23rd Fiscal Period

Report on Performance andManagement Status (Semiannual Report)
September 1, 2015 to February 29, 2016

Fukuoka REIT
Corporation

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

I. Overview of Fukuoka REIT Corporation
To Our Unitholders
We would like to express our sincere appreciation to all unitholders for your continued support of Fukuoka REIT Corporation (FRC).
We are pleased to be able to report on the performance results and management status of FRC for the twenty-third fiscal period (September
1, 2015 to February 29, 2016).
FRC started as Japan's first REIT specializing in regional properties. Its mission is to raise capital for
the Fukuoka and Kyushu areas from Japanese and overseas prime investors by incorporating high quality
properties into its portfolio, and thus contribute to the vitalization and enhancement of the attractiveness of
the urban landscape of the areas. Since our listing in June 2005, we have exhibited consistent growth andachieved stable performance through the support of our unitholders and sponsor companies.
During the fiscal period under review, the Japanese economy remained on course for a modest recovery
despite weakness being observed in certain areas. Looking ahead, with the employment and income
environment continuing to improve, the economy is expected to head for a moderate recovery due to various
political measures proving effective. In the Fukuoka and Kyushu area, the core investment target area for
FRC, the economy was also on track for a modest recovery, with capital investment increasing while theemployment and income environment as well as consumer sentiment steadily improved, although consumer
spending remained somewhat weak in certain areas.

Etsuo Matsuyuki
As for land price trends, according to the government’s Land Price Survey announced in March 2016, theCEO & Representative Director,
Fukuoka REIT Corporation
national average over the past year from January 2015 took an upward turn in terms of the combined averagefor residential and commercial land for the first time in eight years. Although the residential land price showeda slight decrease, the commercial land price shifted from a decrease to an increase for the first time in eight years. In Fukuoka City, thecentral area of FRC's investment targets, land prices continued rising for the fourth consecutive year, up 5.9% year-on-year for commercial
land and up 2.8% year-on-year for residential land, marking higher rates of increase.

Under such circumstances, Canal City Hakata, FRC's flagship property, attracted visitors totaling over 16.48 million people in fiscal 2015
(Note 1), a record high since its opening in 1996. This achievement was spurred, for one, by the measures we implemented together withthe property management companies in an integrated manner to enhance the competitiveness of our retail properties, including tenant
replacement and renewal work. Successful absorption of the strong inbound tourist demand, as represented by an increase in the number of
cruise ships calling at the Port of Hakata, also drove this performance. Furthermore, Canal City Hakata marked its 20th anniversary on April
20, 2016. As we plan a variety of events to celebrate the anniversary for all the facilities throughout the year, we anticipate that our operational
endeavors will result in increasing the attractiveness of the facilities.
As for our office buildings, the occupancy rate stood at 100.0% (Note 2) as of the end of the fiscal period under review, due to such factors
as improved tenant satisfaction as a result of our renewal work and a decrease in the vacancy rates of the business districts in Fukuoka City.
With other assets also steadily maintaining high occupancy, the average occupancy rate of all properties FRC owns was 99.6% at the endof the twenty-third fiscal period.
As a result of these management endeavors, profit for the fiscal period surpassed the forecast, bringing the dividend per unit to 3,574 yen.
Going forward, FRC will continue to exert its strengths as a REIT specializing in regional properties and quickly respond to market changes,
while receiving support and cooperation from powerful sponsors who are leaders in the Kyushu business world. As we do so, we will strive toachieve stable growth of our portfolio in the medium 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 philosophy of "Act Local, Think Global."
We greatly appreciate your continued support and cooperation.
(Note 1) The figures include visitors to Canal City Hakata East Building.
(Note 2) The occupancy rate is for the office buildings owned by FRC, excluding the residential portion of Taihaku Street Business Center.

CONTENTS
I.

Overview of Fukuoka REIT Corporation
To Our Unitholders
Financial Summary
ProfileAsset Portfolio Growth at Fukuoka REIT Corporation
Sales Increase as Result of Attracting Inbound Foreign Visitors to Canal City Hakata

1
2
3
5
5

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

1

6
22
23
25
26
27
28

I. Overview of Fukuoka REIT Corporation

Financial Summary
Financial Highlights for 23rd Fiscal Period (ended February 2016)
Dividend per unit was 3,574 yen, surpassing the forecast by 74 yen.
Category(unit)

19th fiscal period

20th fiscal period

21st fiscal period

22nd fiscal period

23rd fiscal period(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)(September 1, 2014 to
February 28, 2015)(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)

Operating revenues

mm yen

7,574

7,779

7,789

8,423

8,343

Leasing NOI (Note 1)
Depreciation and amortization
expenses
Operating income

mm yen

4,732

4,800

4,829

5,229

5,237

mm yen

1,354

1,387

1,390

1,458

1,471

mm yen

2,801

2,824

2,860

3,167

3,141

Ordinary income

mm yen

2,239

2,263

2,370

2,663

2,670

Profitmm yen

2,238

2,262

2,369

2,661

2,669

yen

16,219

3,278

3,435

3,563

3,574

units

138,000

690,000

690,000

747,000

747,000

Total assets (at end of period)

mm yen167,492

167,824

167,369

181,597

181,445

Total net assets (at end of period)

mm yen81,67981,70381,81193,804

93,812

days
Days in fiscal period
Number of investment
properties
properties (at end of period)
Number of tenants (at end of period) (Note 3)

181

184

181

184

182

23

24

25

27

27

Dividend per unit (Note 2)
Total number of investment units
outstanding (at end of period) (Note 2)

868

894

1,003

1,001

1,003

Total leasable floor space (at end of period)

m2

466,087.01

475,682.05

478,197.10

554,464.84

554,549.65

Occupancy rate (at end of period) (Note 4)

%

98.1

99.3

99.6

99.5

99.6

(Note 1) “Leasing NOI” is calculated using "Leasing business revenues - Expenses related to leasing business + Depreciation and amortization expenses".
(Note 2) Concerning the number of investment units, FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date.
(Note 3) “Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for properties owned. For the number of tenants in pass-through master leasing properties, thetotal number of sections stipulated in the tenancy agreements with end tenants is shown.
(Note 4) “Occupancy rate” refers to the percentage of total leased floor space at end of period to total leasable floor space at end of period.

Business Forecasts for 24th and 25th Fiscal Periods
FRC expects the dividend per unit for the 24th and 25th fiscal periods to reach 3,560 yen.
Category

23rd fiscal period

24th fiscal period

25th fiscal period(September 1, 2015 to February 29, 2016)(March 1, 2016 to August 31, 2016)(September 1, 2016 to February 28, 2017)(unit)

Results

Operating revenues

mm yen

8,343

8,412

8,364

Leasing NOI (Note)

mm yen

5,237

5,234

5,235

Depreciation and amortization
expenses

mm yen

1,471

1,482

1,521

Operating income

mm yen

3,141

3,121

3,088

Ordinary income

mm yen

2,670

2,660

2,660

Profitmm yen

2,669

2,659

2,659

Dividend per unityen (1)

3,574

–

–

Latest dividend forecast per unityen (2)

3,500

3,560

3,560

Difference from forecast

yen (1)-(2)

+74

–

–

747,000

747,000

Total number of investment units
outstanding (at end of period)

units

747,000

Forecast(Note) “Leasing NOI” is calculated using "Leasing business revenues - Expenses related to leasing business + Depreciation and amortization expenses".

FUKUOKA REIT CORPORATION

2Forecast

I. Overview of Fukuoka REIT Corporation

ProfileStatus 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 the Investment Corporation
Fukuoka REIT Corporation

Name:

Representative: Etsuo Matsuyuki, CEO & Representative Director
Asset manager: Fukuoka Realty Co., Ltd. (Fukuoka Local Finance Branch Bureau (financial instruments) No. 10)
Listed date:June 21, 2005 (Tokyo Stock Exchange, and Fukuoka Stock Exchange)

Sponsors

5%
The Bank of Fukuoka, Ltd.

5%

5%

5%

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

50%

Director

10%

Outsidedirector

Fukuoka Realty Co., Ltd.

Fukuoka Jisho Co., Ltd. (Note 1)

Saibu Gas Co., Ltd.

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

5%

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

KYUSHU RAILWAY COMPANYRoyal Holdings Co., Ltd.

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

Financial Highlights
Total assets

181.4 bn yen (as of February 29, 2016)

Total debt

72.3 bn yen (as of February 29, 2016)

LTV (Total debt / Total assets)

S&P
Credit ratings

39.9% (as of February 29, 2016)

A−(Positive)

R&I

A＋

(Stable)JCR

AA−(Stable)Investment Unit Price
Investment unit price

194,200 yen(as of February 29, 2016)

Total number of investment units outstanding

747,000 units(as of February 29, 2016)

Market capitalization

145.0 bn yen(Unit price × Units outstanding)(as of February 29, 2016)

Net assets per unit

125,585 yen(as of February 29, 2016)

Market net assets per unit (Note 2)

152,132 yen(as of February 29, 2016)

FUKUOKA REIT CORPORATION(Note 2) Market net assets per unit = {(Total appraisal value at endof period based on appraisal reports of real estate held at endof period − Total value on balance sheet of real estate heldat end of period (excluding construction in progress in trust)) +(Net assets at end of period)} / Total number of investment
units outstanding3

I. Overview of Fukuoka REIT Corporation

ProfileDividend Performance
23rd fiscal period end

February 29, 2016

23rd fiscal period dividend

3,574 yen per unit（yen）(semiannual periods ending every February and August)

3,802

3,726
4,000 （19,014）3,687（18,632）（18,438）

23rd fiscal period days

182 days

Dividend yield

3.7% {(Dividend / Days × 365) / Unit price (as of February 29, 2016)}

3,672 3,699 3,674 3,609（18,499）（18,373）3,468（18,360）（18,049）3,475 3,479
3,356

3,384 3,324
3,563 3,574（17,377）（17,397）
3,293（16,922）
3,238 3,257 3,291 3,243
3,435（16,783）（16,621）（16,465）（16,458）（16,219）3,278（16,289）（16,193）（17,341）

3,000

2,000

1,000

0

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

99.3

98.8

17th

18th

19th

20th

21st

22nd

23rd

99.3

99.6

99.5 99.6

20th

21st

22nd

(Note) Dividend per unit indicates the value after the 5-for-1 split. Figures in parentheses indicate the value before the 5-for-1 split.

Portfolio Property Occupancy Rate (at end of period)
FRC has maintained a portfolio property occupancy rate of 97% or higher since listing.
（%）

100

99.8

99.0

99.4

99.4

99.7

98.8

99.4

99.2

98.8

99.1

99.0

98.6

99.6

98.1

95

97.0

98.1

90

85
2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

19th

23rd

(Note) “Occupancy rate” refers to the percentage of total leased floor space at end of period to total leasable floor space at end of period.

Overview of the AssetManager
Name:

Investment type (based on acquisition price)

Fukuoka Realty Co., Ltd.

Representative: Etsuo Matsuyuki
CEO & Representative
Director
Address:

Portfolio (Note)+81-92-272-3900

Established:

December 26, 2003

27.0%

60.7%
Investment area (based on acquisition price)

2-25, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka
City

TEL:

Office buildings

RetailFukuoka metropolitan area

78.1%

Total leasable floor space2

Capital:200,000,000 yen(Note) Figures are based on properties owned as of February 29, 2016.

FUKUOKA REIT CORPORATION

4

Other
Kyushu areas

21.9%

Occupancy rate at end of period
99.6%

554,549.65m

Others 12.3%

I. Overview of Fukuoka REIT Corporation

Asset Portfolio Growth at Fukuoka REIT Corporation
Acquisitions from outside parties

Acquisitions from sponsor companies■Listing
Canal City Hakata
Canal City Business Center Building
Park Place Oita
Gofukumachi Business Center■2nd
SunLive City Kokura 6,633(mm yen)(Properties)

LTV
■17th
Tenjin Nishi-Dori Center Building 2,600■10th
Higashi Hie Business Center 5,900■22nd
LOGIPORT Island-city Hakata
8,150
Marinoa City Fukuoka (Marina Side Building) 5,250
Adjacent land of Park Place Oita
590
■16th
Aqualia Kego
2,800
■21st
Aqualia Chihaya 1,280
Granfore Yakuin Minami 1,100■18th
D-Wing Tower
2,800
Hotel FORZA Oita
1,530
Tenjin North Front Building 2,800■20th
Tosu Logistics Center 1,250■14th
Canal City Hakata・B 28,700■5thAmex Akasakamon Tower
2,060
Square Mall Kagoshima Usuki 5,300
Kumamoto Intercommunity SC 2,400■7th
Hanahata SC
1,130City House Keyaki Dori
1,111
Kurume Higashi Kushiwara SC 2,500■3rd
Sanix Hakata Building 4,400

200,000 30

No. of properties■8th
K’s Denki Kagoshima 3,550

32,00014,60015,700
11,200(%)
70
Acquisition capacity:
approx.
36,800 mm yen■6th
AEON Hara Shopping Center 5,410■4th
Taihaku Street Business Center 7,000

60

150,000
20

50

Properties

100,000
40
10
LTV

50,000

30

0 0

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

19th

20th

21st

22nd

23rd

20

(Aug 2005) (Feb 2006) (Aug 2006) (Feb 2007) (Aug 2007) (Feb 2008) (Aug 2008) (Feb 2009) (Aug 2009) (Feb 2010) (Aug 2010) (Feb 2011) (Aug 2011) (Feb 2012) (Aug 2012) (Feb 2013) (Aug 2013) (Feb 2014) (Aug 2014) (Feb 2015) (Aug 2015) (Feb 2016)* Kominedai Community Mall, acquired in the 3rd fiscal period and sold in the 6th fiscal period, was omitted from the figures in the graph above.
* Higashi Hie Business Center, acquired in the 10th fiscal period, was acquired both from an outside party and a sponsor. Accordingly, its acquisition price has been divided equally and added to the acquisition
price of assets acquired from outside parties and acquired from sponsor companies, respectively.
* As the senior equity interest in an anonymous partnership managed by CCH Bridge Y.K. was redeemed in the 14th fiscal period, it is excluded from total acquired assets from the 14th fiscal period onward.
* Assets acquired from sponsor companies include properties acquired through arrangements made by the sponsor companies.
* LOGIPORT Island-city Hakata was renamed to LOGICITY Minato Kashii as of March 1, 2016. The same shall apply hereafter.

Sales Increase as Result of Attracting Inbound Foreign Visitors to Canal City Hakata
Canal City Hakata, which marked its 20th anniversary of operation on April 20, 2016, had good performance in the sales of goods, restaurants and eateries as well as
hotel rooms thanks to the demand of inbound tourists including those from China aboard cruise ships. Meanwhile, installation of the 4DX® auditorium at United Cinemas,
which coincided with the screening of popular movies, attracted domestic customers to contribute to higher sales of all Canal City facilities.

Canal City Hakata
Canal City Hakata·B

March 2014 – February 2015
Sales (annual total (Note 1))

31.3 billion yen
March 2015 – February 2016
Sales (annual total (Note 1))

38.0 billion yen+ 21.5%

Changes in the Number of Guests Visiting Canal City Hakata (Note 1)

16.40

Achieved a new record high

15.0

16.48

11.60

10.0

5.0

0.0

(Note 1) The figure represents combined salesof Canal City Hakata and Canal City Hakata·B
owned by FRC.

(million people)

20.0

FY 1996(Note 2)

FY 2000

FY 2005

FY 2010

FY 2015

Source: Prepared by Fukuoka Realty Co., Ltd. based on the data provided by Fukuoka Jisho Co., Ltd.
(Note 1) For FY 2011 and thereafter, the figure includes the number of visitors to Canal City Hakata East.
(Note 2) For FY 1996, the figure shows the number of visitors from April 20, 1996 to April 19, 1997. Other thanthis, the FY represents a period from April 1 to March 31 next year.

● Canal City Hakata marked its 20th anniversary on April 20, 2016
Overview of the first round of events for the 20th anniversary● Sale of goods specially offered in memory of the 20th anniversary● Canal Fringe Festival● Special tie-up with Meitantei Konan (Detective Conan; English title: “Case Closed”) for the 20th anniversary● Public recording of FM Fukuoka radio station held for 20 days

● New Tenants and Renewal of Tenant Facilities ● Feature access to Canal City Hakata■ Renewal of United Cinemas at Canal City Hakata● 4DX® installation (opened December 18, 2015)● Premium Dining Cinema (opened April 23, 2016)■ New tenants opened● Whole square FUKUOKA (opened November 30, 2015)● Wolfgang’s Steakhouse (opened March 14, 2016)■ Renewal of Grand Hyatt Fukuoka guest rooms● Overview of guest room refurbishment: 370 rooms in total● First phase: 188 rooms January – April 2016
● Second phase: 182 rooms January – April 2017

■ Other topics■ Subway line extension project completed by fiscal 2020
Chukan Station
Nakasu Kawabata (tentative name)side exit/entrance
Station central exit/entrance Hakata Ward Office

Hakata Station side exit/entrance

Canal City
HakataStairsElevator/
escalator

Extension of Fukuoka City
Subway Nanakuma Line
Scheduled to be in service
in fiscal 2020
HakataStation● Canal City Theater: “Beauty and the Beast” by Shiki Theater Company
Source : Prepared by Fukuoka Realty Co., Ltd. based on the “Plan for High Speed Rail No. 3, etc.” dated January 19,
Performance started March 13, 20162016 by the Special Committee on Traffic Control Measures, Fukuoka City
● “Bairan” Chinese cuisine and “Sendai Henmi” restaurant specializing in grilled beef tongue
Scheduled opening on April 22, 2016
● Ramen Stadium “Hokkaido Ramen Santouka” and “Ganso Najima-Tei”
Opened March 20, 2016
*Presently, FRC has no plans to own the Canal City Theater.

FUKUOKA REIT CORPORATION

5

II. Semiannual Report
Overview of Asset Management
1. Changes in operating results and financial position
19th fiscal period

20th fiscal period(March 1, 2014 toAugust 31, 2014)(September 1, 2014 to
February 28, 2015)

21st fiscal period

22nd fiscal period(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)

mm yen7,574[7,574]
4,773[4,197]
2,801
2,239
2,238
167,492[(0.2)]
81,679[(0.0)]
79,441

7,779[7,779]4,955[4,366]
2,824
2,263
2,262
167,824[0.2]
81,703[0.0]
79,441

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

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

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

Fiscal Period(unit)

Operating revenues

mm yen[Leasing business revenues]

mm yenOperating expenses

mm yen[Expenses related to leasing business]

mm yenOperating income
Ordinary income
ProfitTotal assets

mm yenmm yen(a)

mm yen(b)

mm yen(c)

mm yen[Change from previous period]

Net assets%[Change from previous period]%

Unitholders’ equity
Total number of investment
units outstanding(September 1, 2013 to
February 28, 2014)

23rd fiscal period

units

138,000

690,000

690,000

747,000

747,000

Net assets per unit(c)/(d)(Note 3)yen

118,376

118,410

118,567

125,574

125,585

Total dividend
Dividend per unit(e)

mm yen(e)/(d)

yen

2,261
3,278
[3,278]
[–]

2,370
3,435
[3,435]
[–]

2,661
3,563
[3,563]
[–]

2,669
3,574
[3,574][–](d)[Earnings dividend per unit]

yen[Dividend in excess of earnings per unit]

yen

2,238
16,219[16,219][–](Note 4)%

1.3 [2.7]

1.3 [2.7]

1.4 [2.9]

1.5 [3.0]

1.5 [3.0](Note 4)%2.7 [5.5]

2.8 [5.5]

2.9 [5.8]

3.0 [6.0]

2.8 [5.7](c)/(b)

%

48.8

48.7

48.9

51.7

51.7

%
(e)/(a)

%

[0.1]
100.0

[(0.1)]
100.0

[0.2]
100.0

[2.8]
100.0

[0.0]
100.0

23

24

25

27

27

m2

466,087.01

475,682.05

478,197.10

554,464.84

554,549.65

%

98.1

99.3

99.6

99.5

99.6

mm yen

1,354

1,387

1,390

1,458

1,471

mm yen

848
4,732
181

740
4,800
184

328
4,829
181

445
5,229
184

630
5,237
182

Ratio of ordinary income tototal assets
Return on net assets
Ratio of net assets to total
assets[Change from previous period]

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

properties(at end of period)

Occupancy rate
(at end of period)

Depreciation and amortization
expensesCapital expenditures
Leasing NOI
Days in fiscal period(Note 4) 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) FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. Accordingly, net assets per unit have been calculated based on the assumption that the split ofinvestment units was conducted at the beginning of the 19th fiscal period.
(Note 4) 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
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
Leasing business revenues – expenses related to leasing business + depreciation and amortization expenses

FUKUOKA REIT CORPORATION

6

II. Semiannual Report

Overview of Asset Management
2. Management situation(1) Brief history of the investment corporation
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 23rd fiscal period (February 29, 2016), FRC manages a total of 27 properties
comprising 11 Retail, 7 Office buildings and 9 Others.

(2) Investment environment and portfolio performance
During the fiscal period under review, the Japanese economy remained on course for a modest recovery despite weakness
being observed in certain areas. Looking ahead, with the employment and income environment continuing to improve, theeconomy is expected to head for a moderate recovery due to various political measures proving effective. In the Fukuoka andKyushu area, the core investment target area for FRC, the economy was also on track for a modest recovery, with capital
investment increasing while the employment and income environment, as well as consumer sentiment, steadily improving,although consumer spending remained somewhat weak in certain areas.
As for land price trends, the national average over the past year from January 2015 took an upward turn in terms of the
combined average for residential and commercial land for the first time in eight years according to the government’s 2016
Land Price Survey. Although the residential land price showed a slight decrease, the commercial land price shifted from adecrease to an increase for the first time in eight years. In Fukuoka City, the central area of FRC's investment targets, land
prices continued rising for the fourth consecutive year, up 5.9% year-on-year for commercial land and up 2.8% year-on-year
for residential land, marking higher rates of increase.
Under such circumstances, FRC continued its efforts to reinforce competitive advantages and customer drawing ability at
Canal City Hakata and other major retail facilities, 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 99.6% at the end of
the 23rd fiscal 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 78.1%; when analyzing by property type, Retail, Office buildings, and Others accounted for 60.7%,
27.0% and 12.3%, respectively.

(3) Summary of fundraising
In the 23rd fiscal period, FRC refinanced 6,500 million yen in long-term debt that matured in February 2016. As a result, thebalance of interest-bearing debt outstanding (including the investment corporation bonds) at the end of the 23rd fiscal period
totaled 72,325 million yen, with the loan-to-value ratio (ratio of interest-bearing debts (including the investment corporation
bonds to total assets) at 39.9%. In addition, FRC concluded an interest rate swap agreement (notional principal of 4,000
million yen) on February 25, 2016. This brought the ratio of fixed-interest rate debt to total debt (including investment
corporation bonds) at the end of the fiscal period to 80.1%. Going forward, FRC will continue its efforts to reduce refinancing
risks by dispersing the debt repayment dates and increasing the average length of time until debt maturity, and to mitigate
risks of rising interest rates by shifting to fixed-interest rate borrowings and through other measures.

FUKUOKA REIT CORPORATION

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II. Semiannual Report

Overview of Asset Management
Moreover, the credit ratings assigned to FRC as of the end of the 23rd fiscal period are as follows:
Credit Rating Agency

Rating Type

RatingRating Outlook

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

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

A−
A−2

Positive−

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

Issuer Rating

A+

StableLong-term Senior Debts Rating

AA−

StableJapan Credit Rating Agency, Ltd. (JCR)(4) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 8,343 million yen and operating income after excluding
operating expenses such as expenses related to rent business and asset management fees totaled 3,141 million yen. Ordinary
income was 2,670 million yen and profit was 2,669 million yen.
Management decided to make a dividend of 3,574 yen per investment 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 [Act No. 26
in 1957 including later revisions, hereinafter the “Special Taxation Measures Act”]). Under this law, an investment corporation isallowed to deduct the maximum amount of dividends paid to investors from its taxable income.

3. Change in the number of investment units issued
Changes in unitholders’ capital from the incorporation of FRC to the end of the 23rd fiscal period are as follows:
Number of investment units
issued (units)
Increase
Balance
July 2, 2004
Established through private placement250
250November 8, 2004 Additional issue of investment units through private offering
82,80083,050June 20, 2005
Additional issue of new investment units through public offering
7,000
90,050July 21, 2005
Additional issue of new investment units through third-party allotment
2,000
92,050
September 7, 2006 Additional issue of new investment units through public offering
15,000107,050
March 1, 2011
Additional issue of new investment units through public offering
16,000123,050
March 1, 2013
Additional issue of new investment units through public offering
14,950138,000
March 1, 2014
Split of investment units
552,000
690,000
April 27, 2015
Additional issue of new investment units through public offering
57,000747,000
Date

Item

Unitholders’ capital

Remarks(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(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
HighestLowest19th fiscal period(before ex rights)(September 1, 2013 to
February 28, 2014)

868,000 yen
708,000 yen

19th fiscal period(after ex rights) (Note 2)(September 1, 2013 to
February 28, 2014)

171,400 yen
171,000 yen

20th fiscal period(Note 2)
(March 1, 2014 toAugust 31, 2014)

21st fiscal period(Note 2)22nd fiscal period(Note 2)23rd fiscal period(Note 2)

244,400 yen
186,200 yen

226,000 yen
187,100 yen

209,000 yen
171,300 yen(September 1, 2014 to
February 28, 2015)

199,000 yen
157,100 yen(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)(Note 1) The highest and lowest prices of the investment unit price are based on the closing prices on the Real Estate Investment Trust Section of the Tokyo Stock Exchange, Inc.
(Note 2) In accordance with the 5-for-1 split of FRC’s investment units with March 1, 2014 as the effective date, the investment units are traded at the price after ex rights, starting on February 26, 2014.

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II. Semiannual Report

Overview of Asset Management
4. Results of dividend, etc.
With respect to the dividend for the 23rd fiscal period, FRC determined to distribute the whole unappropriated surplus (except
for the fraction amount, which is the dividend per unit of less than 1 yen) to be eligible for special tax measures for an investment
corporation (as stipulated in Article 67-15 of the Special Taxation Measures Act) that allow FRC to deduct the maximum amountof earnings dividend from its taxable income. Accordingly, dividend per unit for the fiscal period was 3,574 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 perunit, distribution per unit of thereserve for temporary difference
adjustments)

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

19th fiscal period

20th fiscal period(September 1, 2013 to
February 28, 2014)

21st fiscal period(March 1, 2014 toAugust 31, 2014)

2,238,265
2,238,288
66
2,238,222[16,219 yen]
2,238,222[16,219 yen]

–

[– ]

–

[–]

–

[–]

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

2,262,068
2,262,134
314
2,261,820[3,278 yen]
2,261,820[3,278 yen]

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

–

–

[–]

[–]

–

–

[–]

[– ]

–

–

[–]

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

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

–

[–]

–

[–]

–

[–]

–

[–]

–

[–]

–

[–]

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 with adequate 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 23rd fiscal period
The earthquakes that have occurred on and since April 14, 2016, with epicenters located in the Kumamoto area of Kumamoto
Prefecture, have caused damages to Kumamoto Intercommunity SC, a property owned by FRC.
While there has not yet been sufficient time to complete an assessment of the damages caused by the earthquakes andcalculate the impact on FRC's operations, FRC anticipates accrual of costs for restoration work in future periods.
Furthermore, although the cost of the damages is currently under investigation, the property is covered by earthquake
insurance.
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II. Semiannual Report

Overview of the Investment Corporation
1. Summary of unitholders’ capital
Fiscal period
Total number of authorized
investment units
Total number of investment
units outstanding
Number of unitholders

19th fiscal period

20th fiscal period

21st fiscal period

22nd fiscal period

2,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

138,000 units

690,000 units

690,000 units

747,000 units

747,000 units

7,156

7,386

7,350

10,524

10,330as of February 28, 2014

as of August 31, 2014

as of February 28, 2015

23rd fiscal period

as of August 31, 2015

as of February 29, 2016

2. Matters related to investment units
The following table sets forth the major unitholders of FRC as of February 29, 2016.
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
MetLife, Inc.
Nomura Securities Co., Ltd. (Proprietary Account)
Shikoku Railway Company
The Bank of New York Mellon SA/NV 10
Total

244,351
66,07539,99337,88025,617
11,985
11,872
9,911
9,130
9,098
465,912Percentage of total number ofinvestment units outstanding (%) (Note)
32.71
8.84
5.35
5.07
3.42
1.60
1.58
1.32
1.22
1.21
62.37

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

3. Matters related to directors(1) The names of FRC’s directors, etc. and their fees for the 23rd fiscal period are as
follows:
Title

Name of directors, etc.

Major concurrent assignments

Total fee for each title for the
23rd fiscal period(thousands of yen) (Note 2)

CEO and Representative Director
Supervisory Directors
Independent Auditor

Etsuo Matsuyuki
Takashi Shinohara
Hiroyasu Shindo
PricewaterhouseCoopers Aarata

CEO and Representative Director, Fukuoka Realty
Co., Ltd.
Representative Partner, Shinohara CPA Office
Representative Council, Shindo Law Firm

–

6,000
3,600
9,000

(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 23rd fiscal period, and the fee to the Independent Auditor is the amount payable to it(estimate) for audits pertaining to the 23rd 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

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II. Semiannual Report

Overview of the Investment Corporation
4. Names of asset management company, asset custodian and generaladministrators as of the end of the 23rd fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as ofFebruary 29, 2016.
Category of entrustment

Name

Asset Management Company

Fukuoka Realty Co., Ltd.

Asset Custodian

Mitsubishi UFJ Trust and Banking Corporation

General Administrator (accounting matters, etc.)

Mitsubishi UFJ Trust and Banking Corporation

General Administrator (administration of unitholders’ list)

Sumitomo Mitsui Trust Bank, Limited

General Administrator (administration of investment corporation bonds registry)

Sumitomo Mitsui Banking Corporation

Status of FRC’s Assets under Management
1. FRC’s asset structure
22nd fiscal period
Type of asset

Area

Use

23rd fiscal period

as of August 31, 2015

Total value of
properties held

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

as of February 29, 2016

Percentage of
total assets

Total value of
properties held(%) (Note 3)(mm of yen) (Note 2)

Percentage of
total assets(%) (Note 3)

Fukuoka urban area

70,64338.9

70,567

38.9

Other Kyushu areas

36,13919.935,86919.8

Fukuoka urban area

43,983

24.2

43,636

24.0

Other Kyushu areas

–

–

–

–

Fukuoka urban area

18,911

10.4

18,764

10.3

Other Kyushu areas

2,728

1.5

2,717

1.5

Deposits and other assets

9,191

5.1

9,890

5.5

Total amount of assets (Note 4)

181,597[172,416]

100.0[94.9]

181,445[171,575]

100.0[94.6]

RetailReal estate trust
beneficiary interest

Office buildings

Others(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) 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.

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II. Semiannual Report

Status of FRC’s Assets under Management
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 29,
2016.
Real estate property name (Note 1)

Book value(mm of yen)

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

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

Main use

Canal City Hakata

30,51046,563.32

46,431.79

99.7

15.9

RetailCanal City Hakata·B

28,45468,808.14

67,862.54

98.6

19.4

RetailPark Place Oita (Note 4)

17,873

109,590.83

109,429.46

99.9

13.5

RetailCanal City Business Center Building

13,512

23,030.84

23,030.84

100.0

7.8

Office building

Gofukumachi Business Center

9,453

19,905.34

19,905.34

100.0

6.3

Office building

LOGIPORT Island-city Hakata (Note 5)8,142

43,233.72

43,233.72

100.0(Note 6)

Taihaku Street Business Center

6,408

14,677.27

14,477.95

98.6

3.6

Office building

SunLive City Kokura

5,911

61,450.22

61,450.22

100.0

3.5

RetailMarinoa City Fukuoka (Marina Side Building)

5,301

33,069.82

33,069.82

100.0

2.1

RetailAEON Hara Shopping Center

5,271

27,313.53

27,313.53

100.0

2.5

RetailTotal

130,839447,643.03

446,205.21

99.7(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 revenue” is rounded off to one decimal place.
(Note 4) The figures include those for the property’s adjacent land that FRC acquired on May 28, 2015. The same shall apply hereafter.
(Note 5) LOGIPORT Island-city Hakata was renamed to LOGICITY Minato Kashii as of March 1, 2016. The same shall apply hereafter.
(Note 6) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

FUKUOKA REIT CORPORATION

12–OthersII. Semiannual Report

Status of FRC’s Assets under Management
3. Details of real estate properties in the portfolio
The following table provides details of the real estate properties owned by FRC as of February 29, 2016.

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
27-52, 6-Chome, Hara, Sawara
AEON Hara Shopping Center
Ward, Fukuoka 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
13-17, 2-Chome, Kego, Chuo
Aqualia Kego
Ward, 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,
LOGIPORT Island-city Hakata
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
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.

46,563.32

33,00030,51068,808.14

29,90028,454

109,590.83

17,936

17,873

Japan Real Estate Institute61,450.22

7,890

5,911

Japan Real Estate Institute14,602.88

5,290

4,641

Japan Real Estate Institute6,968.66

2,650

2,088

Japan Real Estate Institute27,313.53

4,090

5,271

Japan Real Estate InstituteTanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

2,801.15

1,240

1,029

6,467.80

2,750

2,184

7,296.17

3,680

3,169

33,069.82

5,510

5,301

384,932.52

113,936

106,436

23,030.84

15,10013,512

19,905.34

13,2009,453

6,293.76

5,210

3,993

Japan Real Estate Institute

14,677.27

7,140

6,408

Japan Real Estate Institute13,674.96

6,430

4,853

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

2,930

2,711

Japan Real Estate Institute5,252.39

3,270

2,704

Japan Real Estate Institute86,173.88

53,28043,636

4,821.25

1,850

1,791

2,710.86

1,030

980

7,415.36

3,660

2,657

Japan Real Estate Institute

5,619.69

1,600

1,219

Japan Real Estate Institute7,187.58

3,250

2,796

2,496.06

1,230

1,176

5,785.44

1,720

1,462

Japan Real Estate Institute4,173.29

1,350

1,254

Japan Real Estate Institute43,233.72

8,480

8,142

Tanizawa Sogo Appraisal
Co., Ltd.

83,443.25
554,549.65

24,170191,386

21,482
171,555

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

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

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

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

Status of FRC’s Assets under Management
23rd fiscal period

22nd fiscal period(March 1, 2015 to August 31, 2015)

Real estate property name

Canal City Hakata
Canal City Hakata·B
Park Place Oita
SunLive City Kokura
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
AEON Hara Shopping Center
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Marinoa City Fukuoka (Marina Side
Building)
Retail subtotal:
Canal City Business Center Building
Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center
Higashi Hie Business Center
Tenjin Nishi-Dori Center Building
Tenjin North Front Building
Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Kego
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tosu Logistics Center
LOGIPORT Island-city Hakata(September 1, 2015 to February 29, 2016)

Total leasing
Percentage ofTotal leasing
Percentage of
Number of tenants Occupancy rate
Number of tenants Occupancy ratebusiness revenue total leasing
business revenue total leasingat end of period at end of period
at end of period at end of period
during period business revenue
during period business revenue(Note 1)(%) (Note 3)(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)(mm of yen)(%) (Note 4)

1 [46]
1 [49]
1 [105]
1
13
2
1
2
1
1

99.5
99.6
99.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,470
1,611
1,666
292
256
90
212
40
88
111

17.5
19.1
13.8
3.5
3.0
1.1
2.5
0.5
1.0
1.3

1 [47]
1 [47]
1 [105]
1
13
2
1
2
1
1

99.7
98.6
99.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,325
1,618
1,127
295
262
90
212
40
88
111

15.9
19.4
13.5
3.5
3.1
1.1
2.5
0.5
1.1
1.3

1

100.0

118

1.4

1

100.0

177

2.1

99.8

5,459

64.8

25 [221]

99.7

5,349

64.1

100.0
99.5
95.8
98.8
100.0
100.0
100.0

649
521
196
298
328
86
132

7.7
6.2
2.3
3.5
3.9
1.0
1.6

100.0
100.0
100.0
98.6
100.0
100.0
100.0

649
524
193
297
333
86
133

7.8
6.3
2.3
3.6
4.0
1.0
1.6

99.4

2,213

26.3

1 [61]
36
16
1 [69]
1 [22]
1
11
67 [216]

99.8

2,217

26.6

98.5
95.5
96.0
95.7
92.1
97.0
100.0
100.0
100.0

66
38
115
57
112
39
63
(Note 5)(Note 5)

0.8
0.5
1.4
0.7
1.3
0.5
0.7
(Note 5)(Note 5)

94.2
100.0
96.3
99.3
97.0
98.0
100.0
100.0
100.0

65
37
114
58
109
38
63
(Note 5)(Note 5)

0.8
0.5
1.4
0.7
1.3
0.5
0.8
(Note 5)(Note 5)

98.4

749

8.9

1 [63]
1 [42]
1 [124]
1 [104]
1 [132]
1 [97]
1
1
2
10 [566]

99.0

776

9.3

99.5

8,423

100.0

102 [1,003]

99.6

8,343

100.0

25 [222](Note 2)

1 [61]
36
18
1 [68]
1 [23]
1
13
71 [220](Note 2)Others subtotal:

1 [66]
1 [40]
1 [124]
1 [101]
1 [128]
1 [96]
1
1
2
10 [559]

Total

106 [1,001](Note 2)
(Note 2)

(Note 2)

(Note 2)

(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 witha residential tower. Its number of tenants comprises 13 for the office building and 56 for the residence in the 23rd fiscal period (12 for the office building and 56 for the residence in the 22nd 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 revenue” is rounded off to one decimal place, and the total of individual percentages in the above table may not equal 100%.
(Note 5) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

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

5. Details of the rights to operate public facilities, etc. in the portfolio
No relevant items.

6. Securities incorporated in the portfolio
No relevant items.
FUKUOKA REIT CORPORATION

14

II. Semiannual Report

Status of FRC’s Assets under Management
7. List of specific transaction and forward exchange transaction contract
amount and status of fair value
The following table provides the contract amount of specific transactions by FRC and the status of its fair value as of February
29, 2016.
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)

Total

24,50024,500(355)

24,50024,500(355)(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors.

8. Status of other assets
All real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in theportfolio” on page 13. There is no incorporation of other specified assets as of the end of the 23rd fiscal period.

9. Status of owned assets by country and region
As of the end of the 23rd fiscal period, no overseas real estate properties in countries or regions other than Japan areincorporated into FRC’s portfolio.

Capital Expenditures for Owned Real Estate
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.
Planned construction cost
(mm of yen)

Real estate property
nameLocation

PurposeSchedule
Total

Conduction
cost

Amountalready paid

Canal City Hakata

Hakata Ward,
Fukuoka City

Introduction of new customer attraction
devices

From May 2016
to November 2016

459

2

5

Canal City Hakata·B

Hakata Ward,
Fukuoka City

Renewal of signboards

From May 2016
to August 2016

87

–

1

Canal City Hakata·B

Hakata Ward,
Fukuoka City

Introduction of new customer attraction
devices

From May 2016
to November 2016

912

5

10

Canal City BusinessCenter Building

Hakata Ward,
Fukuoka City

Introduction of new customer attraction
devices

From May 2016
to November 2016

116

0

1

Renovation of external walls

From July 2016
to February 2017

150

–

–

Gofukumachi Business Hakata Ward,
CenterFukuoka CityFUKUOKA REIT CORPORATION

15

II. Semiannual Report

Capital Expenditures for Owned Real Estate
2. Capital expenditures during the 23rd fiscal period
The following table provides the overview of major construction work that was completed in the 23rd fiscal period out of
the capital expenditures totaling 630 million yen. Furthermore, FRC incurred construction costs of 939 million yen in total in
the 23rd fiscal period, in addition to 298 million yen in repair and maintenance expenses that were classified as expenses inaccounting and 9 million yen in expenses for restoration to former state.
Real estate property nameLocation

PurposeConstruction cost

Period(mm of yen)

Canal City Hakata

Hakata Ward, Fukuoka City

Renovation of northern external walls ofCenter Walk

Canal City Hakata・B

Hakata Ward, Fukuoka City

Renovation of northern external walls ofCenter Walk

Canal City Hakata・B

Hakata Ward, Fukuoka City

Floor renovation on the 7th floor of multi-story From January 2016
parking lot
to February 2016

36

Square Mall Kagoshima Usuki

Kagoshima City, Kagoshima

Repairs of western external walls

February 2016

22

Renovation of wooden decks

From October 2015
to November 2015

25

Marinoa City Fukuoka (Marina Side
Nishi Ward, Fukuoka City
Building)

From November 2015
to February 201667

From November 2015
to February 2016

134

3. Reserves for long-term repair and maintenance plans
FRC has deposited the following amounts from the cash flows generated during the 23rd fiscal period in order to fund largescale repair and maintenance work in the medium- to long-term, based on long-term repairs and maintenance plans preparedfor respective properties.
(millions of yen)
Fiscal period
Balance of deposits at beginning of period
Deposits during the period

19th fiscal period(September 1, 2013 to
February 28, 2014)

20th fiscal period(March 1, 2014 toAugust 31, 2014)

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)

700

700

800

800

800

–

100

–

–

–

Amounts used from deposits during the period

–

–

–

–

–

Deposits carried forward to the next period

700

800

800

800

800

FUKUOKA REIT CORPORATION

16

II. Semiannual Report

Expenses and Liabilities
1. Details of expenses related to asset management(thousands of yen)
22nd fiscal periodItem23rd fiscal period(March 1, 2015 toAugust 31, 2015)(a) Asset management fees(b) Asset custody fees(c) Administrative service fees(d) Directors’ compensations(e) Other operating expenses
Total(September 1, 2015 toFebruary 29, 2016)

486,520
6,327
47,7679,600
54,600604,817

493,021
6,772
52,472
9,600
62,612
624,478(Note) Aside from the amounts of the asset management fees shown above, 55,350 thousand yen was paid for asset management related to the acquisition of LOGIPORT Island-city Hakata, Marinoa City
Fukuoka (Marina Side Building) and the adjacent land of Park Place Oita during the 22nd fiscal period.

2. Status of debt
As of the end of the 23rd fiscal period (February 29, 2016), FRC has the following debt from respective financial institutions.
Category
LenderBalance as Balance as ofDrawdown of September 1, February 29,
date
2016
2015

March 1,The Bank of Fukuoka
2011
March 1,The Nishi-Nippon City Bank
2011
March 1,Development Bank of Japan2011
February 29,
Mizuho Bank
2012
August 31,
Development Bank of Japan
2009
July 29,
Shinsei Bank
2011
December 30,
The Bank of Fukuoka
2010
Current
December 30,
maturities of The Hiroshima Bank
2011
long-term
December 30,
The Oita Bank
debt
2011
December 30,
The Eighteenth Bank
2011
December 30,
The Shinwa Bank
2011
December 30,
The Kitakyushu Bank
2011
January 31,
The Kagoshima Bank
2012
January 31,
Resona Bank
2012
September 28,
Sumitomo Mitsui Trust Bank
2012
SubtotalJune 30,Development Bank of Japan2009
December 30,
The Bank of Fukuoka
2010
July 29,
The Bank of Fukuoka
2011Long-term
July 29,
The Nishi-Nippon City Bank
2011
debt
The Dai-Ichi Life Insurance
July 29,
2011
Company
December 30,
The Bank of Fukuoka
2011
December 30,
The Hiroshima Bank2011

(mm of yen)

(mm of yen)

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds

Description

February 29, Lump-sum upon2016
maturity
February 29, Lump-sum upon2016
maturity
February 29, Lump-sum upon2016
maturity
February 29, Lump-sum upon2016
maturity
August 31, Lump-sum upon2016
maturity
July 29,
Lump-sum upon2016
maturity
December 30, Lump-sum upon2016
maturity
December 30, Lump-sum upon2016
maturity
December 30, Lump-sum upon2016
maturity
December 30, Lump-sum upon2016
maturity
December 30, Lump-sum upon2016
maturity
December 30, Lump-sum upon2016
maturity
January 31, Lump-sum upon2017
maturity
January 31, Lump-sum upon2017
maturity
September 30, Lump-sum upon2016
maturity

Acquisition
fund
Acquisition
fund
Acquisition
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund

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

June 30,(Note 2)2017
December 30, Lump-sum upon2016
maturity
July 31,
Lump-sum upon2017
maturity
July 31,
Lump-sum upon2017
maturity
July 31,
Lump-sum upon
2018
maturity
December 30, Lump-sum upon2017
maturity
December 30, Lump-sum upon2016
maturity

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

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee(Note 1)

2,000

–

0.621

2,000

–

0.774

2,000

–

0.771

500

–

1.117

4,000

4,000

2.170

1,000

1,000

1.208

–

1,500

0.621

–

500

1.182

–

500

1.182

–

500

1.182

–

500

1.182

–

500

1.182

–

100

1.168

–

400

1.218
0.571

–

600

11,50010,100

2,100

2,025

2.200

1,500

–

0.621

2,000

2,000

1.305

2,000

2,000

1.305

1,000

1,000

1.800

1,500

1,500

0.771

500

–

1.182

FUKUOKA REIT CORPORATION

17

II. Semiannual Report

Expenses and Liabilities
Category
LenderThe Oita BankThe Eighteenth BankThe Shinwa Bank
The Kitakyushu Bank
The Kagoshima Bank
Resona Bank
Sumitomo Mitsui Banking
Corporation
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation
Resona Bank
The Higo Bank

Long-term
debt

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

Balance as Balance as ofDrawdown of September 1, February 29,
date
2016
2015
(mm of yen)

December 30,
2011
December 30,
2011
December 30,
2011
December 30,
2011
January 31,
2012
January 31,
2012
January 31,
2012
March 1,
2012
March 30,
2012
March 30,
2012
March 30,
2012

June 29,2012

September 28,
2012
September 28,
Resona Bank
2012
February 1,
The Nishi-Nippon City Bank
2013
February 28,
The Nishi-Nippon City Bank
2013
February 28,
Mizuho Bank
2013
February 28,
Sumitomo Mitsui Trust Bank
2013
Mitsubishi UFJ Trust andFebruary 28,
2013
Banking Corporation
February 28,
Aozora Bank
2013
Mitsubishi UFJ Trust andMarch 29,
2013
Banking Corporation
Sumitomo Mitsui Trust Bank

(mm of yen)

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds

Description(Note 1)

500

–

1.182

500

–

1.182

500

–

1.182

500

–

1.182

100

–

1.168

400

–

1.218

500

500

1.338

2,000

2,000

1.170

500

500

1.203

600

600

1.253

300

300

1.203

1,000
1,000
700
700
600
500
500
500
500

1,000
1,000
700
700
600
500
500
500
500

0.858

600

–

0.571

2,000

2,000

1.033

2,500

2,500

0.775

1,900

1,900

0.671

1,700

1,700

0.671

1,100

1,100

0.721

1,500

1,500

0.521

600

600

0.521

600

600

0.521

FUKUOKA REIT CORPORATION

18

December 30, Lump-sum upon Refinance2016
maturity
fund
December 30, Lump-sum upon Refinance2016
maturity
fund
December 30, Lump-sum upon Refinance2016
maturity
fund
December 30, Lump-sum upon Refinance2016
maturity
fund
January 31, Lump-sum upon Refinance2017
maturity
fund
January 31,
Lump-sum
Refinance
2017
upon maturity
fund
January 31,
Lump-sum
Refinance
2019
upon maturity
fund
March 31,
Lump-sum
Acquisition
2017
upon maturity
fund
March 31,
Lump-sum
Refinance
2017
upon maturity
fund
March 31,
Lump-sum
Refinance
2017
upon maturity
fund
March 31,
Lump-sum
Refinance
2017
upon maturity
fund

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

June 30,
2017

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

September 30,
2016
September 29,
2017
February 29,
2020
February 28,
2018
February 29,
2020
February 28,
2018
February 28,
2018
February 28,
2018
March 30,
2018

Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity

Refinance
fund
Refinancefund
Acquisition
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund

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

Expenses and Liabilities
Category
LenderBalance as Balance as ofDrawdown of September 1, February 29,
date
2016
2015

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds

Description

June 28,
2013

0.571

June 30,
2020

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

0.538

July 31,2019

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

0.835

July 30,
2021

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

August 31,
2022
September 25,
2019
June 30,
2022
July 31,2023
August 31,
2023
August 31,
2022
August 31,
2023
February 29,
2024
February 29,
2024
February 28,
2025
February 29,
2024

Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity

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

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(mm of yen)Aozora Bank
Mizuho Bank
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

July 31,2014

August 29,
2014
The Bank of Tokyo- Mitsubishi September 25,
2014
UFJ
Sumitomo Mitsui Banking
June 30,
2015
Corporation
July 31,
Sumitomo Mitsui Trust Bank
2015
August 31,
Development Bank of Japan2015
August 31,
The Bank of Fukuoka
2015
August 31,
The Nishi-Nippon City Bank
2015
February 29,
The Bank of Fukuoka
2016
February 29,
The Nishi-Nippon City Bank
2016
February 29,
Development Bank of Japan2016
February 29,
Mizuho Bank
2016
Subtotal
Total

Development Bank of Japan

Long-term
debt(mm of yen)

(Note 1)

1,000

1,000

200
3,000
500
2,300
1,000
1,400
800
500
300

200
3,000
500
2,300
1,000
1,400
800
500
300

4,000

4,000

1.010

500

500

0.520

1,600

1,600

0.790

1,500

1,500

0.611

4,000

4,000

0.880

400

400

0.521

400

400

0.870

–

2,000

0.450

–

2,000

0.440

–

2,000

0.620

–

500

0.440

58,90070,40060,22570,325(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 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. Furthermore, as the 150 million yen scheduled for repayment within a year is included in Long-term debt for the convenience of comparison, the balances do not match thefigures recorded on the balance sheet as Current maturities of long-term debt and Long-term debt payable.

3. Investment corporation bonds
As of February 29, 2016, FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Balance as of
Balance as of
Decrease during
September 1,
February 29,
the fiscal period
2015
2016
(mm of yen)
(mm of yen)First Series ofDecember 30,
Unsecured Bonds
2013

2,000

CouponMaturitydate

Maturity
methodUse

Description

1.32

December 29,
2023

Lump-sumupon maturity

Repaymentof debt

No collateral/
No guarantee(%)(mm of yen)

–

2,000

(Note 1)

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

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

5. Subscription rights to shares
No relevant items.
FUKUOKA REIT CORPORATION

19(Note 2)

II. Semiannual Report

Acquisitions and Sales during the 23rd Fiscal Period
1. Acquisition and sale of real estate, asset-backed securities,
infrastructure assets, etc. and infrastructure-related assets, etc.
No relevant items.

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

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

(2) 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.

4. Transactions with interested parties, etc.
(1) Transaction status
No relevant items.

(2) Amount of fees paid, etc.
FRC paid the following fees to the interested parties, etc. during the 23rd fiscal period.
Category

Total paid fees(A)(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(B)/(A)(%)(thousands of yen)

Fukuoka Jisho Co., Ltd.
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
290,704
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,277,732 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,237,783 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.

9,992
1,380
180,489
97,898924,737
190,541
61,711
237,448
189,726568

18,932

52.8
7.3
62.1
33.7
72.4
14.9
4.8
19.2
15.3
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 23rd
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.
14,823 thousand yen
Park Place Oita Co., Ltd.
5,317 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 23rd fiscal period. The amounts include construction
work fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd.
688,677 thousand yen
Park Place Oita Co., Ltd.
118,290 thousand yen
Sunlife Co., Ltd.
40,062 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.

FUKUOKA REIT CORPORATION

20

II. Semiannual Report

Acquisitions and Sales during the 23rd Fiscal Period
5. Transactions with the asset management company regarding
concurrent work conducted by the asset management company
The asset management company (Fukuoka Realty Co., Ltd.) concurrently conducts land and building transaction business but
there was no relevant transaction conducted in the 23rd fiscal period. Moreover, the asset management company does notconcurrently conduct any of the class 1 financial instruments transaction business, class 2 financial instruments transaction
business or real estate syndication business, and has no such transactions with FRC.

Overview of Accounting
1. Assets, liabilities, principal and profits/loss
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
No relevant items.

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. Notice
Partial amendments were made to the general administration entrustment agreement and the special account administrationagreement concluded with Sumitomo Mitsui Trust Bank, Limited in response to the enforcement of the Act on the Use of
Numbers to Identify a Specific Individual in the Administrative Procedure (Act No. 27 in 2013 including later revisions).

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

FUKUOKA REIT CORPORATION

21

III. Independent Auditor's Report

FUKUOKA REIT CORPORATION

22

IV. Balance Sheet(thousands of yen)
23rd fiscal period

22nd fiscal period

Account(as of August 31, 2015)(as of February 29, 2016)

AssetsCurrent assets
Cash and deposits

2,331,908

3,513,400

Cash and deposits in trust

5,267,938

4,905,852

Operating accounts receivable

434,567

372,912Prepaid expenses

267,938

284,075

Consumption taxes receivable

246,657–

Deferred tax assets

62

8

4,536

6,442

8,553,609

9,082,690

OthersTotal current assets
Noncurrent assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation*1

83,847,220(19,606,745)

Structures in trust

1,475,281

Accumulated depreciation(521,623)

Machinery and equipment in trust

618,646

Accumulated depreciation(262,400)

Vehicles and transport equipment in trust
Accumulated depreciation

64,240,475

Accumulated depreciation(926,118)(20,966,851)

953,657(559,477)

356,245(284,920)

63,454,811
918,185

638,321353,400

747(198)
1,250,581

84,421,663
1,477,663

747

Tools and fixtures in trust
Lands in trust

*1

548

(246)

500

1,274,834
324,463*1

104,756,397(973,210)

301,623*1

104,756,397

10,276

19,571

170,642,063

169,804,490

1,765,318

1,765,318

8,976

5,633

1,774,294

1,770,951

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

110,000

110,000

Long-term prepaid expenses

456,882

628,962

Total investment and other assets

576,882748,962

172,993,240

172,324,405

Investment corporation bond issuance expenses

16,375

15,392

Investment unit issuance expenses

34,53823,383

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

Total noncurrent assets
Deferred assets

Total deferred assets
Total assets

50,91338,776

181,597,763

181,445,872

FUKUOKA REIT CORPORATION

23

IV. Balance Sheet(thousands of yen)Account

23rd fiscal period

22nd fiscal period(as of August 31, 2015)(as of February 29, 2016)

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

726,913667,486

11,650,000

10,250,000

Accounts payable - other32,13423,963

Accrued expenses

351,432

353,001

Income taxes payable

1,744

736

Accrued consumption taxes–

321,550

Advances received

1,014,843

1,004,199

Deposits received

1,049,290

777,866

Total current liabilities

14,826,359

13,398,803

Investment corporation bonds

2,000,000

2,000,000

Long-term debt payable

58,750,000

60,075,000

Noncurrent liabilities

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

331,243*1

Total noncurrent liabilities
Total liabilities

11,885,673

331,243*1

11,828,272

72,966,916

74,234,515

87,793,276

87,633,318

91,142,766

91,142,766

2,661,720

2,669,786

Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated surplus
Total surplus
Total unitholders’ equity
Total net assets*3

Total liabilities and net assets

2,661,720

2,669,786

93,804,487

93,812,553

93,804,487
181,597,763

FUKUOKA REIT CORPORATION

24*393,812,553
181,445,872

V. Statement of Income(thousands of yen)
22nd fiscal period

Account

23rd fiscal period(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)

Operating revenues
Leasing revenues - real estate*1

7,902,500

Other leasing revenues - real estate*1

520,821*1, *2

4,651,490

8,423,321*1

7,864,570*1

478,927

8,343,498

Operating expenses
Expenses related to leasing business
Asset management fees

*1, *2486,520

4,577,406
493,021

Asset custody fees

6,327

6,772

Administrative service fees

47,76752,472

Director’s compensations

9,600

9,600

Other operating expenses

54,600Operating income

5,256,307

62,612

3,167,014

5,201,885
3,141,613

Non-operating revenues
Interest received
Others

706

780

1,302

2,009

2,566

3,346

Non-operating expenses
Interest expenses

374,293

345,071

Interest expenses on investment corporation bonds

13,296

13,200

Amortization of investment corporation bond issuance
expenses982

982

Amortization of investment unit issuance expenses

10,21911,154

Financing related expenses

106,699

104,000

Others15505,50615

474,423

Ordinary income

2,663,517

2,670,536

Net income before income taxes

2,663,517

2,670,536

Income taxes-current

1,886

Income taxes-deferred(53)

Profit

855
1,833

53

908

2,661,683

2,669,627

Surplus brought forward

37

159

Unappropriated surplus

2,661,720

2,669,786

FUKUOKA REIT CORPORATION

25

VI. Statement of Changes in Net Assets
22nd fiscal period (March 1, 2015 to August 31, 2015)
Item
Balance as of March 1, 2015
Changes in the current fiscal period
Issuance of new investment units
Dividend of surplus
ProfitTotal of changes in the current fiscal period
Balance as of August 31, 2015

Unitholders’ capital
79,441,236(thousands of yen)
Unitholders’ Equity
Surplus
Unappropriated surplus
2,370,187

11,701,530

11,701,530
91,142,766(2,370,150)
2,661,683
291,533
2,661,720

Total unitholders’ equity
81,811,423

81,811,423

11,701,530(2,370,150)
2,661,683
11,993,063
93,804,487

11,701,530(2,370,150)
2,661,683
11,993,063
93,804,487

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

Item
Balance as of September 1, 2015
Changes in the current fiscal period
Dividend of surplus
ProfitTotal of changes in the current fiscal period
Balance as of February 29, 2016

Total net assets(thousands of yen)
Total unitholders’ equity

91,142,766

Unitholders’ Equity
Surplus
Unappropriated surplus
2,661,720

93,804,487

93,804,487–
91,142,766(2,661,561)
2,669,627
8,066
2,669,786(2,661,561)
2,669,627
8,066
93,812,553(2,661,561)
2,669,627
8,066
93,812,553

Unitholders’ capital

FUKUOKA REIT CORPORATION

26

Total net assets

VII. Cash Flow Statement(thousands of yen)
22nd fiscal period

Account

23rd fiscal period(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)

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

2,663,517

2,670,536

Depreciation and amortization expenses

1,458,153

1,471,072

Amortization of investment corporation bond issuance expenses
Amortization of investment unit issuance expenses

982

982

10,21911,154

Interest received

(706)

(780)

Interest expenses

387,590358,271

Decrease (increase) in operating accounts receivable(115,889)

61,654

Decrease (increase) in consumption taxes receivable(246,657)

246,657

Increase (decrease) in accrued consumption taxes(168,301)

321,550

Increase (decrease) in operating accounts payable

159,326(145,288)

Increase (decrease) in accounts payable-other(8,290)9,219

Increase (decrease) in accrued expenses

20,828

1,824

Increase (decrease) in advances received

84,824(10,644)

Increase (decrease) in deposits expenses

375,869(271,423)

Decrease (increase) in prepaid expenses(19,723)(16,137)

Decrease (increase) in long-term prepaid expenses(45,515)(172,080)

Others, net(1,630)(2,806)

Subtotal

4,554,594

4,533,761

706

780

(387,405)(358,527)(876)(1,863)

4,167,019

4,174,151(14,543,468)(549,764)

21,09630

Interest 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 in trust
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits(5,884)(30)

Proceeds from tenant leasehold and security deposits in trust

837,785

74,447

Repayments of tenant leasehold and security deposits in trust(784,680)(131,849)

Payments of tenant leasehold and security deposits in trust(10,000)–

Proceeds from restricted trust deposits

5,534

5,507

Payments for restricted trust deposits(8,890)(5,065)(14,488,507)(606,723)

Proceeds from short-term debt payable

21,500,000–

Repayments of short-term debt payable(21,500,000)–

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

Proceeds from long-term debt payable

7,900,000

6,500,000

Repayments of long-term debt payable(6,275,000)(6,575,000)

Proceeds from issuance of investment units

11,701,530–

Payment of investment unit issuance expenses(22,261)(11,411)

Dividends paid

(2,369,757)(2,661,169)

Net cash provided by (used in) financial activities

10,934,511(2,747,581)

Net increase (decrease) in cash and cash equivalents

613,023

819,846

Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period

6,920,356
7,533,380*1

FUKUOKA REIT CORPORATION

27

7,533,380*1

8,353,226

VIII. Notes to Financial Statements(Significant accounting policies)
1. Depreciation method for noncurrent assets(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The useful lives of major categories of property, plant and equipment are as follows:
Buildings in trust:
10 – 50 years
Structures in trust:
15 – 50 years
Machinery and equipment in trust:
15 – 17 years
Vehicles and transport equipment in trust:
7 years
Tools and fixtures in trust:5 – 15 years(2) Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.

2. Accounting for deferred assets

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

3. Standards for recognition of revenues and expenses

Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses themethod of charging the corresponding amounts of assessed taxes to the current fiscal period as
expenses related to leasing business.

4. Method of hedge accounting(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.

5. 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.

6. Other significant items fundamental to preparing
the financial 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

28

VIII. Notes to Financial Statements(Notes to balance sheet)*1. Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:(thousands of yen)
22nd fiscal period

23rd fiscal period

as of August 31, 2015

Buildings in trust
Lands in trust

as of February 29, 2016

6,703,703
16,101,020
22,804,724

Total

6,579,940
16,101,020
22,680,961

Secured liabilities are as follows:(thousands of yen)
22nd fiscal period

23rd fiscal period

as of August 31, 2015

Tenant leasehold and security deposits
received in trust

as of February 29, 2016

1,981,957

1,949,584

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)
22nd fiscal period

23rd fiscal period

as of August 31, 2015

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of February 29, 2016

6,000,000–

6,000,000–

6,000,000

6,000,000[Committed line of credit agreement 2](thousands of yen)
22nd fiscal period

23rd fiscal period

as of August 31, 2015

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of February 29, 2016

7,000,000–

7,000,000–

7,000,000

7,000,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
(thousands of yen)
22nd fiscal period

23rd fiscal period

as of August 31, 2015

as of February 29, 2016

50,00050,000FUKUOKA REIT CORPORATION

29

VIII. Notes to Financial Statements(Notes to statement of income)*1. Breakdown of revenues and expenses related to real estate leasing business.
(thousands of yen)
22nd fiscal period

23rd fiscal period

6,403,867
1,076,907
421,726

6,381,060
1,065,731
417,778(March 1, 2015 toAugust 31, 2015)

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, 2015 toFebruary 29, 2016)

7,902,500

478,940
41,880442,763
36,164

520,821
8,423,321

1,668,605
248,273597,541
57,441
466,266
1,458,153
155,208

1,568,436
298,942596,494
57,757423,772
1,471,072
160,931

4,651,490
4,651,490
3,771,831*2. Transactions with affiliated companies.

(thousands of yen)
22nd fiscal period

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

Expenses related to real estate leasing business(September 1, 2015 toFebruary 29, 2016)

1,555,181

1,528,328(Notes to statement of changes in net assets)
Total number of authorized investment units and total number of investment units issued.
22nd fiscal period

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

Total number of authorized investment units
Total number of investment units issued(September 1, 2015 toFebruary 29, 2016)

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)
22nd fiscal period

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

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents(September 1, 2015 toFebruary 29, 2016)

2,331,908
5,267,938(66,467)
7,533,380

3,513,400
4,905,852(66,025)
8,353,226(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

FUKUOKA REIT CORPORATION

30

7,864,570

478,927
8,343,498

4,577,406
4,577,406
3,766,091

VIII. Notes to Financial Statements(Notes to leases)
The future lease revenues under the non-cancellable operating leases are as follows:(thousands of yen)

22nd fiscal period

23rd fiscal period

as of August 31, 2015

Due within 1 year
Due after 1 year

as of February 29, 2016

6,233,828
27,605,287
33,839,116

Total

5,817,702
26,099,897
31,917,600(Notes to financial instruments)
1. Matters concerning status of financial instruments(1) Policy on handling financial instruments
In order to secure stable earnings and steady growth of assets under management, FRC procures funds primarily throughborrowings from financial institutions, issuance of investment corporation bonds or issuance of investment units 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.
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.
(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.
FUKUOKA REIT CORPORATION

31

VIII. Notes to Financial Statements

2. Matters concerning fair value of financial instruments
The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding
fair values and the difference between these amounts as of August 31, 2015. 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
2,331,908
5,267,938
7,599,847–
11,650,000
2,000,000
58,750,000
1,240,273
73,640,273––

Fair value(Note 1)2,331,908
5,267,938
7,599,847–
11,769,869
2,099,325
59,481,598
1,234,116
74,584,908––

Difference––––
119,869
99,325
731,598(6,157)
944,635––

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 29, 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
3,513,400
4,905,852
8,419,252–
10,250,000
2,000,000
60,075,000
1,199,566
73,524,566––

Fair value(Note 1)

3,513,400
4,905,852
8,419,252–
10,352,631
2,120,088
60,712,714
1,197,970
74,383,404––

Difference––––
102,631
120,088637,714(1,596)
858,838––(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)

FUKUOKA REIT CORPORATION

32

VIII. Notes to Financial Statements(Note 2) Financial instruments for which determination of fair value is considered extremely difficult.

(thousands of yen)

22nd fiscal period

23rd fiscal period

as of August 31, 2015

Tenant leasehold and security deposits
received in trust

as of February 29, 2016

10,645,399

10,628,705

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 thefair value.
This is because future cash flows cannot be estimated since there is no market price and it is difficult to assume the reimbursement dates due to the possibility ofcancellation, renewal and re-execution of lease contracts by lessees even if the contract terms are fixed, and because the past rate of tenants moving out of theproperties 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, 2015).
(thousands of yen)Due in 1 year or less
2,331,908
5,267,938
7,599,847

Cash and deposits
Cash and deposits in trust
Total

Amount of redemption of monetary claims scheduled to be due after closing of accounts (February 29, 2016).
(thousands of yen)Due in 1 year or less
3,513,400
4,905,852
8,419,252

Cash and deposits
Cash and deposits in trust
Total(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, 2015).
(thousands of yen)
Long-term debt
Investment
corporation bonds

Due in 1 year or less
11,650,000–

1 to 2 years
20,450,000–

2 to 3 years
10,200,000

3 to 4 years
4,200,000––

4 to 5 years
5,700,000–

Due after 5 years
18,200,000
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 29, 2016).
(thousands of yen)
Long-term debt
Investment
corporation bonds

Due in 1 year or less
10,250,000–

1 to 2 years
23,875,000–

2 to 3 years
2,100,000

3 to 4 years
8,400,000–

FUKUOKA REIT CORPORATION–

33

4 to 5 years
1,000,000–

Due after 5 years
24,700,000
2,000,000

VIII. Notes to Financial Statements(Notes to derivative transactions)
1. Derivatives to which hedge accounting is not applied
22nd fiscal period (as of August 31, 2015)
Not applicable.

23rd fiscal period (as of February 29, 2016)
Not applicable.

2. Derivatives to which hedge accounting is applied
22nd fiscal period (as of August 31, 2015)
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.
(thousands of yen)
Method of hedge accounting
Special accounting for interest rate swaps

Contract amount, etc.
Calculation
Fair value method for theOf which,fair value
exceeding 1 year

Type of derivative transactions, etc. Main hedged item
Interest rate swap transaction
Payable fixed; Receivable floating

Long-term debt

22,500,000

20,500,000–(*)(*) 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)).

23rd fiscal period (as of February 29, 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.
(thousands of yen)
Method of hedge accounting
Special accounting for interest rate swaps

Contract amount, etc.
Calculation
Fair value method for theOf which,fair value
exceeding 1year

Type of derivative transactions, etc. Main hedged item
Interest rate swap transaction
Payable fixed; Receivable floating

Long-term debt

24,500,000

24,500,000(*)–(*) 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)).

(Notes to tax effect accounting)
1. Breakdown of primary causes for occurrence of deferred tax assets and deferred tax liabilities.
(thousands of yen)

22nd fiscal period

23rd fiscal period

as of August 31, 2015

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

as of February 29, 2016

62
62
62

8
8
8

2. Breakdown of significant components that caused difference between effective statutory income tax rate and effective income tax rate after application of tax effectaccounting.
(%)
22nd fiscal period

23rd fiscal period

as of August 31, 2015

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

FUKUOKA REIT CORPORATION

as of February 29, 2016

33.94
(33.92)
0.04
0.07

34

32.11
(32.10)0.02
0.03

VIII. Notes to Financial Statements

3. Tax rate changes after closing of accounts.
With the Act Concerning Partial Amendment of the Income Tax Act, Etc. (Act No. 15 of 2016) and the Act Concerning Partial Amendment of the Local Tax Act, Etc. (ActNo. 13 of 2016) promulgated on March 31, 2016, the income tax rate will be lowered, effective for the fiscal period starting on or after April 1, 2016. In accordance with
this, the effective statutory tax rate used to calculate deferred tax assets and deferred tax liabilities concerning temporary differences that are expected to be reversed inand after the fiscal period starting September 1, 2016 will be changed from 32.11% to 31.35%. The tax rate change will have only a minor impact on FRC.

(Notes to transactions with related parties)
1. Transactions with related parties(1) Parent company and major corporate unitholders
22nd fiscal period (from March 1, 2015 to August 31, 2015)(thousands of yen)Classification

Name

Location

Capital

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

Generalreal estatebusiness

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

Ownership in
FRC
Direct[8.67%]

Indirect[1.17%]

Description ofrelationship

Description of Transaction
Categorytransaction
amountPurchase ofreal estate(Note 1)

Consignmentof real estateConsignment
management, etc. of real estate
management,
etc. (Note 2)

5,840,000(Note 4)

1,555,181(Note 4)

Balanceat end ofperiod––Operatingaccounts
payable215,314(Note 4)(Note 1) Transaction terms and conditions are determined in reference to appraisal values by third parties and after negotiating on prices.
(Note 2) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 3) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for 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.

23rd fiscal period (from September 1, 2015 to February 29, 2016)(thousands of yen)Classification

Other affiliates

Name

Location

Capital

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

Generalreal estatebusiness

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

Ownership in
FRC
Direct[8.85%]

IndirectDescription ofrelationship

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

1,528,328(Note 3)Operatingaccounts
payableBalanceat end ofperiod145,722(Note 3)[1.00%](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.

(2) Affiliated companies, etc.
22nd fiscal period (March 1, 2015 to August 31, 2015)
Not applicable.

23rd fiscal period (September 1, 2015 to February 29, 2016)
Not applicable.

FUKUOKA REIT CORPORATION

35

VIII. Notes to Financial Statements(3) Sister companies
22nd fiscal period (from March 1, 2015 to August 31, 2015)
(thousands of yen)Classification

Name

Location

CapitalBusiness
description

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

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

Real estatebusiness–

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

Asset
management
200,000of FRCand otherbusinesses–

Description ofrelationship

Description of Transaction
Categorytransaction
amountConsignment
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)

567,497(Note 5)486,520(Note 5)

Balanceat end ofperiodOperatingaccounts
payable136,008(Note 5)

Accruedexpenses

240,649(Note 5)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded 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.

23rd fiscal period (from September 1, 2015 to February 29, 2016)(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)

534,780–

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

493,021(Note 5)(Note 5)

Balanceat end ofperiodOperatingaccounts
payable103,766

Accruedexpenses

239,080(Note 5)(Note 5)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded 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.

(4) Directors and major individual unitholders
22nd fiscal period (March 1, 2015 to August 31, 2015)
Not applicable.

23rd fiscal period (September 1, 2015 to February 29, 2016)
Not applicable.

FUKUOKA REIT CORPORATION

36

VIII. Notes to Financial Statements

2. Parent company and major affiliated companies
22nd fiscal period (March 1, 2015 to August 31, 2015)
Not applicable.

23rd fiscal period (September 1, 2015 to February 29, 2016)
Not applicable.

(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)
22nd fiscal period

Use

Retail(March 1, 2015 toAugust 31, 2015)

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

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

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

101,444,917
5,347,690
106,792,608
113,234,000

106,792,608(337,924)
106,454,683
113,936,000

44,261,050(277,083)
43,983,967
52,260,000

43,983,967(345,509)
43,638,457
53,280,000

13,559,539
8,080,243
21,639,782
23,690,000

21,639,782(157,481)
21,482,301
24,170,000

159,265,508
13,150,850
172,416,358
189,184,000

172,416,358(840,915)
171,575,442
191,386,000(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 22nd fiscal period, the amount of increase is primarily attributable to the acquisition of new properties (14,163 million yen in total) and capital expenditures (445million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,458 million yen). Of the amount of change during the 23rd fiscal period, the amount of
increase is primarily attributable to capital expenditures (630 million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,471 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers.

FUKUOKA REIT CORPORATION

37

VIII. Notes to Financial Statements

The following table provides the income (loss) from properties for lease.
(thousands of yen)
22nd fiscal period

Use

RetailOffice buildings

OthersTotal(March 1, 2015 toAugust 31, 2015)

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 business23rd fiscal period(September 1, 2015 toFebruary 29, 2016)

5,459,799
3,095,364
2,364,435

5,349,509
3,056,023
2,293,485

2,213,552
1,224,723
988,8292,217,378
1,190,348
1,027,029

749,970
331,402418,567

776,609
331,033
445,575

8,423,321
4,651,490
3,771,831

8,343,498
4,577,406
3,766,091(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,
respectively.

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

[Related information]

22nd fiscal period (from March 1, 2015 to August 31, 2015)(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 revenue
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating
revenues recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of
property, plant and equipment recorded on the balance sheet.

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

FUKUOKA REIT CORPORATION

38

VIII. Notes to Financial Statements

23rd fiscal period (from September 1, 2015 to February 29, 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 revenue
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating
revenues recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of
property, plant and equipment recorded on the balance sheet.

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

(Notes to per unit information)
22nd fiscal period(March 1, 2015 to August 31, 2015)

Net assets per unit (yen)Profit per unit (yen)23rd fiscal period(September 1, 2015 to February 29, 2016)

125,574
3,649

125,585
3,573(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:

22nd fiscal period(March 1, 2015 to August 31, 2015)

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)

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

2,661,683–
2,661,683
729,3422,669,627–
2,669,627
747,000(Notes to cash distributions)
Account(thousands of yen)
23rd fiscal period

22nd fiscal period(March 1, 2015 to August 31, 2015)(September 1, 2015 to February 29, 2016)

I. Unappropriated surplus

2,661,720

2,669,786

II. Total dividend

2,661,561[3,563 yen]

2,669,778[3,574 yen]

159

8

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 67-15
of the Act on Special Taxation Measures.
Following the above policy, FRC proposed to distribute
2,661,561 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15
of the Act on Special Taxation Measures.
Following the above policy, FRC proposed to distribute
2,669,778 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

[Dividend per unit]

III. Surplus brought forward

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

(Notes to significant subsequent events)
The earthquakes that have occurred on and since April 14, 2016, with epicenters located in the Kumamoto area of Kumamoto
Prefecture, have caused damages to Kumamoto Intercommunity SC, a property owned by FRC.
While there has not yet been sufficient time to complete an assessment of the damages caused by the earthquakes andcalculate the impact on FRC's operations, FRC anticipates accrual of costs for restoration work in future periods.
Furthermore, although the cost of the damages is currently under investigation, the property is covered by earthquake
insurance.
FUKUOKA REIT CORPORATION

39

VIII. Notes to Financial Statements(Schedule of securities)
No relevant items.

(Schedule of contract amount, etc. and fair value of derivativetransactions and forward exchange transactions)(thousands of yen)
Category

Type

Special accounting for interest rate swaps

Interest rate swap transaction
Payable fixed; Receivable floating

Total

Contract amount, etc.
Of which,(Note 1)exceeding 1year

Fair value

24,500,000

24,500,000(355,095)

24,500,000

24,500,000(355,095)(Note 2)

(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.

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

Increase

Decrease

Balance as ofFebruary 29,
2016

Accumulated Depreciation for
depreciation
the period

Net property
andequipment

Description

Buildings in trust

83,847,220

574,904462

84,421,663

20,966,851

1,360,215

63,454,811(Note)

Structures in trust

1,475,281

2,381

–

1,477,663

559,477

37,854

918,185(Note)

Machinery andequipment in trust

618,646

19,674–

638,321284,920

22,520353,400(Note)

747

–

–

747

246

47

500

1,250,581

24,253–

1,274,834

973,210

47,092

301,623

104,756,397––

104,756,397––

104,756,397

10,276

9,295–

19,571––

19,571

Vehicles andTotal property, transport
plant and equipment in trust
equipment Tools and fixturesin trust

Land in trust
Construction inprogress in trust

191,959,151

630,509462

192,589,198

22,784,707

1,467,729

169,804,490

Leasehold right in
trust

1,765,318––

1,765,318––

1,765,318

Other intangible
assets in trust

33,426––33,426

27,792

3,342

5,633

Subtotal

Total
intangible
assetsBalance as of
September 1,
2015

Subtotal
Total

1,798,744––

1,798,744

27,792

3,342

1,770,951

193,757,895

630,509462

194,387,942

22,812,500

1,471,072

171,575,442(Note)(Note)(Note) The main increase and decrease in the 23rd fiscal period are due to construction work at properties and retirement of assets, respectively.

(Schedule of other specified assets)
No relevant items.

(Schedule of investment corporation bonds)
Issue

First Series ofUnsecured Bonds

Issue date

December 30,
2013

Balance as
Decrease
Balance as ofof September 1, during the fiscal February 29,
2015
period2016(thousands of yen)(thousands of yen)(thousands of yen)

2,000,000–

2,000,000

Coupon(%)

Maturity date

Maturity
methodUse

Description

1.32

December 29,
2023

Lump-sumupon maturity

Repayment ofdebt

No collateral/
No guarantee(Note 1)

(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 CORPORATION

40(Note 2)

VIII. Notes to Financial Statements(Schedule of debt)
Category
Lender(thousands of yen)

Decrease

Use of funds

Description(thousands of yen)

2,000,000–

2,000,000

–

0.621

February 29, 2016

Acquisition fundNo collateral/ No guarantee

The Nishi-Nippon CityBank
Development Bank ofJapan

2,000,000–

2,000,000

–

0.774

February 29, 2016

Acquisition fundNo collateral/ No guarantee

2,000,000–

2,000,000

–

0.771

February 29, 2016

Acquisition fundNo collateral/ No guarantee

500,000–

500,000–

1.117

February 29, 2016

Refinance fundNo collateral/ No guarantee

Development Bank ofJapan

4,000,000––

4,000,000

2.170

August 31, 2016

Refinance fundNo collateral/ No guarantee

Shinsei Bank

1,000,000––

1,000,000

1.208

July 29, 2016

Refinance fundNo collateral/ No guarantee

The Bank of Fukuoka–

1,500,000–

1,500,000

0.621

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–

600,000–

600,000

0.571

September 30, 2016

Refinance fundNo collateral/ No guarantee

Subtotal

11,500,000

5,100,000

6,500,000

10,100,000

Development Bank ofJapan

2,100,000–

75,0002,025,000

2.200(Note 2)

Refinance fundNo collateral/ No guarantee

The Bank of Fukuoka

1,500,000–

1,500,000

–

0.621

December 30, 2016

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

2,000,000––

2,000,000

1.305

July 31, 2017

Refinance fundNo collateral/ No guarantee

1,000,000––

1,000,000

1.800

July 31, 2018

Refinance fundNo collateral/ No guarantee

The Bank of Fukuoka

1,500,000––

1,500,000

0.771

December 30, 2017

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

500,000––

500,000

1.338

January 31, 2019

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

The Nishi-Nippon CityBank

1,000,000––

1,000,000

The Oita Bank

700,000––

700,000

The Miyazaki Bank

700,000––

700,000

0.858

June 30, 2017

Refinance fundNo collateral/ No guarantee

The Shinwa Bank

600,000––

600,000

The Nishi-Nippon CityBank
The Dai-Ichi Life
Insurance Company

Long-term
debt

2015

Balance as of
AverageFebruary 29,
interest
rate Repayment date(thousands of yen) (thousands of yen)2016(%) (Note 1)
Increase

The Bank of Fukuoka

Mizuho Bank

Current
maturitiesoflong-term
debt

Balance asof September 1,

Sumitomo Mitsui Banking
Corporation
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation

The Iyo Bank

500,000––

500,000

The Bank of Saga

500,000––

500,000

FUKUOKA REIT CORPORATION

41

VIII. Notes to Financial Statements

Category
LenderBalance asof September 1,

2015(thousands of yen)

Balance as of
AverageFebruary 29,
interest rate Repayment date(thousands of yen) (thousands of yen)2016(%) (Note 1)
Increase

Decrease

Use of funds

Description(thousands of yen)

The Eighteenth Bank

500,000––

500,000

The Kitakyushu Bank

500,000––

500,000

Sumitomo Mitsui TrustBank

600,000–

600,000

Resona Bank

2,000,000–

The Nishi-Nippon CityBank
The Nishi-Nippon CityBank

2,500,000

0.858

June 30, 2017

Refinance fundNo collateral/ No guarantee

–

0.571

September 30, 2016

Refinance fundNo collateral/ No guarantee–

2,000,000

1.033

September 29, 2017

Refinance fundNo collateral/ No guarantee––

2,500,000

0.775

February 29, 2020

Acquisition fundNo collateral/ No guarantee

1,900,000––

1,900,000

0.671

February 28, 2018

Refinance fundNo collateral/ No guarantee

Mizuho Bank

1,700,000––

1,700,000

0.671

February 29, 2020

Refinance fundNo collateral/ No guarantee

Sumitomo Mitsui TrustBank
Mitsubishi UFJ Trust andBanking Corporation

1,100,000––

1,100,000

0.721

February 28, 2018

Refinance fundNo collateral/ No guarantee

1,500,000––

1,500,000

0.521

February 28, 2018

Refinance fundNo collateral/ No guarantee

Aozora Bank

600,000––

600,000

0.521

February 28, 2018

Refinance fundNo collateral/ No guarantee

Mitsubishi UFJ Trust andBanking Corporation

600,000––

600,000

0.521

March 30, 2018

Refinance fundNo collateral/ No guarantee

Aozora Bank

1,000,000––

1,000,000

0.571

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

0.835

July 30, 2021

Refinance fundNo collateral/ No guarantee

The Norinchukin Bank
The Bank of Saga

500,000––

500,000

2,300,000––

2,300,000

1,000,000––

1,000,000

The Hiroshima Bank

1,400,000––

1,400,000

The Kitakyushu Bank

800,000––

800,000

The Iyo Bank

500,000––

500,000

The Higo Bank

Mizuho Bank

Long-term The Norinchukin Bank
debt

300,000––

300,000

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

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

0.611

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

0.521

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

0.450

February 29, 2024

Refinance fundNo collateral/ No guarantee–

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–

500,000–

500,000

0.440

February 29, 2024

Refinance fundNo collateral/ No guarantee

Subtotal

58,900,000

6,500,000

5,175,000

60,225,000

Total

70,400,000

11,600,000

11,675,000

70,325,000

The Nishi-Nippon CityBank
Development Bank ofJapanMizuho Bank

(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 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. Furthermore, as the 150 million yen scheduled for repayment within a year is included in Long-term debt for the convenience of comparison, the balances do not match thefigures recorded on the balance sheet as Current maturities of long-term debt and Long-term debt payable.
(Note 3) Amount of repayment of long-term debt scheduled to be due within 5 years after closing of accounts.

(thousands of yen)
Long-term debt

1 to 2 years
23,875,000

2 to 3 years
2,100,000

3 to 4 years
8,400,000

FUKUOKA REIT CORPORATION

4 to 5 years
1,000,000

42

VIII. Notes to Financial Statements

FUKUOKA REIT CORPORATION

43