

22,121.05

22,121.05

710

8.3

Square Mall Kagoshima Usuki

13

100.0

14,602.88

14,602.88

253

3.0

Kumamoto Intercommunity SC

2

100.0

6,968.66

6,968.66

89

1.1

Hanahata SC

2

100.0

2,801.15

2,801.15

40

0.5

Kurume Higashi Kushiwara SC

1

100.0

6,467.80

6,467.80

88

1.0

K’s Denki Kagoshima
Marinoa City Fukuoka (Marina
Side Building)

1

100.0

7,296.17

7,296.17

111

1.3

Retail subtotal:
Canal City Business Center
Building
Gofukumachi Business Center
Sanix Hakata Building

1

100.0

33,069.82

33,069.82

165

1.9

25 [348](Note 2)

99.9

391,420.66

391,069.52

5,157

60.6

1 [60]

99.2

23,029.92

22,834.52

624

7.3

36

100.0

19,905.34

19,905.34

554

6.5

16

100.0

6,293.75

6,293.75

207

2.4

Taihaku Street Business Center

1 [67]

98.4

14,677.30

14,444.57

318

3.7

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

1 [27]

100.0

13,614.59

13,614.59

349

4.1

1

100.0

3,339.32

3,339.32

86

1.0

11

100.0

5,252.41

5,252.41

145

1.7

Higashi Hie Business Center II

2

100.0

6,214.77

6,214.77

164

1.9

Higashi Hie Business Center III

94.1

2,981.14

2,806.28

47

0.6

99.4

95,308.54

94,705.55

2,497

29.3

Amex Akasakamon Tower

5
74 [225](Note 2)
1 [61]

90.6

4,821.25

4,366.0864

0.8City House Keyaki Dori1 [42]

100.0

2,710.86

2,710.86

38

0.4

Office buildings subtotal:

Aqualia Chihaya

1 [103]

97.9

5,619.69

5,500.23

59

0.7

D-Wing Tower

1 [133]

96.7

7,187.59

6,952.80

117

1.4

Granfore Yakuin Minami

1 [98]

99.0

2,496.06

2,471.10

38

0.5

Hotel FORZA Oita

1

100.0

5,785.44

5,785.44

63

0.7

Tissage Hotel Naha

1

100.0

3,758.76

3,758.76

Tosu Logistics Center

1

100.0

4,173.29

4,173.29

LOGICITY Minato Kashii

2

100.0

43,233.72

43,233.72

LOGICITY Hisayama

1

100.0

24,505.65

24,505.65

43
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)

0.5
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)

—

—

—

—

—

—

99.2

104,292.31

103,457.93

863

10.1

99.7

591,021.51

589,233.00

8,518

100.0

LOGICITY Wakamiya (Note 7)
Others subtotal:
Total

11 [443](Note 2)110 [1,016](Note 2)

14

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2020
Note 1:

Note 2:
Note 3:Note 4:Note 5:Note 6:Note 7:“Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and officebuildings among relevant properties. For the number of tenants in pass-through master leasing properties, the number ofsections stipulated in the tenancy agreements with end tenants is shown in parentheses. The Taihaku Street BusinessCenter is an office building with a residential tower. Its number of end tenants comprises 11 offices and 56 residences.
The subtotal and total of all the tenants in other than pass-through master leasing properties and the number of sections
stipulated in the tenancy agreements with end tenants for pass-through master leasing properties is shown in parentheses
in the totals column for “Number of tenants.”“Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the figures are rounded
off to one decimal place.
“Total leasing revenues” is the total of real estate leasing revenues and other revenues from real estate rent in the current
fiscal period.
“Percentage of total leasing revenues” is obtained by dividing each property’s total leasing revenues by the total amount of
total leasing revenues. The total of individual percentages in the above table may not equal 100%, since the figures arerounded off to one decimal place.
The figures are not disclosed as no consent to disclosure has been obtained from the tenants.
Since the repair work will be carried out after the acquisition and the operation is scheduled to start around November 2020,
no rent, etc. will be incurred in the 32nd fiscal period.

(2) Status of capital expenditures
1) Capital expenditures after the end of the 32nd fiscal period and planned capital expenditures
The following table provides amounts of major items of capital expenditures associated with renovations, etc.
conducted after the end of the 32nd fiscal period and of capital expenditures associated with renovations, etc.
planned as of October 16, 2020 for real estate properties owned by FRC. The planned construction costs indicatedbelow may be partly classified as expenses. In addition, FRC will implement renewal construction work in order tomaintain and improve the competitiveness of properties in the market as well as tenant satisfaction, on top of theconstruction, facilities and replacement work for which expenditures will be made regularly.
Planned construction cost
(mm of yen)
Construction
AmountTotal
costalready paid

Real estate
property nameLocation

PurposeSchedule

Canal City Hakata

Hakata Ward,
Fukuoka City

Formation oftenant sections

From August 2020
to January 2021

99

—

—

Canal City Hakata･B

Hakata Ward,
Fukuoka City

From December 2020
to August 2021

57

—

—

Park Place Oita

Oita City, Oita

From October 2020
to November 2020

114

—

—

Taihaku Street
Business Center

Hakata Ward,
Fukuoka City

From May 2021
to August 2021

120

—

—

Replacement of
mechanicalsecurity systemmonitoring
terminals
Replacement of
air-conditioning
units
Renovation of
external walls2) Capital expenditures during the 32nd fiscal period
Capital expenditures for the real estate properties owned by FRC totaled 790 mm yen in the 32nd period.
Furthermore, FRC incurred construction costs of 895 mm yen in total in the period, including 92 mm yen in repair
and maintenance expenses classified as expenses on the statement of income and 12 mm yen in expenses forrestoration to former state. The following table provides the overview of major construction work that was completed
in the 32nd fiscal period.
Real estate
property nameLocation

Canal City Hakata

Hakata Ward,
Fukuoka City

Renovation of external walls

From August 2019
to July 2020

88

Canal City Hakata･B

Hakata Ward,
Fukuoka City

Renovation of external walls

From August 2019
to July 2020

176

Canal City Hakata･B

Hakata Ward,
Fukuoka City

Replacement of tideembankment (Seawall (water
stops))

From April 2020
to July 2020

57

Park Place Oita

Oita City, Oita

Renovation of external walls

From March 2020
to May 2020

81

Park Place Oita

Oita City, Oita

Rooftop waterproofing

From April 2020
to May 2020

48

Sanix Hakata
Building

Hakata Ward,
Fukuoka City

Replacement of
air-conditioning units

April 2020

29

Purpose15

PeriodConstruction cost
(mm of yen)