March 16, 2023
Provisional translation only

Fukuoka REIT Corporation
1-2-25 Sumiyoshi, Hakata Ward, Fukuoka City
Zenji Koike
Executive Director(Securities Code: 8968)
Asset Management Company:
Fukuoka Realty Co., Ltd.
1-2-25 Sumiyoshi, Hakata Ward, Fukuoka City
Zenji Koike
President and CEO
Inquiries:
Hiroyuki Ayabe
Executive Officer and General Manager
Finance Department
TEL: +81-(0)92-272-3900

Fukuoka REIT Corporation Concludes Agreement to Purchase a New Property(Domestic real estate)
Fukuoka REIT Corporation (FRC) announces that Fukuoka Realty Co., Ltd, an asset management company towhich the company entrusts the management of its assets, decided to acquire the following domestic real estate
today.
1. Summary of Acquisition
Property
nameKumamoto
East Front
Building(Note1)Use

Location

Office1-Chome,Shinyashiki,
Chuo Ward,
Kumamoto City

Acquisition
Price (planned)

1,450 mm yen

Acquisition
Date(scheduled)
March 28, 2023

SellerNot
disclosed

Sales
Agent

Present(Note2)(Note1) Although the current name is different, the property name will be changed to “Kumamoto East Front Building” after FRC
acquires the property. For this reason, this press release uses the name of “Kumamoto East Front Building”.
(Note2)The name of the seller is not disclosed as no consent to disclosure has been obtained from the seller.

2. Reason for Acquisition
FRC invests in a diverse range of properties, including retail facilities, office buildings, and others (logistics
facilities, residential properties, hotels, etc.) in the Fukuoka and Kyushu regions as its main investment target area.
As for investment type, FRC is proactively considering investing in office buildings, logistic facilities andresidences, and this acquisition of an office building is in line with such investment policy. Kumamoto East Front
Building (hereafter, “the property”) will be the first office building in the Kumamoto area to be invested in byFRC. This is an area where the government attracted large-scale factories. It is expected to become a promisingarea where affiliated companies and other companies will concentrate and business markets will become vitalized
in the future. The property is about a four-minute walk from the “Kuhonji Kosaten” stop on the Kumamoto City
Tram which offers smooth access to various areas of the city and a five-minute walk from the “Suidocho” stop on- 1 -the Kumamoto City Tram and boasts excellent visibility from Toricho and Suidocho, which are central areas ofKumamoto City. In addition, it is a relatively large property for the area with a base floor area of approximately
128 tsubo and can accommodate a wide range of tenant needs. Therefore, it has sufficient competitiveness, andFRC believes it will maintain stable and high profitability over the medium to long term along with the economic
growth that is expected to be seen in the Kumamoto area in the future.
The acquisition of the property is an acquisition from an external party and utilizes the information and knowhow of the asset management company, which is well versed in the individual circumstances of the Fukuoka andKyushu regions. FRC anticipates that the acquisition of the property will contribute to further enhancement of its
portfolio and securing of stable earnings in the future.
3. Detail of Property for Acquisition(1) Overview of Acquisition
1) Property to be acquired:
2) Property name:3) Acquisition price (planned) (Note1):
4) Appraisal value:
5) Acquisition cap rate (Note2):
6) Acquisition date (scheduled):
7) Seller:8) Funding:9) Payment method:

Real Estate
Kumamoto East Front Building
1,450 million yen
1,460 million yen (as of February 1, 2023)
5.0%
March 28, 2023
Not disclosed (Note3)
Cash on hand (Note4) and borrowings
For details, please see 3. (8) Form of payment below.

(Note1) The acquisition price (planned) does not include acquisition expenses, amounts equivalent to the settlement ofproperty taxes and city planning taxes, consumption taxes on the building and other expenses.
(Note2) The acquisition CAP is calculated by the direct capitalization method: NCF/ The acquisition price (planned) x
100 (%) of the appraisal assessment.
(Note3) The name of the seller is not disclosed as no consent to disclosure has been obtained from the seller.
(Note4) The detail of the borrowings is yet to be determined at this point in time and will be announced oncedetermined.

(2) Points Valued in Deciding on the property
1) Location conditions
The property is about a four-minute walk from the “Kuhonji Kosaten” stop and a five-minute walk fromthe “Suidocho” stop on the Kumamoto City Tram, enabling smooth access also from the center of theoffice district where Kumamoto City Hall and other government offices as well as financial institutions,etc. concentrate. In addition, it is adjacent to Prefectural Road Route 28 (tramroad), which is a majorarterial road in Kumamoto City, and has sufficient parking. Therefore, it offers excellent access by car
to the Suizenji area where Kumamoto City Hall is located and the “Semicon Techno Park” area createdand developed by Kumamoto Prefecture where semiconductor-related companies concentrate. In thesurrounding area of the property, there is a mixture of offices, retail stores and mid- and high-riseapartments, and a concentration of companies has also been seen in recent years with move-ins by NTT
West’s Kumamoto branch and group companies.
2) Building properties etc.
The property is an office building with a steel-reinforced concrete structure completed in December
1993, and in 2022 it underwent renovation work for the common corridors, interior, toilets andkitchenettes. It has a base floor area of approximately 128 tsubo, and floors can be divided into spacesof around 20 tsubo. In addition, it has parking for a total of 87 vehicles consisting of tower parking for
70 vehicles, mechanical parking for 16 vehicles and open-air parking for 1 vehicle, meeting the needsof major sources of demand in the area such as branches and business offices.
- 2 -(3) Overview of the property
Property name
Type of the specified asset
Acquisition price (planned)
Location (address)

Land

Building
Constructor
Designer
Building design officeengaged in structural
engineering data
Organization thatauthorized building
construction
Appraisal value
Appraiser
Collateral after acquisition
Property managementcompany
Earthquake PML

Special notations

Kumamoto East Front Building
Real Estate
1,450 million yen

Outside 2 5-15 1-Chome, Shinyashiki, Chuo Ward, Kumamoto City
1,053.70 ㎡
AreaZoning
Commercial area
400%
Floor area ratio
Building coverage
80%ratio
Type of ownership Ownership
Structure/ floor
8-story, SRC/RC structure building with flat roof
Built
December 3, 1993
4,251.06 ㎡
Total floor area
Office and garage
UseType of ownership Comparted ownership (Note1)
Takenaka Corporation
NIKKEN SEKKEI LTD
NIKKEN SEKKEI LTD

Kumamoto City Construction Manager

1,460 million yen (As of February 1, 2023)
The Tanizawa Sogo Appraisal Co., Ltd.
None
Fukuoka Jisho Co., Ltd.
11.6% (based on the assessment by Tokio Marine dR Co., Ltd. )The following findings have been confirmed regarding the building ofthe property. 1) to 3) are scheduled to be ameliorated without delay after
the acquisition at the responsibility and expense of FRC, while 4) isscheduled to be ameliorated at the responsibility and expense of theseller.
1) There is a through hole on the exterior wall located within 2 metersof the outdoor emergency stairs.
2) A janitor’s room has been additionally constructed near the service
door.
3) There is a signboard established for outdoor advertisement whichis unregistered.
4) Appropriate actions may not have been taken in terms of the smoke
control plan as the layout inside the exclusive area on the 7F hasbeen changed.
・Part of the block wall and some electric wiring may extend over theboundary and into the adjacent land, but there has been no dispute, etc.
- 3 -Status of leasing(Note2)

with the owner or occupant of the adjacent land.
Total number of7 (Note3)
tenants
Total rent income
96 million yen (Note4)(annually)
Security deposits
47 million yen (Note5)
Total leasable area 3,139.27 ㎡ (Note6)
2,911.34 ㎡ (Note6)
Total leased area
Occupancy rate
92.7% (Note7) (as of February 28, 2023)*All figures for space, floor space, location, use, structure etc. are based on the indications on the registry.
* The earthquake PML figure is based on the earthquake risk assessment report by the indicated estimator. The figure is a
representation of the reporter’s opinion, and does not guarantee the accuracy of its content.
(Note1) Although this property is a separately owned building, all exclusive spaces are owned by the seller. FRC plans toacquire all exclusive spaces.
(Note2) As for the status of leasing, the details as of February 28, 2023, are indicated. However, as of the date of thisdocument, lease agreements for some sections (area of targeted section: 714.25 ㎡, ratio to the total leasable area: 22.8%)
are scheduled to be cancelled in April 2023 and September 2023.
(Note3) The number of tenants as of February 28, 2023 (including the seller using the property on its own) is indicated.
(Note4) The figure is calculated by multiplying the total monthly rent indicated in the lease agreements concluded withtenants as of February 28, 2023, by 12. As for the own-use section of the seller, a rental room lease agreement that willexpire if a transaction agreement for the property is not executed was concluded with the seller on March 16, 2023, and theannual rent for said section has been included. Moreover, the figure has been rounded off to the nearest million yen. Parkinglots, etc. are not included.
(Note5) The figure is the sum of the amounts indicated in the lease agreements concluded with tenants as of February 28,2023. As for the own-use section of the seller, a rental room lease agreement that will expire if delivery based on theTransaction Agreement for the property is not completed by the commencement date of leasing was concluded with theseller on March 16, 2023, and lease and guarantee deposits for said section has been included. Moreover, the figure hasbeen rounded off to the nearest million yen. Parking lots, etc. are not included.
(Note6) Total leasable area indicates the area that can be leased to tenants. Total leased area indicates the total contract area
indicated in the lease agreements concluded with tenants as of February 28, 2023, and the contract area indicated in therental room lease agreements concluded with the seller on March 16, 2023. Moreover, parking lots, etc. are not included.
(Note7) The figure indicates the ratio of the total leased area to the leasable area, and has been rounded to the first decimalplace.

(4) Overview of Building Status Assessment Report
Urgent and shortSurveyor

Date of survey reportterm repair andreplacement expenses(Note1)

Tokio Marine dR Co., Ltd.

March 8 , 2023

－Long-term repair andreplacement expenses(Note2)24 million yen(Note1) Urgent and short-term repair and replacement expenses refer to the amount indicated in the report as repair andreplacement expenses that will be required urgently or within roughly one year.
(Note2) Long-term repair and replacement expenses refer to the amount indicated in the report as average repair andreplacement expenses for 12 years. The indicated figure has been rounded off to the nearest million yen.

(5) Profile of Previous Owner
The profile of the seller is not disclosed as no consent to disclosure has been obtained from the seller. The seller,- 4 -which is a domestic general business company, has no capital, personnel or business relationship to note with FRCand the asset management company or the affiliates or affiliated companies of FRC and the asset managementcompany. The seller and the affiliates or affiliated companies of the seller do not fall within the scope of relatedparties of FRC and the asset management company.

(6) Condition of property acquirer
The acquisition is not from a party having special interests with FRC or the asset management company.

(7) Sales Agent Profile
The intermediary party in the acquisition of the property does not have any special interests with FRC and theasset management company.

(8) Form of payment
FRC is scheduled to pay the acquisition fee in full on the scheduled acquisition date (March 28, 2023) of theproperty proceeds from borrowings and cash on hand.

(9) Acquisition Schedule
March 16, 2023

Decision of acquisition

March 16, 2023

Conclusion of agreement

March 28, 2023

Payment (scheduled)

March 28, 2023

Delivery of the property (scheduled)

4. Outlook
Since the scheduled acquisition date of the property is March 28, 2023, the acquisition of the property had no impact
on the forecast of performance for the fiscal period ending August 2023 (March 1, 2023 - August 31, 2023) and for thefiscal period ending February 2023 (September 1, 2022 – February 28, 2023), announced in “Earnings Briefing for thePeriod Ended August 2022” dated October 19, 2022.

- 5 -5. Overview of Appraisal Report
Property name

Kumamoto East Front Building

Appraisal value

1,460,000 thousand yen

Appraiser

The Tanizawa Sogo Appraisal Co., Ltd

Pricing dateFebruary 1, 2023
Category

Figures

Reasons, etc.

Income Capitalization Approach Value

1,460,000 thousand yen

Value Calculated Using the Direct
Capitalization Method

1,540,000 thousand yen

Gross Operating Revenue

139,857 thousand yen

Maximum Gross Operating Revenue
Shortfall Attributed to Vacancies
Operating Expenses

149,025 thousand yen Based on the market rent level
9,167 thousand yen
52,597 thousand yen

Maintenane and Management Fees・PM Fees（Note）

18,920 thousand yen Based on the similar cases and the estimate

Utilities Expenses

14,314 thousand yen

Repair and Maintenance Expenses

6,055 thousand yen Based on the ER and the similar cases

Tenants' Leasing Expenses etc.
Taxes and Fees
Damage Insurance

993 thousand yen Assumed annual 10.0% tenant replacement
11,011 thousand yen Based on the property taxes notice, etc
323 thousand yen Based on the estimate
979 thousand yen Based on the similar cases

Other Expenses
Neto Operating Income
Profit through Management ofTemporary Deposits
Capital Expenditure Reserve
Net Cash Flow

87,259 thousand yen
574 thousand yen
15,570 thousand yen
72,264 thousand yen
Evaulated considering the location, etc. of the4.7% property, future uncertainties, comparablecases, etc.

Capitalization Rage
Value through DCF method

Based on the income and expenditure results
and similar cases

1,430,000 thousand yen

Discount Rate

4.5%

Terminal Cap Rate

4.9%Value through cost method

1,420,000 thousand yen

Percentage of Leased Land

45.8%

Percentage of Building

54.2%

Other matters noted by the appraiser in inconducting
Not listed
appraisal(Note) Since disclosing the amounts of maintenance and management fees and PM fee separately could affect other transactions of the parties
entrusted with the building management and property management, eventually posing a problem for FRC’s efficient entrustment of affairs andpossibly damaging the interests of unitholders, maintenance and management fees and PM fee are indicated as a sum.

*FRC’s website is https://www.fukuoka-reit.jp/en/index.html- 6 -(Attachments)

Reference 1: Outlook of the Property
Reference 2: Location of the Property
Reference 3: Map of FRC’s Portfolio
Reference 4: FRC Portfolio List

- 7 -

Reference 1: Outlook of the Property- 8 -Reference 2: Location of the Property- 9 -Reference 3: Map of FRC’s Portfolio- 10 -

Reference 4: FRC Portfolio List
UseProperty Name

Acquisition Date(scheduled)

RetailOffice buildings
OthersCanal City Hakata
Canal City Hakata・B
Park Place Oita
SunLive City Kokura
Konoha Mall Hashimoto
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Marinoa City Fukuoka (Marina Side Building)
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
Higashi Hie Business Center III
Tenjin Nishi-Dori Business Center(Land with leasehold interest)
Hakata Chikushi-Dori Center Building
Kumamoto East Front Building
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia ChihayaD-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha
Tosu Logistics Center
LOGICITY Minato Kashii
LOGICITY Hisayama
LOGICITY Wakamiya
Total of all properties

Acquisition Price(planned) (mm yen)

Investment
Ratio(Note1)(Note2)

Nov. 9, 2004
Mar. 2, 2011
Nov. 9, 2004
Jul. 1, 2005
Mar. 1, 2018
Sep. 28, 2006
Nov. 30, 2006
Sep. 3, 2007
Feb. 1, 2008
Mar. 27, 2008
May 1, 2015
Nov. 9, 2004
Nov. 9, 2004
Sep. 30, 2005
Mar. 16, 2006
Mar. 13, 2009
Feb. 1, 2013
Mar. 28, 2013
Mar. 1, 2018
May 29, 2020

32,00021,06019,610
6,633
10,000
5,300
2,400
1,130
2,125
3,550
5,250
14,600
11,200
4,400
7,000
5,900
2,600
2,800
4,230
3,290

15.4%
10.2%
9.5%
3.2%
4.8%
2.6%
1.2%
0.5%
1.0%
1.7%
2.5%
7.0%
5.4%
2.1%
3.4%
2.8%
1.3%
1.3%
2.0%
1.6%

Jun.1, 2021

7,700

3.7%

Mar. 1, 2022
March 28, 2023
Sep. 1, 2006
Dec. 20, 2007
Mar. 1, 2012
Mar. 1, 2013
Nov. 4, 2014
Mar. 1, 2013
Dec. 7, 2018
Mar. 28, 2014
Mar. 27, 2015
Jun. 1, 2017
Jun. 30, 2020
－4,320
1,450
2,060
1,111
1,280
2,800
1,100
1,530
2,835
1,250
8,150
5,050
1,700
207,414

2.1%
0.7%
1.0%
0.5%
0.6%
1.3%
0.5%
0.7%
1.4%
0.6%
3.9%
2.4%
0.8%
100.0%(Note 1) All figures in the Acquisition Price (planned) column indicate the acquisition price written in the sales agreement
between FRC and the seller, and exclude charges, taxes and other expenses.
(Note 2) The ratio is rounded off to one decimal places.
(Note 3) Kurume Higashi Kushiwara SC completed the transfer of its 15% co-ownership interest in the trust beneficiary right on
February 28, 2023, and it is excluded the initial acquisition prices.

- 11 -