Provisional translation only
October 16, 2019EARNINGS BRIEFING FOR THE PERIOD ENDED AUGUST 2019
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 CEO & Representative Director

Asset manager:
Representative:
Contact:

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

Expected date for submitting securities report:
November 28, 2019
Expected commencement date of dividend payments: November 18, 2019
Supplementary documents for earnings briefing
Yes
Analyst meeting (for institutional investors and analysts) Yes(Figures rounded down to nearest mm yen)

1. Performance and situation of assets for the period ended August 2019
(March 1, 2019 to August 31, 2019)(1) Performance(% shows percentage change from previous period)

Operating revenues
mm of yen
Period ended

August 2019
Period ended

February 2019

Operating income%

mm of yen

Ordinary income%

mm of yen

Profit%mm of yen

%

9,231

(0.1)

3,318

0.4

2,939

0.1

2,939

0.1

9,242

0.7

3,306

2.1

2,935

2.6

2,934

2.6

Profit per unit
Period ended

August 2019
Period ended

February 2019

Return on net assets

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

3,692 yen

2.9%

1.5%

31.8%

3,687 yen

2.9%

1.5%

31.8%

(2) Dividends
Dividend
per unit

Total
dividend(excl. dividend in(excl. dividend inexcess ofexcess of earnings)
earnings)
Period ended

August 2019
Period ended

February 2019

Dividendin excess ofearnings
per unit

Total
dividendin excess ofearnings

Dividend
per unit(incl. dividend inexcess of
earnings)

Total
dividend(incl. dividend inexcess of earnings)

Payoutratio

Ratio ofdividend
to netassets3,693 yen 2,939 mm yen

0 yen

0 mm yen

3,693 yen 2,939 mm yen 100.0%

2.9%

3,687 yen 2,934 mm yen

0 yen

0 mm yen

3,687 yen 2,934 mm yen 100.0%

2.9%(3) Financial condition

Period ended

August 2019
Period ended

February 2019

Ratio of net assets tototal assets

Total assets

Net assets

Net assets per unit

195,106 mm yen

101,878 mm yen

52.2%

127,987 yen

195,433 mm yen

101,874 mm yen

52.1%

127,982 yen

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of cash andcash equivalents at
end of period

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

9,205 mm yen

4,832 mm yen(3,604) mm yen(859) mm yen

8,319 mm yen(4) Cash flows condition

Period ended

August 2019
Period ended

February 2019

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019

2. Forecast of performance for the period ending February 2020 (September 1, 2019 to February 29,2020) and the period ending August 2020 (March 1, 2020 to August 31, 2020)(% shows percentage change from previous period)

Operating revenues Operating income

Period ending

February 2020
Period ending

August 2020mm of yen%

ProfitDividend
per unit%

mm of yen(excl.
dividend inexcess of
earnings)

in excess ofearnings
per unit

Ordinary income
mm of yen

mm of yen

%

9,270

0.4

3,281 (1.1)

2,907 (1.1)

2,906(1.1) 3,650 yen

0 yen

9,350

0.9

3,309

2,930

2,929

0.8 3,680 yen

0 yen

0.8

(Reference) Forecast profit per unit: Period ending February 2020
Forecast profit per unit: Period ending August 2020

0.8%

Dividend

3,650 yen
3,680 yen

3. Other(1) Changes in accounting policies, changes in accounting estimates and restatement of accounting errors(i) Changes in accounting policies accompanying amendments to accounting standards, etc.: No(ii) Changes in accounting policies other than above (i):No
(iii) Changes in accounting estimates:No(iv) Restatement of accounting errors:No(2) Number of investment units outstanding(i) Number of investment units outstanding at end of period (including treasury investment units):
As of August 2019
796,000 units
As of February 2019
796,000 units(ii) Treasury investment units at end of period:
As of August 2019
0 unitAs of February 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 andcontain uncertain factors to a large extent. Actual operating revenues, operating income, ordinary income,profit, and dividend 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 please refer to “1. Management Situation, (2) Forecast for the next fiscal period –Preconditions for the performance forecast for the period ending February 2020 (September 1, 2019 toFebruary 29, 2020) and the period ending August 2020 (March 1, 2020 to August 31, 2020)” on page 3.

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019

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 (August 31,2019), 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 30th fiscal period), the Japanese economy showed a modest recovery
despite weakness lingering recently mainly in exports. Looking ahead, with the employment and income
environment continuing to improve, the economy is expected to continue recovering moderately due to various
political measures proving effective, among other factors, although weakness will remain for some time.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy is expanding moderately.
With regard to the outlook, a mild expansion is expected to continue, although attention should be paid to theimpact of the uncertainty about overseas economies and the impact of a labor shortage on the supply side, among
other factors.
As for land price trends, the national average price in combined average for residential and commercial land
increased for the second consecutive year, reinforcing its upward trend, according to the 2019 Land Price Survey.
By land type, residential land price continued to show a decelerating pace of decrease and commercial land pricerose for the third consecutive year. Meanwhile in Fukuoka City, the central area of FRC's investment targets, land
prices continued rising for seven consecutive years, up 12.8% year-on-year for commercial land and up 5.3%
year-on-year for residential land, marking higher rates of increase than the last year.
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 99.6% at the end of the 30th fiscal period.
When analyzing FRC’s portfolio (on an acquisition price basis) as of the end of the 30th 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. Under this promotion system, FRC has been driving sustainability initiatives,
obtaining “Green Star” and “4 Stars” ratings in the GRESB ((Global Real Estate Sustainability Benchmark) Real
Estate Assessment since fiscal 2018 and becoming a signatory to the Principles for Responsible Investment (PRI)
and the Principles for Financial Action for the 21st Century (PFA21) as of September 2018, among otherachievements.
(c) Summary of fundraising
As FRC conducted refinancing in the 30th 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 39.7% 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 90.2% as of the same date.
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.
Furthermore, FRC became the first corporation among those headquartered in Kyushu to raise funds with green
loans in the 30th fiscal period. Going forward, FRC will promote fundraising through green financing in order topromote ESG activities and broaden fundraising means through expansion of the investor base.
1

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019

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.
Issuer Rating
A+
Stable(R&I)
Japan 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 9,231 mm yen and operating income after
excluding operating expenses such as expenses related to leasing business and asset management fees totaled
3,318 mm yen. Ordinary income was 2,939 mm yen and profit amounted to 2,939 mm yen. Management decided
to make a dividend of 3,693 yen per unit to meet the requirements of special tax measures for an investment
corporation (as stipulated in Article 67-15 of the Act on Special Measures Concerning Taxation of Japan [Act No.
26 in 1957 including later revisions]). Under this act, an investment corporation is allowed to deduct the maximum
amount of dividends paid to investors from its taxable income.
(2) Forecast for the next fiscal period(a) Portfolio management policy
FRC will further reinforce management and leasing capabilities by cooperating with property managementcompanies including sponsor companies, and secure and maintain the stable operation of the properties bymaking the most use of their advantages.
FRC will make investments based on the basic policy stipulated in its Articles of Incorporation and its basic
philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in “highgrowth potential markets.” By geographic location, of Fukuoka and Kyushu areas, FRC will invest 60% to 90%
of its assets in the Fukuoka urban area since the Fukuoka urban area is expected to have a high population
growth rate in the future. In addition to the Fukuoka urban area, management has decided to actively acquire
properties in major cities if there are regions or properties where FRC can generate investment merits from
community-oriented viewpoints. FRC will acquire high-quality properties with adequate use of its advantages,
such as information gathering ability in the areas, good knowledge of regional properties and close relations withthe local business community and governments, so that investors can continue to invest in FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try tomaintain a solid financial structure.
(b)

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

(c)Performance forecast for the next fiscal period
FRC aims to achieve the following performance goals for the period ending February 2020 (September 1, 2019
to February 29, 2020) and the period ending August 2020 (March 1, 2020 to August 31, 2020). Concerning
preconditions for the forecast, please refer to “Preconditions for the performance forecast for the period ending
February 2020 (September 1, 2019 to February 29, 2020) and the period ending August 2020 (March 1, 2020 toAugust 31, 2020)” on page 3.
Period ending February 2020
Operating revenues
Operating income
Ordinary income
ProfitDividend per unit
Dividend in excess of earnings
per unit
Period ending August 2020
Operating revenues
Operating income
Ordinary income
ProfitDividend per unit
Dividend in excess of earnings
per unit
Note:9,270 mm yen
3,281 mm yen
2,907 mm yen
2,906 mm yen
3,650 yen
0 yen

9,350 mm yen
3,309 mm yen
2,930 mm yen
2,929 mm yen
3,680 yen
0 yen

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

2

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019

Preconditions for the performance forecast for the period ending February 2020 (September 1, 2019 to February 29,2020) and the period ending August 2020 (March 1, 2020 to August 31, 2020)
Item
Preconditions
31st fiscal period: September 1, 2019 to February 29, 2020 (182 days)
Calculation period
32nd fiscal period: March 1, 2020 to August 31, 2020 (184 days)
Assets under• It is assumed that there will be 29 properties FRC owns as of August 31, 2019.
management• In practice, the number may fluctuate due to changes in assets under management.
Total number ofinvestment units• It is assumed that there will be no issuance of new investment units until August 31, 2020.
outstanding• The balance of interest-bearing debt outstanding at the end of the 31st fiscal period(February 29, 2020) is expected to total 77,500 mm yen, the same as that at the end of the
30th fiscal period (August 31, 2019). The loan-to-value ratio (interest-bearing debt ÷ total
Interest-bearing
assets × 100) is expected to stand at around 39.3% (as of August 31, 2019, the loan-todebt andvalue ratio stands at 39.7%).
• The balance of interest-bearing debt outstanding at the end of the 32nd fiscal period
refinancing(August 31, 2020) is expected to total 77,500 mm yen, the same as the end of the 31st
fiscal period (February 29, 2020). The loan-to-value ratio (interest-bearing debt ÷ total
assets × 100) is expected to stand at around 39.3%.
• Of leasing revenues – real estate, revenues from properties FRC has already acquired are
calculated based on tenancy agreements that are valid as of October 16, 2019 by taking
into account the competitiveness of the properties and the market environment, etc.
Operating
Of leasing revenues– real estate, revenues from lease contracts with variable rent such as
revenues
percentage-of-sales rent and percentage-of-GOP rent are calculated based on past resultsby 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 assumed that there will be no rent arrears or non-payments by tenants.
• 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 beborne by FRC for the initial year will not be written off since they will be included in theacquisition cost.
• FRC writes off estimated repair costs expected to be required for buildings for the
calculation periods (the 31st and 32nd fiscal periods). Actual repair costs may differ
Operatingsignificantly from the estimated amounts since there is the possibility that repair costs are
expenses
incurred urgently due to damages to buildings caused by unforeseeable factors, repair costs
generally differ largely from period to period, and repair costs are not regularly incurred.
• Concerning outsourcing expenses, FRC anticipates 1,907 mm yen for the 31st fiscal period
and 1,923 mm yen for the 32nd fiscal period.
• Concerning taxes and other public charges, FRC anticipates 734 mm yen for the 31st fiscal
period and 742 mm yen for the 32nd fiscal period.
• Concerning depreciation and amortization expenses, FRC anticipates 1,662 mm yen for the
31st fiscal period and 1,680 mm yen for the 32nd fiscal period.
• Concerning interest expenses (including interest expenses on investment corporation
Non-operating
bonds) and expenses related to financing, FRC anticipates 369 mm yen for the 31st fiscal
expensesperiod and 373 mm yen for the 32nd fiscal period.
• Dividend (dividend per unit) is calculated based on the dividend policy stipulated in FRC’s
Articles of Incorporation.
Dividend per unit
• Dividend per unit may fluctuate due to fluctuations in leasing revenues caused by changes
in assets under management and tenants or various factors including unexpectedoccurrences of repair.
Dividend in excess• Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned atof earnings per
the moment.
unit• It is assumed that there will be no significant revisions to laws and regulations, the tax
system, and accounting standards that may influence the forecast figures.
Other• It is also assumed that there will be no significant unexpected changes in general economic
conditions and the real estate market.

3

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019

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

29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)

AssetsCurrent assets
Cash and deposits

3,570,388

3,962,695

Cash and deposits in trust

4,796,296

5,290,603

Operating accounts receivable

676,783

704,699

Prepaid expenses

297,375

271,613

4,182

5,090

9,345,026

10,234,701

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

100,692,867(28,811,313)(729,404)(462,805)

1,143,873

938,007

Lands in trust(758,444)

1,124,948(505,053)

909,560

747
214

1,378,452(1,117,165)

70,755,371

1,414,614

747
(533)

(30,359,294)

1,883,393

1,400,813

Accumulated depreciation

Accumulated depreciation

71,881,554

1,873,277

Vehicles and transport equipment in trust

Tools and fixtures in trust

101,114,666

(581)

166

1,382,487
261,286(1,144,897)

237,589

104,918,451

104,918,451

7,088

15,164

179,150,475

177,961,252

5,545,883

5,545,883

26,654

40,467

5,572,537

5,586,351

17

3

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

327,135

327,135

Long-term prepaid expenses

972,221937,627

1,309,374

1,274,765

186,032,387

184,822,369

40,44938,346

15,342

11,50655,79149,853

195,433,205

195,106,924

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 August 2019
(thousands of yen)Account

29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)

Liabilities
Current liabilities
905,301

428,285

8,400,000

5,700,000

Accounts payable-other

20,908

10,313

Accrued expenses

368,137

371,617

1,047

726

Accrued consumption taxes

199,254261,879

Advances received

1,043,991

1,054,458

Deposits received

1,103,147

1,361,488

Total current liabilities

12,041,787

9,188,769

Investment corporation bonds

5,000,000

5,000,000

Long-term debt

64,100,000

66,800,000

375,482392,641

12,041,779

11,847,068

81,517,261

84,039,710

93,559,049

93,228,480

98,938,764

98,938,764

Unappropriated surplus

2,935,391

2,939,679

Total surplus

2,935,391

2,939,679

Total unitholders’ equity

101,874,156

101,878,444

Total net assets

101,874,156

101,878,444

Total liabilities and net assets

195,433,205

195,106,924

Operating accounts payable
Current maturities of long-term debt

Income taxes payableNon-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
Surplus5

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019(2) Statement of income(thousands of yen)Account

29th fiscal period

30th fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

Operating revenues
Leasing revenues – real estate
Other leasing revenues – real estate*1*18,604,955
637,878*1

9,242,834*1

8,530,902
700,755

9,231,657

Operating expenses
Expenses related to leasing business
Asset management fees

*1, *2

5,274,003*1, *2

5,250,066

532,061

540,190

Asset custody fees

7,182

7,388

Administrative service fees

54,581

55,674

Director’s compensations

9,600

Other operating expenses

59,167

Operating income

9,600
5,936,596

50,3253,306,238

5,913,244
3,318,413

Non-operating revenues
39

Interest received
Others

2,162

41
2,202

593

634

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

245,801

250,590

29,20029,200

2,102

2,102

3,835

3,835

91,53593,396

Others37372,51137379,162

Ordinary income

2,935,928

2,939,885

Profit before income taxes

2,935,928

2,939,885

Income taxes-current

1,053

Income taxes-deferred(2)

Profit

730
1,051

14

745

2,934,877

2,939,139

Surplus brought forward

514

539

Unappropriated surplus

2,935,391

2,939,679

6

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019(3) Statement of changes in net assets
29th fiscal period (September 1, 2018 to February 28, 2019)(thousands of yen)
Unitholders’ Equity
Surplus
Item

Balance as of September 1,
2018
Changes in the current fiscal
periodUnitholders’ capital

Unappropriated surplus

Total
net assets

2,860,542

101,799,306

101,799,306

Dividend of surplus(2,860,028)(2,860,028)(2,860,028)

Profit2,934,877

2,934,877

2,934,877-

74,84974,84974,84998,938,764

2,935,391

101,874,156

101,874,156

Total of changes in thecurrent fiscal period
Balance as of February 28,
201998,938,764

Total
unitholders’ equity

30th fiscal period (March 1, 2019 to August 31, 2019)(thousands of yen)
Unitholders’ Equity
Surplus
Item

Balance as of March 1, 2019

Unitholders’ capital

Unappropriated surplus

98,938,764

Total
unitholders’ equity

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

Changes in the current fiscal
periodTotal of changes in thecurrent fiscal period
Balance as of August 31,
2019

7

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019(4) Dividend statement

Account

29th fiscal period

30th fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)I.

Unappropriated surplus

2,935,391 thousand yen

2,939,679 thousand yen

II.

Total

2,934,852 thousand yen

2,939,628 thousand yen[Dividend per investment
unit][3,687 yen]

[3,693 yen]

III. Surplus brought forward

539 thousand yen

51 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 2,934,852 FRC shall decide to distribute 2,939,628
thousand yen, which is almost the entire thousand yen, which is almost the entire
amount of unappropriated surplus, as amount of unappropriated surplus, asearnings dividends. Moreover, dividend in earnings dividends. Moreover, dividend inexcess of earnings as stipulated in Article 38- excess of earnings as stipulated in Article
2 of FRC’s Articles of Incorporation will not be 38-2 of FRC’s Articles of Incorporation will
provided.
not be provided.

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

8

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019(5) Cash flows statement(thousands of yen)Account
Net cash provided by (used in) operating activities
Profit before income taxes
Depreciation and amortization expenses
Amortization of investment corporation bond issuance
expenses
Amortization of investment unit issuance expenses
Interest received
Interest expenses
Decrease (increase) in operating accounts receivables
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits expenses
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investment activities
Purchase of property, plant and equipment 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 short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Net cash provided by (used in) financial activities
Net increase (decrease) in cash and cash equivalents
Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period

929th fiscal period

30th fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

2,935,928
1,622,792

2,939,885
1,651,902

2,102

2,102

3,835
(39)
275,001(134,143)
598,560
199,254(10,519)
2,530
5,784
(5,858)(224,102)(43,231)(121,575)
3,668
5,109,987
39(276,266)(998)
4,832,761

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(3,601,665)(15,881)60－
149,480(135,190)
5,343(6,268)(3,604,122)(846,296)(18,665)
28,976(11,817)
183,512(378,222)
6,544(7,094)(1,043,063)

4,800,000－(4,800,000)
2,500,000(500,000)(2,859,795)(859,795)
368,843
7,950,972
8,319,815－
3,700,000(3,700,000)(2,933,970)(2,933,970)
886,061
8,319,815
9,205,877

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019(6) Notes on the going concern assumption
No relevant items.
(7) Significant accounting policies
The disclosure is omitted, since there are no significant changes from contents disclosed by the latest securities report(submitted on May 31, 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)

29th fiscal period

30th fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

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

7,045,595

6,961,827

Common charges

1,111,443

1,101,386

Parking revenues

447,916

Other leasing revenues – real estate
Incidental income

616,581

Other miscellaneous income

21,296

Total real estate leasing business revenues

8,604,955

467,689
664,715

637,878

36,0399,242,834

1,908,842

1,910,909

Repair and maintenance expenses

221,346

123,202

Taxes and other public charges

661,774

734,315

55,68949,910569,325

550,418

1,622,792

1,651,902

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

234,232

5,274,003

700,755
9,231,657

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

Insurance premiums and trustcompensation
Utilities expenses

8,530,902

229,406

5,250,066

5,274,003

5,250,066

3,968,831

3,981,591*2. Transactions with affiliated companies(thousands of yen)

Item
Expenses related to real estate leasing business29th fiscal period

30th fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

1,493,926

10

1,395,796

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019

(Per unit information)
29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

Net assets per investment unit:
Profit per investment unit:

127,982 yen
3,687 yen

Net assets per investment unit:
Profit per investment unit:

127,987 yen
3,692 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

29th fiscal period

30th fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

2,934,877

2,939,139——

2,934,877

2,939,139

796,000

796,000

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2019

3. Reference Information(1) Information on the prices, etc. of investment assets
1) Investment situation(as of August 31, 2019)

Type ofasset

Location

Use(Note 1)

Total value of
properties owned

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

Fukuoka urban area

75,473

38.7

Other Kyushu areas

36,461

18.7

Fukuoka urban area

45,654

23.4

Other Kyushu areas--

Fukuoka urban area

20,437

10.5

Other Kyushu areas

5,506

2.8

183,532

94.1

11,574

5.9

195,106

100.0[183,547][94.1]

RetailReal estatein Trust

Office buildings

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

Note 1: “Fukuoka urban area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City
for school and work, according to the 2015 census, which states “the number of workers and students aged 15 years orolder (students including those aged 14 years or younger: particular reference) including commuting between their homes
and places of work or school” conducted by Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs andCommunications. “Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area).
Note 2: “Total value of properties owned” is based on the value on the balance sheet (the value of real estate 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 August 31, 2019)

Value on balance sheet(mm of yen)

Percentage of total amount of assets (%)

Total amount of liabilities

93,22847.8

Total amount of net assets

101,87852.2

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 August 2019(iii) Other primary investment assets(A) Values and investment ratios at end of period are as follows.
(as of August 31, 2019)

Acquisitionvalue(mm of yen)
(Note 1)

Value onbalance sheet(mm of yen)

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

Canal City Hakata

32,00029,911

32,000Canal City Hakata･B

28,70029,001

30,100Park Place Oita

18,62019,44919,800SunLive City Kokura

6,633

5,582

8,340

Konoha Mall Hashimoto

10,00010,12910,500

Square Mall Kagoshima Usuki

5,300

4,380

5,630

Kumamoto Intercommunity SC

2,400

1,993

2,860

Hanahata SC

1,130

984

1,250

Kurume Higashi Kushiwara SC

2,500

2,059

2,790

K’s Denki Kagoshima

3,550

2,997

3,710

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

5,250

5,446

6,080

116,083

111,934

123,060

14,60013,132

15,900Gofukumachi Business Center

11,2008,935

14,300Sanix Hakata Building

4,400

3,805

6,360

Taihaku Street Business Center

7,000

5,929

8,640

Higashi Hie Business Center

5,900

4,483

7,650

Tenjin Nishi-Dori Center Building

2,600

2,685

3,170

Tenjin North Front Building

2,800

2,535

3,990

Higashi Hie Business Center II

4,230

4,146

4,440

Office buildings subtotal:

52,73045,65464,450Amex Akasakamon Tower

2,060

1,702

1,840

City House Keyaki Dori

1,111

917

1,140

Aqualia Chihaya

1,280

1,194

1,780

D-Wing Tower

2,800

2,692

3,570

Granfore Yakuin Minami

1,100

1,118

1,310

Hotel FORZA Oita

1,530

1,418

1,860

Tissage Hotel Naha

2,835

2,901

3,020

Tosu Logistics Center

1,250

1,186

1,430

LOGICITY Minato Kashii

8,150

7,900

8,900

LOGICITY Hisayama

5,050

4,911

5,260

Others subtotal:
Total

27,166
195,979

25,943
183,532

30,110217,620

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 August 2019

(B) Summary of the real estate leasing business(as of August 31, 2019)

Real estate property name

Number oftenants(Note 1)

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

Totalleased floor
space (m2)

Totalleasingrevenues(mm of yen)
(Note 4)

Percentage of
total
leasingrevenues(%) (Note 5)

Canal City Hakata

1 [51]

100.0

46,604.75

46,604.75

1,247

13.5

Canal City Hakata･B
Park Place Oita
SunLive City Kokura
Konoha Mall Hashimoto

1 [48]
1 [106]
1
1 [127]

99.4
100.0
100.0
100.0

68,826.37
113,834.19
61,450.22
22,121.03

68,437.78
113,834.19
61,450.22
22,121.03

1,582
1,188
284
835

17.1
12.9
3.1
9.0

Square Mall Kagoshima Usuki

12

100.0

14,602.88

14,602.88

257

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

40

0.4

Kurume Higashi Kushiwara SC

1

100.0

6,467.80

6,467.80

88

1.0

K’s Denki Kagoshima

1

100.0

7,296.17

7,296.17

111

1.2

Marinoa City Fukuoka (Marina
Side Building)

1

100.0

33,069.82

33,069.82

177

1.9

24 [352](Note 2)99.9

384,043.04

383,654.45

5,902

63.9

1 [60]

94.4

23,031.44

21,749.32

626

6.8

36
16
1 [70]
1 [26]

100.0
100.0
99.6
100.0

19,905.34
6,293.75
14,677.30
13,614.59

19,905.34
6,293.75
14,622.25
13,614.59

545
201
310
345

5.9
2.2
3.4
3.7

1

100.0

3,339.32

3,339.32

86

0.9

11
2
69 [222](Note 2)
1 [66]
1 [39]
1 [105]
1 [131]
1 [99]
1
1

100.0
100.0

5,252.41
6,214.77

5,252.41
6,214.77

142
166

1.5
1.8

98.6

92,328.92

90,991.75

2,424

26.3

98.5
92.3
100.0
94.0
100.0
100.0
100.0

4,821.25
2,710.86
5,619.69
7,187.59
2,496.06
5,785.44
3,758.76

4,748.10
2,502.54
5,619.69
6,757.13
2,496.06
5,785.44
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

67
36
60
113
38
63
88
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)

0.7
0.4
0.7
1.2
0.4
0.7
1.0
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)99.3

104,292.31

103,580.38

904

9.8

99.6

580,664.27

578,226.58

9,231

100.0

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
Higashi Hie Business Center II
Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha

Others subtotal:
Total
Note 1:

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

11 [446](Note 2)104
[1,020](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 58 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 August 2019(2) Status of capital expenditures
1) Capital expenditures after the end of the 30th fiscal period and planned capital expenditures
The following table provides amounts of major items of capital expenditures associated with renovations, etc. conducted after theend of the 30th fiscal period and of capital expenditures associated with renovations, etc. planned as of October 16, 2019 for realestate properties owned by FRC. The planned construction costs indicated below may be partly classified as expenses. In addition,
FRC will implement renewal construction work in order to maintain and improve the competitiveness of properties in the market aswell as tenant satisfaction, on top of the construction, facilities and replacement work for which expenditures will be made regularly.
Real estate
property nameLocation

PurposeCanal City Hakata

Hakata Ward,
Fukuoka City

Renovation of external
walls

Canal City
Hakata･B

Hakata Ward,
Fukuoka City

Renovation of external
wallsPark Place Oita

Oita City,
Oita

Renovation of external
wallsPark Place Oita

Oita City,
Oita

Renovation ofcommon spaces

Gofukumachi
Business Center

Hakata Ward,
Fukuoka City

Enhancement ofmultilevel mechanicalparking equipment

Taihaku Street
Business Center

Hakata Ward,
Fukuoka City

Replacement of airconditioning units

Planned construction cost
(mm of yen)
Construction
AmountTotal
costalready paid

Schedule
From August
2019 to July
2020
From August
2019 to July
2020
From December
2019 to February
2020
From January
2020 to April
2020
From June2019 toNovember 2019
From January
2020 toMarch 2020

88

－

－

176

－

－

72

－

－

155

－

－

55

－

－

41

－

－

2) Capital expenditures during the 30th fiscal period
Capital expenditures for the real estate properties owned by FRC totaled 476 million yen in the 30th period. Furthermore, FRC
incurred construction costs of 607 million yen in total in the period, including 123 million yen in repair and maintenance expenses
classified as expenses on the statement of income and 8 million yen in expenses for restoration to former state. The following tableprovides the overview of major construction work that was completed in the 30th fiscal period.
Real estate property name
Canal City Hakata
Canal City Hakata･B

LocationHakata Ward,
Fukuoka City
Hakata Ward,
Fukuoka City

Park Place Oita

Oita City, Oita

Park Place Oita

Oita City, Oita

Higashi Hie Business Center

Hakata Ward,
Fukuoka City

Tenjin North Front Building
LOGICITY Minato Kashii

Chuo Ward,
Fukuoka City
Higashi Ward,
Fukuoka City

Purpose

PeriodWater supply piping
for guestrooms
Replotting of floor
sections
Replacement of airconditioning units
Renovation of
external walls
Replacement of
outdoor unit
compressors
Renovation ofcommon spaces
Formation of floor
sections

From February
2019 to May 2019
From February
2019 to April 2019
From March 2019
to April 2019
From April 2019 to
May 2019

15

From May 2019 to
May 2019
From April 2019 to
May 2019
From March 2019
to April 2019

Construction cost
(mm yen)
10
31
56
31
13
22
34