Provisional translation only
April 13, 2020

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

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

Representative:

Etsuo Matsuyuki

Asset manager:
Representative:
Contact:

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

CEO & Representative Director

Expected date for submitting securities report:
May 29, 2020
Expected commencement date of dividend payments:
May 18, 2020
Supplementary documents for earnings briefing
Yes
Analyst meeting (for institutional investors and analysts) Yes(Figures rounded down to nearest mm yen)

1. Performance and situation of assets for the period ended February 2020
(September 1, 2019 to February 29, 2020)(1) Performance(% shows percentage change from previous period)

Operating revenues
mm of yen
Period ended

February 2020
Period ended

August 2019

Operating income%

mm of yen

Ordinary income%

mm of yen

Profit%mm of yen

%

9,162

(0.7)

3,273

(1.3)

2,900

(1.4)

2,899

(1.4)

9,231

(0.1)

3,318

0.4

2,939

0.1

2,939

0.1

Profit per unit
Period ended

February 2020
Period ended

August 2019

Return on net assets

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

3,642 yen

2.8%

1.5%

31.7%

3,692 yen

2.9%

1.5%

31.8%

(2) Dividends

Period ended

February 2020
Period ended

August 2019

Dividend
per unit

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

Dividendin excess ofearnings
per unit

Total
dividendin excess ofearnings

Dividend
per unit

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

Ratio of

Payout dividend
to netratio
assets3,642 yen 2,899 mm yen— yen — mm yen

3,642 yen 2,899 mm yen 100.0%

2.8%

3,693 yen 2,939 mm yen— yen — mm yen

3,693 yen 2,939 mm yen 100.0%

2.9%(3) Financial condition
Period ended

February 2020
Period ended

August 2019

Ratio of net assets tototal assets

Total assets

Net assets

194,795 mm yen

101,837 mm yen

52.3%

127,937 yen

195,106 mm yen

101,878 mm yen

52.2%

127,987 yen

Net assets per unit

(4) Cash flows condition

Period ended

February 2020
Period ended

August 2019

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of cash andcash equivalents at
end of period

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

10,032 mm yen

4,863 mm yen(1,043) mm yen(2,933) mm yen

9,205 mm yen

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

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

Operating revenues Operating income

Period ending

August 2020
Period ending

February 2021%

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

Dividendin excess ofearnings
per unit

8,893

(2.9)

2,887 (11.8)

2,509 (13.5)

2,508 (13.5) 3,150 yen

— yen

9,240

3.9

3,288

2,906 15.8

2,905 15.8 3,650 yen— yen

Period ending August 2020
Period ending February 2021

mm of yen

Dividend
per unit

%

13.9

%

Profitmm of yen

(Reference) Forecast profit per unit:
Forecast profit per unit:

mm of yen

Ordinary income

3,150 yen
3,650 yen

3. Other(1) Changes in accounting policies, changes in accounting estimates and restatement of accounting errors(i) Changes in accounting policies accompanying amendments to accounting standards, etc.: No(ii) Changes in accounting policies other than above (i):No
(iii) Changes in accounting estimates:No(iv) Restatement of accounting errors:No(2) Number of investment units outstanding(i) Number of investment units outstanding at end of period (including treasury investment units):
As of February 2020
796,000 units
As of August 2019
796,000 units(ii) Treasury investment units at end of period:
As of February 2020
0 unitAs of August 2019
0 unitNote: Regarding the number of investment units, a basis for calculating profit per unit, please refer to “Per unit information,” on page11.

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

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

1. Management Situation(1) Summary of the current fiscal period(a) Brief history of the investment corporation
Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on Investment
Trusts and Investment Corporations” (Act No. 198 in 1951 including later revisions) and listed on the Tokyo Stock
Exchange Group Inc. and the Fukuoka Stock Exchange on June 21, 2005 as the nation’s first real estate
investment trust specializing in regional properties (code number: 8968). FRC invests in real estate throughout allof Kyushu (including Okinawa Prefecture) with a central focus on Fukuoka City and Yamaguchi Prefecture(hereinafter the “Fukuoka/Kyushu area) by turning regional characteristics in the real estate industry into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retailin Canal City Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common space), a
commercial complex where specialty shops, cinema complex, theaters, amusement facilities, hotels and offices
are integrally developed (hereinafter “Canal City Hakata”). As of the end of the current fiscal period (February 29,2020), FRC manages a total of 29 properties comprising 11 Retail, 8 Office buildings and 10 Others.
(b) Investment environment and portfolio performance
During the fiscal period under review (the 31st fiscal period), the Japanese economy was recovering moderately,
but has recently been put in a severe situation, significantly pushed down by the impact of novel corona virus(COVID-19) infection. Looking ahead, the severe situation due to the impact of the COVID-19 infection is expected
to continue.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy was expanding
moderately, but is recently on a somewhat weak note, mainly in terms of consumer spending as well as exports
and production, due to the impact of the COVID-19 infection, etc. With regard to the outlook, attention should be
paid to the growing impact of the COVID-19 infection as well as the uncertainties over overseas economies andthe impact of a labor shortage on the supply side, among other factors.
As for land price trends, according to the 2020 Land Market Value Publication, the average rate of change in thenational average increased for the third consecutive year for residential land and increased for the fifth
consecutive year for commercial land and for the combined average for all land types. In Fukuoka City, the central
area of FRC’s investment targets, land prices continued rising for eight consecutive years, up 16.5% year-on-year
for commercial land and up 6.8% 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 properties, and to increase the earning power of office buildings
in Fukuoka City through such measures as upward revision of rents, while focusing on maintaining and increasing
the occupancy rate of its owned properties. As a result of these endeavors, the average occupancy rate of allproperties FRC owns was 99.7% at the end of the 31st fiscal period. In spite of this, the spread of the COVID-19
infection in Japan and abroad resulted in the number of visitors decreasing at its retail properties and theguestroom occupancy rate falling at its hotels since the second half of February 2020.
When analyzing FRC’s portfolio (on an acquisition price basis) as of the end of the 31st fiscal period by investment
target area, the investment ratio in the Fukuoka urban area accounted for 77.2%; when analyzing by property
type, Retail, Office buildings, and Others accounted for 59.2%, 26.9% and 13.9%, respectively.
On top of these efforts, FRC is engaged in promoting sustainability through environment, social and governance(ESG) considerations based on its Sustainability Policy. For this purpose, it has established the Sustainability
Promotion Committee (comprising President/CEO and general managers, Property Management Department,
Investment Department, Finance Department, Planning Department and Compliance Department of the AssetManager), which investigates specific targets and measures and supervises the progress in implementation of
the measures with regard to the internal system, cooperation with related parties outside the company andinformation disclosure policy, etc. On the implementation side, FRC has established the Sustainability Promotion
Office under the sustainability officer (general manager of the Planning Department), who is the person
responsible for the practical aspects concerning the targets set at the Sustainability Committee, and the Office isengaged in continuous operations related to the GRESB Real Estate Assessment (with Green Star and 4 Star
ratings), the Principles for Responsible Investment (PRI) and the Principles for Financial Action for the 21stCentury (PFA21) continuing operations and other initiatives.
(c) Summary of fundraising
As FRC conducted refinancing in the 31st fiscal period, the balance of its interest-bearing debt outstanding(including investment corporation bonds) at the end of the period totaled 77,500 mm yen, with the loan-to-value
ratio (ratio of interest-bearing debt (including investment corporation bonds) to total assets) at 39.8% and the ratioof fixed-interest rate debt (ratio of interest-bearing debt with fixed interest rates (including investment corporation
bonds) to total interest-bearing debt) at 92.4% as of the same date. In addition, with the expiration of thecommitment line agreement (credit limit: 7,000 mm yen) with The Nishi-Nippon City Bank, Ltd. serving as theagent, FRC rearranged the commitment line agreement by extending the commitment period to three years.
Going forward, FRC will continue its endeavors to reduce refinancing risks by dispersing debt repayment dates
and extending debt duration. At the same time, FRC will work to mitigate risks of rising interest rates by shifting
to fixed-interest rate borrowings and through other measures.
1

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

Moreover, the credit ratings assigned to FRC as of the end of the current fiscal period are as follows.
Credit Rating Agency
Rating Type
RatingRating Outlook
Rating and Investment Information, Inc. (R&I)
Issuer Rating
A+
StableJapan Credit Rating Agency, Ltd. (JCR)
Long-term Issuer Rating
AA−
Stable(d) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 9,162 mm yen and operating income after
excluding operating expenses such as expenses related to leasing business and asset management fees totaled
3,273 mm yen. Ordinary income was 2,900 mm yen and profit amounted to 2,899 mm yen. Management decided
to make a dividend of 3,642 yen per unit to meet the requirements of special tax measures for an investment
corporation (as stipulated in Article 67-15 of the Act on Special Measures Concerning Taxation of Japan [Act No.
26 in 1957 including later revisions]). Under this act, an investment corporation is allowed to deduct the maximum
amount of dividends paid to investors from its taxable income.
(2) Forecast for the next fiscal period(a) Portfolio management policy
FRC will further reinforce management and leasing capabilities by cooperating with property managementcompanies including sponsor companies, and secure and maintain the stable operation of the properties bymaking the most use of their advantages.
FRC will make investments based on the basic policy stipulated in its Articles of Incorporation and its basic
philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in “highgrowth potential markets.” By geographic location, of Fukuoka and Kyushu areas, FRC will invest 60% to 90%
of its assets in the Fukuoka urban area since the Fukuoka urban area is expected to have a high population
growth rate in the future. In addition to the Fukuoka urban area, management has decided to actively acquire
properties in major cities if there are regions or properties where FRC can generate investment merits from
community-oriented viewpoints. FRC will acquire high-quality properties with adequate use of its advantages,
such as information gathering ability in the areas, good knowledge of regional properties and close relations withthe local business community and governments, so that investors can continue to invest in FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try tomaintain a solid financial structure.
(b)

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

(c)Performance forecast for the next fiscal period
FRC revises the forecast of performance and dividend per unit for the period ending August 2020 as follows:

Previous forecast (A)Revised forecast (B)Amount of change (C) = (B) - (A)Rate of change (D) = (C) / (A)(Reference)
Period ended February 2020

Operatingrevenues

OperatingincomeOrdinary
incomeProfit9,350 mm yen
8,893 mm yen(457) mm yen(4.9) %

3,309 mm yen
2,887 mm yen(422) mm yen(12.8) %2,930 mm yen
2,509 mm yen(421) mm yen(14.4) %2,929 mm yen
2,508 mm yen(421) mm yen(14.4) %9,162 mm yen

3,273 mm yen

2,900 mm yen

2,899 mm yen

Dividend
per unit

3,680 yen
3,150 yen(530) yen
(14.4) %Dividendin excessof earnings
per unit————

3,642 yen—(excl. dividendin excess ofearnings)

Starting in the second half of February 2020, the spread of the COVID-19 infection in Japan and abroad resulted
in a decrease in the number of visitors/guests and a drop in sales, etc. at some of the retail properties and thehotels that FRC owns. With it presently not possible to make a prediction as to when the spread of the infection
will be contained, FRC expects a decrease in its real estate leasing revenues as sales, etc. of such properties
will continue to drop in April 2020 and onward, and is thus revising the dividend forecast.
The above dividend forecast, which assumes that the impact associated with the spread of the infection will
gradually calm down but still continue through to December 2020, may differ depending on when the spread will
actually be contained.
FRC aims to achieve the following performance goals for the period ending August 2020 (March 1, 2020 toAugust 31, 2020) and the period ending February 2021 (September 1, 2020 to February 28, 2021). Concerning
preconditions for the forecast, please refer to “Preconditions for the performance forecast for the period ending
August 2020 (March 1, 2020 to August 31, 2020) and the period ending February 2021 (September 1, 2020 toFebruary 28, 2021)” on page 3.
Period ending August 2020
Period ending February 2021
Operating revenues
8,893 mm yen
9,240 mm yen
Operating income
2,887 mm yen
3,288 mm yen
Ordinary income
2,509 mm yen
2,906 mm yen
Profit2,508 mm yen
2,905 mm yen
Dividend per unit
3,150 yen
3,650 yen
Dividend in excess of earnings per
— yen
— yen
unit
Note:

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

2

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

Preconditions for the performance forecast for the period ending August 2020 (March 1, 2020 to August 31, 2020)
and the period ending February 2021 (September 1, 2020 to February 28, 2021)
Item
Preconditions
32nd fiscal period: March 1, 2020 to August 31, 2020 (184 days)
Calculation period
33rd fiscal period: September 1, 2020 to February 28, 2021 (181 days)
 It is assumed that there will be 29 properties FRC owns as of February 29, 2020, plus LOGICITY
Assets under
Wakamiya and Higashi Hie Business Center III to be acquired.
management
 In practice, the number may fluctuate due to changes in assets under management.
Total number ofinvestment units It is assumed that there will be no issuance of new investment units until February 28, 2021.
outstanding The balance of interest-bearing debt outstanding at the end of the 32nd fiscal period (August 31,
2020) is expected to total 80,700 mm yen. The loan-to-value ratio (interest-bearing debt / total assets
 100) is expected to stand at around 40.0% (as of February 29, 2020, the loan-to-value ratio stands
at 39.8%).
Interest-bearing debt
and refinancing
 The balance of interest-bearing debt outstanding at the end of the 33rd fiscal period (February 28,2021) is expected to total 80,700 mm yen, the same as the end of the 32nd fiscal period (August 31,
2020). The loan-to-value ratio (interest-bearing debt / total assets  100) is expected to stand ataround 40.0%.
 Of leasing revenues – real estate, revenues from properties FRC has already acquired are calculated
based on tenancy agreements that are valid as of April 13, 2020 by taking into account thecompetitiveness of the properties and the market environment, etc.
Of leasing revenues– real estate, revenues from lease contracts with variable rent such as
percentage-of-sales rent and percentage-of-GOP rent are calculated based on past results by taking
into account such fluctuation factors as sales and GOP of the relevant tenants.
 For leasing revenues – real estate, tenant vacancies are taken into account to a certain extent. It is
Operating revenues
assumed that there will be no rent arrears or non-payments by tenants.
 Starting in the second half of February 2020, the spread of the COVID-19 infection in Japan andabroad resulted in the number of visitors decreasing at retail properties and the guestroom
occupancy rate falling at hotels. With it presently not possible to make a prediction as to when the
spread of the infection will be contained, the downturn in sales, etc. is expected to continue in andafter April 2020. As such, the forecast operating revenues assumes that the impact associated withthe spread of the infection will gradually calm down but still continue through to December 2020, andmay differ depending on when the spread will actually be contained.
 When acquiring properties, the property taxes and city planning taxes for the assets will be
proportionally calculated according to the holding period and adjusted with the former owner.
However, the adjusted amount of the property taxes and city planning taxes to be borne by FRC for
the initial year will not be written off since they will be included in the acquisition cost.
 FRC writes off estimated repair costs expected to be required for buildings for the calculation periods(the 32nd and 33rd fiscal periods). Actual repair costs may differ significantly from the estimatedamounts since there is the possibility that repair costs are incurred urgently due to damages tobuildings caused by unforeseeable factors, repair costs generally differ largely from period to period,
Operating expenses
and repair costs are not regularly incurred.
 Concerning outsourcing expenses, FRC anticipates 1,921 mm yen for the 32nd fiscal period and1,905 mm yen for the 33rd fiscal period.
 Concerning taxes and other public charges, FRC anticipates 742 mm yen for the 32nd fiscal period
and 742 mm yen for the 33rd fiscal period.
 Concerning depreciation and amortization expenses, FRC anticipates 1,691 mm yen for the 32nd
fiscal period and 1,635 mm yen for the 33rd fiscal period.
 Concerning interest expenses (including interest expenses on investment corporation bonds) andNon-operating
expenses related to financing, FRC anticipates 372 mm yen for the 32nd fiscal period and 376 mm
expenses
yen for the 33rd fiscal period.
 Dividend (dividend per unit) is calculated based on the dividend policy stipulated in FRC’s Articles ofIncorporation.
 Dividend per unit may fluctuate due to fluctuations in leasing revenues caused by changes in assets
under management and tenants or various factors including unexpected occurrences of repair.
Dividend per unit
 With it presently not possible to make a prediction as to when the spread of the infection will becontained, and the downturn in sales, etc. expected to continue in and after April 2020, the forecast
dividend per unit assumes that the impact associated with the spread of the infection will graduallycalm down but still continue through to December 2020, and may differ depending on when the
spread will actually be contained.
Dividend in excess
 Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned at the moment.
of earnings per unit It is assumed that there will be no significant revisions to laws and regulations, the tax system, andaccounting standards that may influence the forecast figures.
Other It is also assumed that there will be no significant unexpected changes in general economic
conditions and the real estate market.
3

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

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

30th fiscal period

31st fiscal period(as of August 31, 2019)(as of February 29, 2020)

AssetsCurrent assets
Cash and deposits

3,962,695

5,417,020

Cash and deposits in trust

5,290,603

4,664,012

Operating accounts receivable

704,699

659,262

Prepaid expenses

271,613288,251

5,090

19,263

10,234,701

11,047,811

OthersTotal current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation

101,114,666(30,359,294)(758,444)(505,053)

1,124,948

909,560

Lands in trust(787,507)

1,101,295(549,601)

931,204

747
166

1,382,487(1,144,897)

69,586,959

1,480,805

747
(581)

(31,914,629)
1,888,802

1,414,614

Accumulated depreciation

Accumulated depreciation

70,755,371

1,883,393

Vehicles and transport equipment in trust

Tools and fixtures in trust

101,501,588

(628)

118

1,388,990
237,589(1,170,941)

218,048

104,918,451

104,918,451

15,164

15,669177,961,252

176,771,746

5,545,883

5,545,883

40,46734,993

5,586,351

5,580,876

3

17

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

327,135

327,135

Long-term prepaid expenses

937,627

1,014,438

1,274,765

1,351,591

184,822,369

183,704,215

38,34636,244

11,506

7,671

49,853

43,915

195,106,924

194,795,942

Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold right in trust
Other intangible assets in trust
Total intangible assets
Investment and other assets
Deferred tax assets

Total investment and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance
expenses
Investment unit issuance expenses
Total deferred assets
Total assets

4

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

(thousands of yen)Account

30th fiscal period

31st fiscal period(as of August 31, 2019)(as of February 29, 2020)

Liabilities
Current liabilities
Operating accounts payable

428,285

614,3945,700,000

1,000,000

Accounts payable-other

10,313

19,450Accrued expenses

371,617372,025

726

1,041

261,879

191,370

Advances received

1,054,458

1,082,899

Deposits received

1,361,488

867,707

Total current liabilities

9,188,769

4,148,889

Investment corporation bonds

5,000,000

5,000,000

Long-term debt

66,800,000

71,500,000

392,641

403,248

11,847,068

11,905,875

84,039,710

88,809,124

93,228,480

92,958,013

98,938,764

98,938,764

Unappropriated surplus

2,939,679

2,899,164

Total surplus

2,939,679

2,899,164

101,878,444

101,837,928

Total net assets

101,878,444

101,837,928

Total liabilities and net assets

195,106,924

194,795,942

Current maturities of long-term debt

Income taxes payable
Accrued consumption taxes

Non-current liabilities

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

Total unitholders’ equity

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

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

30th fiscal period

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

Operating revenues
Leasing revenues – real estate*1

Other leasing revenues – real estate*1

8,530,902
700,755*1

9,231,657*1

8,515,052
647,685

9,162,738

Operating expenses
Expenses related to leasing business
Asset management fees

*1, *2

5,250,066*1, *25,226,888

540,190534,300

Asset custody fees

7,388

7,276

Administrative service fees

55,67455,030

Director’s compensations

9,600

9,600

Other operating expenses

50,325

Operating income

5,913,244

55,8883,318,413

5,888,984
3,273,754

Non-operating revenues
Interest received

41

Others

593

47
634

674

722

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

250,590

246,018

29,20029,200

2,102

2,102

3,835

3,835

93,396

93,136

Others37379,16237374,330

Ordinary income

2,939,885

2,900,146

Profit before income taxes

2,939,885

2,900,146

Income taxes-current

730

Income taxes-deferred

14

Profit

1,048
745

(14)

1,033

2,939,139

2,899,112

Surplus brought forward

539

51

Unappropriated surplus

2,939,679

2,899,164

6

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

(3) Statement of changes in net assets
30th fiscal period (March 1, 2019 to August 31, 2019)(thousands of yen)
Unitholders’ Equity
Surplus
Item
Balance as ofMarch 1, 2019
Changes in thecurrent fiscal period

Unitholders’ capital

Unappropriated surplus

Total
net assets

2,935,391

101,874,156

101,874,156

Dividend of surplus(2,934,852)(2,934,852)(2,934,852)

Profit2,939,139

2,939,139

2,939,139

—

4,287

4,287

4,287

98,938,764

2,939,679

101,878,444

101,878,444

Total of changes in thecurrent fiscal period
Balance as ofAugust 31, 2019

98,938,764

Total
unitholders’ equity

31st fiscal period (September 1, 2019 to February 29, 2020)(thousands of yen)
Unitholders’ Equity
Surplus
Item
Balance as of
September 1, 2019
Changes in thecurrent fiscal period

Unitholders’ capital

Unappropriated surplus

Total
net assets

2,939,679

101,878,444

101,878,444

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

Profit2,899,112

2,899,112

2,899,112—(40,515)(40,515)(40,515)

98,938,764

2,899,164

101,837,928

101,837,928

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

98,938,764

Total
unitholders’ equity

7

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

(4) Dividend statement
Account
I.
II.

30th fiscal period

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

Unappropriated surplus

2,939,679 thousand yen

2,899,164 thousand yen

Total

2,939,628 thousand yen

2,899,032 thousand yen[Dividend per investment
unit][3,693 yen]

[3,642 yen]

III. Surplus brought forward

51 thousand yen

132 thousand yen

Method for calculating dividends

The amount of dividends shall be decided in The amount of dividends shall be decided inaccordance with the dividend policy accordance with the dividend policy
stipulated in Article 38-1-1 of FRC’s Articles stipulated in Article 38-1-1 of FRC’s Articles
of Incorporation and must exceed 90% of of Incorporation and must exceed 90% of
FRC’s distributable profits as stipulated in FRC’s distributable profits as stipulated in
Article 67-15-1 of the Special Taxation Article 67-15-1 of the Special Taxation
Measures Act. Following the above policy, Measures Act. Following the above policy,
FRC shall decide to distribute 2,939,628 FRC shall decide to distribute 2,899,032
thousand yen, which is almost the entire thousand yen, which is almost the entire
amount of unappropriated surplus, as amount of unappropriated surplus, asearnings dividends. Moreover, dividend in earnings dividends. Moreover, dividend inexcess of earnings as stipulated in Article 38- excess of earnings as stipulated in Article
2 of FRC’s Articles of Incorporation will not be 38-2 of FRC’s Articles of Incorporation will
provided.
not be provided.

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

8

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

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

930th fiscal period

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

2,939,885
1,651,902

2,900,146
1,660,510

2,102

2,102

3,835
(41)
279,790(27,916)
62,625(88,546)(10,882)
1,276
10,466258,341
25,762
34,593(1,501)
5,141,693
41(277,586)(1,052)
4,863,095

3,835
(47)
275,218
45,437(70,509)
9,652
8,530
2,509
28,440(493,780)(16,638)(76,811)(14,848)
4,263,749
47(277,320)(733)
3,985,742(846,296)(18,665)
28,976(11,817)
183,512(378,222)
6,544(7,094)(1,043,063)(289,074)—
24,513(13,906)
198,619(139,812)
1,315(2,339)(220,683)

3,700,000(3,700,000)(2,933,970)(2,933,970)
886,061
8,319,815
9,205,877

4,700,000(4,700,000)(2,938,346)(2,938,346)
826,7119,205,877
10,032,589

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

(6) Notes on the going concern assumption
No relevant items.
(7) Significant accounting policies
The disclosure is omitted, since there are no significant changes from contents disclosed by the latest securities report(submitted on November 28, 2019).
(8) Notes to financial statements
FRC omits the disclosure of notes to balance sheet, statement of changes in net assets, and cash flows statement,
as well as notes on lease transactions, financial instruments, securities, derivative transactions, related-party
transactions, tax-effect accounting, retirement benefits, asset retirement obligations, rental properties, segment
information and equity method income, etc. since it does not find substantial need for disclosure in the earnings briefing.
(Notes to statement of income)*1. Breakdown of revenues and expenses related to real estate leasing business(thousands of yen)

30th fiscal period

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

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

6,961,827

6,968,555

Common charges

1,101,386

1,095,890

Parking revenues

467,689

8,530,902

450,606

8,515,052

Other leasing revenues – real estate
Incidental income

664,715

Other miscellaneous income

36,039Total real estate leasing business revenues

610,648
700,755

37,0379,231,657

647,685
9,162,738

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

1,910,909

1,898,749

Repair and maintenance expenses

123,202116,285

Taxes and other public charges

734,315734,254

Insurance premiums and trust compensation

49,91051,676

Utilities expenses

550,418

505,975

1,651,902

1,660,510

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

229,406

5,250,066

259,435

5,226,888

5,250,066

5,226,888

3,981,591

3,935,850*2. Transactions with affiliated companies(thousands of yen)

Item
Expenses related to real estate leasing business30th fiscal period

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

1,395,796

10

1,430,201

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

(Per unit information)
30th fiscal period

31st fiscal period(March 1, 2019 to August 31, 2019)(September 1, 2019 to February 29, 2020)

Net assets per investment unit:
Profit per investment unit:

127,987 yen
3,692 yen

Net assets per investment unit:
Profit per investment unit:

127,937 yen
3,642 yen

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

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

11

30th fiscal period

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

2,939,139

2,899,112——

2,939,139

2,899,112

796,000

796,000

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

3. Reference Information(1) Information on the prices, etc. of investment assets
1) Investment situation(as of February 29, 2020)

Type ofasset

RetailReal estatein trust

Location

Use

Office buildings

Others(Note 1)

Total value of
properties owned

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

Fukuoka urban area

75,026

38.5

Other Kyushu areas

36,198

18.6

Fukuoka urban area

45,344

23.3

Other Kyushu areas——

Fukuoka urban area

20,303

10.4

Other Kyushu areas

5,464

2.8

182,336

93.6

12,458

6.4

194,795

100.0[182,352][93.6]

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

Note 1: “Fukuoka urban area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City
for school and work, according to the 2015 census, which states “the number of workers and students aged 15 years orolder (students including those aged 14 years or younger: particular reference) including commuting between their homes
and places of work or school” conducted by Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs andCommunications. “Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area).
Note 2: “Total value of properties owned” is based on the value on the balance sheet (the value of real estate in trust is the bookvalue after depreciation).
Note 3: Concerning the “Percentage of total assets,” the figures are rounded off to one decimal place. The total of individual
percentages in the above table may not equal 100%.
Note 4: Figures in parentheses for “Total amount of assets” refer to the value and percentage of real estate owned in effect tothe total amount of assets.
(as of February 29, 2020)

Value on balance sheet

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

Total amount of liabilities

92,958

47.7

Total amount of net assets

101,83752.3

2) Investment assets(i) Primary issues of investment securities
No relevant items.
(ii) Real estate investment portfolio
No relevant items.

12Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2020(iii) Other primary investment assets(A) Values and investment ratios at end of period are as follows.
(as of February 29, 2020)

Acquisitionvalue(mm of yen)
(Note 1)

Value onbalance sheet(mm of yen)

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

Canal City Hakata

32,00029,74331,800Canal City Hakata･B

28,70028,831

29,900Park Place Oita

18,62019,321

20,200SunLive City Kokura

6,633

5,535

8,460

Konoha Mall Hashimoto

10,00010,041

10,500

Square Mall Kagoshima Usuki

5,300

4,343

5,450

Kumamoto Intercommunity SC

2,400

1,980

2,860

Hanahata SC

1,130

978

1,250

Kurume Higashi Kushiwara SC

2,500

2,042

2,790

K’s Denki Kagoshima

3,550

2,974

3,710

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

5,250

5,430

6,080

116,083

111,224

123,000

14,60013,046

16,400Gofukumachi Business Center

11,2008,908

14,600Sanix Hakata Building

4,400

3,767

6,400

Taihaku Street Business Center

7,000

5,851

8,650

Higashi Hie Business Center

5,900

4,486

8,000

Tenjin Nishi-Dori Center Building

2,600

2,675

3,100

Tenjin North Front Building

2,800

2,502

4,360

Higashi Hie Business Center II

4,230

4,105

4,590

Office buildings subtotal:

52,73045,344

66,100Amex Akasakamon Tower

2,060

1,684

1,840

City House Keyaki Dori

1,111

910

1,140

Aqualia Chihaya

1,280

1,182

1,820

D-Wing Tower

2,800

2,681

3,560

Granfore Yakuin Minami

1,100

1,108

1,320

Hotel FORZA Oita

1,530

1,409

1,890

Tissage Hotel Naha

2,835

2,877

2,990

Tosu Logistics Center

1,250

1,177

1,420

LOGICITY Minato Kashii

8,150

7,862

8,910

LOGICITY Hisayama

5,050

4,873

5,270

Others subtotal:
Total

27,166
195,979

25,768
182,336

30,160219,260

Note 1:
Note 2:
Note 3:

Investment
ratio
(%)
(Note 3)

Real estate appraiser

Tanizawa Sogo
Appraisal Co., Ltd.
Tanizawa Sogo
14.6
Appraisal Co., Ltd.
Japan Real Estate
9.5
InstituteJapan Real Estate
3.4
InstituteTanizawa Sogo
5.1
Appraisal Co., Ltd.
Japan Real Estate
2.7
InstituteJapan Real Estate
1.2
InstituteTanizawa Sogo
0.6
Appraisal Co., Ltd.
Tanizawa Sogo
1.3
Appraisal Co., Ltd.
Tanizawa Sogo
1.8
Appraisal Co., Ltd.
Tanizawa Sogo
2.7
Appraisal Co., Ltd.
59.2
Tanizawa Sogo
7.4
Appraisal Co., Ltd.
Tanizawa Sogo
5.7
Appraisal Co., Ltd.
Japan Real Estate
2.2
InstituteJapan Real Estate
3.6
InstituteTanizawa Sogo
3.0
Appraisal Co., Ltd.
Japan Real Estate
1.3
InstituteJapan Real Estate
1.4
InstituteTanizawa Sogo
2.2
Appraisal Co., Ltd.
26.9
Daiwa Real Estate
1.1
Appraisal Co., Ltd.
Daiwa Real Estate
0.6
Appraisal Co., Ltd.
Japan Real Estate
0.7
InstituteTanizawa Sogo
1.4
Appraisal Co., Ltd.
Tanizawa Sogo
0.6
Appraisal Co., Ltd.
Japan Real Estate
0.8
InstituteTanizawa Sogo
1.4
Appraisal Co., Ltd.
Japan Real Estate
0.6
InstituteTanizawa Sogo
4.2
Appraisal Co., Ltd.
Tanizawa Sogo
2.6
Appraisal Co., Ltd.
13.9
100.0
16.3

“Acquisition value” refers to the amount (purchasing prices shown on the purchasing contracts) not including expenses forthe acquisition of relevant properties (agency fees and taxes and other public charges).
“Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity withthe method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation and rules stipulated by theInvestment Trusts Association, Japan.
“Investment ratio” is obtained by dividing each property’s acquisition value by the total acquisition value. The total ofindividual percentages in the above table may not equal 100%, since the figures are rounded off to one decimal place.

13

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

(B) Summary of the real estate leasing business(as of February 29, 2020)

Real estate property name

Canal City Hakata

46,520.56

Total
leasingrevenues(mm of yen)
(Note 4)
1,238

Percentage of
total
leasingrevenues(%) (Note 5)
13.5

Number oftenants(Note 1)

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

Total
leased floor
space
(m2)

1 [48]

99.8

46,604.75

Canal City Hakata･B

1 [46]

99.5

68,826.37

68,451.33

1,586

17.3

Park Place Oita

1 [103]99.9

113,834.20

113,712.33

1,181

12.9

1

100.0

61,450.22

61,450.22

281

3.1

1 [124]

98.7

22,121.04

21,840.73

821

9.0

SunLive City Kokura
Konoha Mall Hashimoto
Square Mall Kagoshima Usuki

12

100.0

14,602.88

14,602.88

256

2.8

Kumamoto Intercommunity SC

2

100.0

6,968.66

6,968.66

90

1.0

Hanahata SC

2

100.0

2,801.15

2,801.15

41

0.4

Kurume Higashi Kushiwara SC

1

100.0

6,467.80

6,467.80

89

1.0

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

1

100.0

7,296.17

7,296.17

111

1.2

1

100.0

33,069.82

33,069.82

178

1.9

24 [341](Note 2)99.8

384,043.06

383,181.65

5,876

64.1

1 [63]

100.0

23,029.92

23,029.92

607

6.6

36

100.0

19,905.34

19,905.34

545

5.9

16

100.0

6,293.75

6,293.75

205

2.2

Retail subtotal:
Canal City Business Center
Building
Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center1 [69]

99.1

14,677.30

14,546.43

311

3.4

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

1 [27]

100.0

13,614.59

13,614.59

342

3.7

1

100.0

3,339.32

3,339.32

86

0.9

11

100.0

5,252.41

5,252.41

143

1.6

Higashi Hie Business Center II2
69 [225](Note 2)
1 [63]

100.0

6,214.77

6,214.77

164

1.8

99.9

92,327.40

92,196.53

2,406

26.3

95.0

4,821.25

4,580.59

65

0.7

Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori1 [39]

93.3

2,710.86

2,529.84

36

0.4

Aqualia Chihaya

1 [103]

97.9

5,619.69

5,500.15

59

0.6

D-Wing Tower

1 [134]

97.7

7,187.59

7,019.24

114

1.3

Granfore Yakuin Minami

1 [96]

97.0

2,496.06

2,421.50

39

0.4

Hotel FORZA Oita

1

100.0

5,785.44

5,785.44

63

0.7

Tissage Hotel Naha

1

100.0

3,758.76

3,758.76

Tosu Logistics Center

1

100.0

4,173.29

4,173.29

LOGICITY Minato Kashii

2

100.0

43,233.72

43,233.72

LOGICITY Hisayama

1

100.0

24,505.65

24,505.65

68
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)

0.8
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)99.2

104,292.31

103,508.18

879

9.6

99.7

580,662.77

578,886.36

9,162

100.0

Others subtotal:
Total
Note 1:

Note 2:
Note 3:Note 4:Note 5:Note 6:

11 [441](Note 2)104 [1,007](Note 2)

“Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and officebuildings among relevant properties. For the number of tenants in pass-through master leasing properties, the number ofsections stipulated in the tenancy agreements with end tenants is shown in parentheses. The Taihaku Street BusinessCenter is an office building with a residential tower. Its number of end tenants comprises 12 offices and 57 residences.
The subtotal and total of all the tenants in other than pass-through master leasing properties and the number of sections
stipulated in the tenancy agreements with end tenants for pass-through master leasing properties is shown in parentheses
in the totals column for “Number of tenants.”“Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the figures are rounded
off to one decimal place.
“Total leasing revenues” is the total of real estate leasing revenues and other revenues from real estate rent in the current
fiscal period.
“Percentage of total leasing revenues” is obtained by dividing each property’s total leasing revenues by the total amount of
total leasing revenues. The total of individual percentages in the above table may not equal 100%, since the figures arerounded off to one decimal place.
The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

14

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

(2) Status of capital expenditures
1) Capital expenditures after the end of the 31st fiscal period and planned capital expenditures
The following table provides amounts of major items of capital expenditures associated with renovations, etc.
conducted after the end of the 31st fiscal period and of capital expenditures associated with renovations, etc.
planned as of April 13, 2020 for real estate properties owned by FRC. The planned construction costs indicatedbelow may be partly classified as expenses. In addition, FRC will implement renewal construction work in order tomaintain and improve the competitiveness of properties in the market as well as tenant satisfaction, on top of theconstruction, facilities and replacement work for which expenditures will be made regularly.
Planned construction cost
(mm of yen)
Construction
AmountTotal
costalready paid

Real estate
property nameLocation

PurposeSchedule

Canal City Hakata

Hakata Ward,
Fukuoka City

Renovation of
external walls

From August 2019
to July 2020

88

—

—

Canal City Hakata･B

Hakata Ward,
Fukuoka City

Renovation of
external walls

From August 2019
to July 2020

176

—

—

Park Place Oita

Oita City, Oita

Replacement of
air-conditioning
units

From September 2020
to December 2020

114

—

—

Park Place Oita

Oita City, Oita

Renovation of
external walls

From December 2019
to May 2020

81

—

—

Taihaku Street
Business Center

Hakata Ward,
Fukuoka City

Replacement of
air-conditioning
units

From January 2020
to October 2020

16

—

—

2) Capital expenditures during the 31st fiscal period
Capital expenditures for the real estate properties owned by FRC totaled 465 mm yen in the 31st period.
Furthermore, FRC incurred construction costs of 585 mm yen in total in the period, including 116 mm yen in repair
and maintenance expenses classified as expenses on the statement of income and 3 mm yen in expenses forrestoration to former state. The following table provides the overview of major construction work that was completed
in the 31st fiscal period.
Real estate
property nameLocation

Canal City Hakata

Hakata Ward,
Fukuoka City

Water supply piping for
guestrooms

From September 2019
to February 2020

17

Canal City Hakata･B

Hakata Ward,
Fukuoka City

Replacement ofcentral monitoring equipment

From October 2019
to February 2020

17Park Place Oita

Oita City, Oita

Renovation of external walls

From January 2020
to February 2020

72

Gofukumachi
Business Center

Hakata Ward,
Fukuoka City

Enhancement of multilevelmechanical parking equipment

From October 2019
to November 201955

Gofukumachi
Business Center

Hakata Ward,
Fukuoka City

Replacement of
air-conditioning units

From February 2020
to February 2020

18

Higashi Hie
Business Center

Hakata Ward,
Fukuoka City

Renovation of common spaces

From July 2019
to September 201932

Purpose15

PeriodConstruction cost
(mm of yen)