32 nd Fiscal Period
Report on Performance andManagement Status (Semiannual Report)

Security Code 8968

March 1, 2020 to August 31, 2020

Fukuoka REIT
Corporation

8968

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation
To Our Unitholders

ProfileStatus of the Investment Corporation

We would like to extend our heartfelt sympathies to those who have been stricken with the COVID-19 infection as well as to theirfamilies and related persons.
We express our sincere appreciation to all unitholders for your contin-

operating revenues of 8,518 million yen, operating income of 2,966

ued support of Fukuoka REIT Corporation (FRC).

million yen, ordinary income of 2,587 million yen and profit of 2,586

We are pleased to report on the performance results and manage-

million yen for the fiscal period under review. The dividend per unit

ment status of FRC for the thirty-second fiscal period (March 1, 2020

came to 3,250 yen. The actual dividend for the period increased by

to August 31, 2020).

100 yen per unit from the forecast at the time of the announcement

FRC was listed in June 2005 and started as Japan’s first REIT spe-of the financial results for the 31st fiscal period. The increase wascializing in regional properties. Since then, we have exhibited consis-

attained due to sales of community-based retail facilities recoveringtent growth and achieved stable performance through the support ofsuccessfully thanks to demand from stay at home; upward revision of

our unitholders and sponsor companies.

rents for office buildings was achieved for eight straight fiscal periods

In the fiscal period under review, the spread of the novel coronavi-

while keeping them at high occupancy; and our endeavors to reducerus (COVID-19) infection caused the government to announce thecosts including administration and operation expenses. Looking

declaration of a state of emergency in Japan, posing a significant

ahead, we will keep our endeavors to maintain and increase divi-

impact on daily lives and economic activities throughout society. As

dends in a stable manner by acquiring blue-chip properties to gener-

we foresee, the Japanese economy is expected to continue picking

ate stable cash flows and continuously taking strategic initiatives.

up due to various political measures proving effective, although full

Going forward, FRC will continue to exert its strengths as a REIT

attention should be paid to the COVID-19 trends and fluctuations in

specializing in regional properties and quickly respond to market

the financial and capital markets. Given the emergency declaration inchanges, while receiving support and cooperation from powerful

April, some of the retail properties FRC owns suspended operations

sponsors leading the Kyushu business world. We will also strive tothroughout the buildings (excluding certain stores), taking the security

maintain and increase the dividend per unit level through steady asset

and safety of the community residents and the tenants’ employees

management. We at FRC are resolved to pursue our mission of max-

into consideration first. Operations were resumed after the emergen-imizing unitholder interests over the medium to long term based oncy declaration was lifted, but sales of Canal City Hakata have de-our management philosophy of “Act Local, Think Global.”creased year-on-year as the decline of inbound tourism continues to

FRC is Japan's first REIT specializing in regional properties. FRC manages a portfolio centering on retail facilities featuring excellent design and entertainment qualities and superior office buildings throughout all of Kyushu. With a central focus on Fukuoka,
and in Yamaguchi Prefecture and Okinawa Prefecture, we are utilizing our strength of knowing the local characteristics of realestate, which is a very regional-specific business.

Overview of the Investment Corporation
Name:
Fukuoka REIT Corporation
Representative: Etsuo Matsuyuki, Executive Director
Asset manager: Fukuoka Realty Co., Ltd. (Fukuoka Local Finance Branch Bureau (financial instruments) No. 10)
Listed date:Sponsors

taking measures against the infection.

5%

THE BANK OFFUKUOKA, LTD.

THE NISHI-NIPPONCITY BANK, LTD.

Development Bank of Japan Inc.

SAIBU GAS CO., LTD.

Director

10%

Outsidedirector

Fukuoka Realty Co., Ltd.

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

5%

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

Kyushu Railway Company

ROYAL HOLDINGS Co., Ltd.

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

Under such circumstances, FRC newly acquired three properties,

Overview of the Asset Manager

including an office building, for 5,980 million yen in total in the 32nd
fiscal period. With the acquisitions, the asset size of FRC reached

Name:
Fukuoka Realty Co., Ltd.
Representative: Etsuo Matsuyuki, CEO & Representative Director
Address:
2-25, 1-Chome, Sumiyoshi, Hakata Ward, Fukuoka City

200.0 billion yen. We will aim to achieve 250.0 billion yen as the next
target going forward, while working to dissipate risks by diversifying
the portfolio as a REIT with comprehensive asset types specializing inregional properties. We will also flexibly investigate property replace-

Etsuo Matsuyuki

Portfolio

Telephone: +81-92-272-3900
Established: December 26, 2003
Capital:200,000,000 yen

Investment type (based on acquisition price)

Executive Director
Fukuoka REIT Corporation

RetailOffice buildings

58.0%

27.7%

Others14.3%

Investment area (based on acquisition price)

CONTENTSI.

5%

We greatly appreciate your continued support and cooperation.

boring and wider areas in Japan to visit the facilities, while thoroughly

cy rate of all properties FRC owns standing at 99.7%. FRC posted

5%

FUKUOKA JISHO
CO., LTD. (Note)

ic, we plan to implement measures to encourage customers in neigh-Occupancy remained solid, with the average period-end occupan-

5%

50%

have an affect. As our operation policy under the COVID-19 pandem-

ment and other measures if we find any favorable opportunities.

June 21, 2005 (Tokyo Stock Exchange, and Fukuoka Stock Exchange)

Overview of Fukuoka REIT Corporation
To Our Unitholders ........................................................................................................ 1
Profile .............................................................................................................................................. 2
Trend of Growth in Asset Size of FRC / Financial Summary ......................................................... 3
Portfolio Overview .......................................................................................................................... 5
Initiatives on Sustainability ............................................................................................................. 7

II. Semiannual Report ............................................................................................................... 9III. Independent Auditor's Report ...................................................................................... 26
IV. Balance Sheet ....................................................................................................................... 27
V. Statement of Income ......................................................................................................... 29
VI. Statement of Changes in Net Assets ........................................................................ 30
VII. Cash Flow Statement ........................................................................................................ 31
VIII. Notes to Financial Statements ..................................................................................... 32

FUKUOKA REIT CORPORATION

1

Other
Kyushu areas

Fukuoka metropolitan area

76.6%

23.4%

Total leasable floor space

Occupancy rate at end of period

591,021.51 m2

99.7%*Figures are based on properties owned as of August 31, 2020.
FUKUOKA REIT CORPORATION

2

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Trend of Growth in Asset Size of FRC
FRC More than Doubled Asset Size and Diversified Investment Types Since
The asset size surpassed 200 billion yen to reach 201.9 billion yen (on an acquisition price basis) in the 32nd fiscal period. FRC aims
Retail (left axis)(mm yen)

Office buildings (left axis)

Residence (left axis)

Logistics (left axis)

Listingto achieve 250.0 billion yen as the next target, while working to dissipate risks by diversifying the investment types.

Hotels (left axis)

Number of investment properties (right axis)

Occupancy rate (right axis) (Note)

99.6

200,000

99.8

99.0

99.4

99.7

99.2

99.3

99.2

99.1

99.0

99.0

99.1

99.0

99.3

99.1

99.3

98.9

98.1

99.5

99.1

98.7

99.6

99.5

99.6

99.4

99.8

99.7

99.6

99.6

99.7 (properties) (%)
40 10099.7

Acquired from sponsors

15

Sponsors

31

60.9%

properties* Higashi Hie Business Center, which FRC acquired in the10th fiscal period ended August 2009, was acquired bothfrom an outside seller and a sponsor. Accordingly, the acquisition price of the property has been evenly divided andadded to the acquisition price from outside sources and theacquisition from the sponsors, respectively. As for the number of properties, it has been added as a single property to
the number of acquisitions from the sponsors.

150,000

Other thansponsors

39.1%
78,969million yen

122,990

As ofmillion yen
August 31, 2020

31
30 90

201,959
million yen

27

100,000

19

15

14
11

16

15

16

16

17

16

28

27

25

24

23

23

27

25

26

29

29

29

26

20

20 80

17

11
10 70

50,000

7

8

5

0

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

(Aug. 2005)(Feb. 2006)(Aug. 2006)(Feb. 2007)(Aug. 2007)(Feb. 2008)(Aug. 2008)(Feb. 2009)(Aug. 2009)(Feb. 2010)(Aug. 2010)(Feb. 2011)(Aug. 2011)(Feb. 2012)(Aug. 2012) inancial Highlights for 32nd Fiscal Period and Business Forecasts forF
33rd and 34th Fiscal Periods
32nd fiscal period

33rd fiscal period

34th fiscal period(March 1, 2020 to August 31, 2020)(September 1, 2020 to February 28, 2021)(March 1, 2021 to August 31, 2021)

ActualForecast

Forecast

Operating revenues

mm yen

8,518

8,903

9,127

Leasing NOI (Note)

mm yen

5,307

5,299

5,448

Depreciation and amortization expenses

mm yen

1,686

1,631

1,607

Operating income

mm yen

2,966

3,013

3,174

Ordinary income

mm yen

2,587

2,628

2,787

Profitmm yen

2,586

2,627

2,786

Dividend per unityen (1)

3,250

–

–

Latest dividend forecast per unityen (2)

3,150

3,300

3,500

yen (1)-(2)

100

–

–

units

796,000

796,000

796,000

Difference from forecast
Total number of investment units outstanding(at end of period)

18th

19th

20th

21st

22nd

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

(Feb. 2013)(Aug. 2013)(Feb. 2014)(Aug. 2014)(Feb. 2015)(Aug. 2015)(Feb. 2016)(Aug. 2016)(Feb. 2017)(Aug. 2017)(Feb. 2018)(Aug. 2018)(Feb. 2019)(Aug. 2019)(Feb. 2020)(Aug. 2020)

60(Note) The occupancy rate indicates the figures at the end of each fiscal period for the 2nd fiscal period through the 4th fiscal period and the weighted average occupancy rate during the fiscal period for the 5th fiscal
period through the 32nd fiscal period. The figures indicate the ratio of total leased floor space to leasable floor space.

Financial Summary

Category0

17th(Note) “Leasing NOI” is calculated using “Leasing business revenues − Expenses related to leasing business + Depreciation and amortization expenses.”
FUKUOKA REIT CORPORATION

3

Dividend Performance
FRC has stably maintained its dividends since listing, despite a decrease in the 32nd fiscal period because of the impact of the
COVID-19 infection.
32nd fiscal period end

August 31, 2020 (semiannual periods ending every February and August) 32nd fiscal period days 184 days

32nd fiscal period dividend 3,250 yen per unit

Dividend yield

4.7% {(Dividend / Days × 365) / Unit price (as of August 31, 2020)}(yen)

4,000 3,802

3,687 3,726

3,468

3,672 3,699 3,674 3,609

3,475 3,479

3,356 3,293 3,384 3,324

3,238 3,257 3,291 3,243 3,278

3,435

3,563 3,574 3,479

3,398 3,422

3,512 3,593

3,687 3,693 3,642
3,250 3,300

3,500

3,000

2,000

1,000

0

2nd

3rd

4th

5th

6th

7th

8th

9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th

Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug.
[2005
] [2006] [2006] [2007] [2007] [2008] [2008] [2009] [2009] [2010] [2010] [2011] [2011] [2012] [2012] [2013] [2013] [2014] [2014] [2015] [2015] [2016] [2016] [2017] [2017] [2018] [2018] [2019] [2019] [2020] [2020] [2021] [2021]*FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. Dividend per unit indicates the value after the 5-for-1 split.
FUKUOKA REIT CORPORATION

4(Forecast)(Forecast)I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation
Purchase of earthquake
insurance

Portfolio Overview
1

Retail2

Canal City Hakata

3

Retail4

RetailRetailOthers25 (residence)

26 Others(hotel)27 Others(hotel)Others28 (logistics)

Park Place Oita

SunLive City Kokura

Granfore Yakuin Minami

Hotel FORZA Oita

Tissage Hotel Naha

Tosu Logistics Center

One of the largest entertainment-type
retail facilities in Japan and comprising
United Cinemas and others

One of the largest entertainment-type
retail facilities in Japan and comprisingGrand Hyatt Fukuoka and others

A leading retail facility in the Oita area,
providing “park entertainment” for families

One of the largest malls in Kitakyushu andanchored by a SunLive supermarket
chosen by local consumers

A rental condominium in the Yakuin/Hirao
area that is popular among younger
generations and has plentiful bus networks

A business hotel located walking distancefrom Oita Station and specialized for
lodging to meet business needs

A hotel in Naha City, Okinawa Prefecture
located a 10-minute car ride from Naha
Airport. Guestrooms are of sufficient sizeand quality to take in leisure demand.

A logistics facility located in the Green
Logistics Park Tosu, operating around theclock and with three temperature zones

5

6

7

8

Others29 (logistics)

Others30 (logistics)

Others31 (logistics)

RetailCanal City Hakata• B

FRC has purchased earthquake insurance
for all the properties it owns.

RetailRetailRetailKonoha Mall Hashimoto

Square Mall Kagoshima Usuki

Kumamoto Intercommunity SC

A community-based retail facility with SunLive
as its anchor tenant and directly connected to
Hashimoto Station via a pedestrian bridge

A retail facility in Kagoshima, designed byJohn Jerde who designed Canal City
Hakata and Roppongi Hills

Located along a major arterial road andcomprising Sports Depo, Golf 5 andStarbucks coffee

Located in a new residential area andcomprising BON REPAS supermarket
and Matsumoto Kiyoshi drug store

9

10 Retail11 Retail12 Office Building

RetailHanahata SC

LOGICITY Minato Kashii

LOGICITY Hisayama

LOGICITY Wakamiya

A logistics facility among the largest in the
Fukuoka area, with a location featuring
traffic convenience and concentration ofsuch facilities

Approximately 5 km from the Fukuoka
Interchange featuring traffic convenience,and has good general-purpose capabilities

A logistics facility located in a leadingindustrial city of Fukuoka prefecture andcan conduct operations 24 hours a day as
well as frequent deliveries

Portfolio Map
Having a large floor area and tenanted byan electric appliance store widely
attracting customers from nearby cities

14 Office Building

Located east of Marinoa City Fukuoka
and has stable attractiveness throughsynergy with the Outlet building

An office building expected to exert
synergy with Canal City Hakata, withshowroom functions

15 Office Building

Saga

16 Office Building

30

29

Fukuoka
Metropolitan Area

31 4
28
9

Nagasaki

Island City

Fukuoka
Oita

26
3

e
Lin

13 Office Building

Canal City Business Center Building

23

7

Sa
ny
o

Kumamoto
MiyazakiFukuoka
Metropolitan
Area

Sh
in
ka
ns
en

Located on a corner of a heavy-trafficintersection and comprising Sports Depoand Golf 5

Marinoa City Fukuoka (Marina Side Building)ssway
Kyushu Expre

K’s Denki Kagoshima

ii
sh
Ka
JR

Kurume Higashi Kushiwara SC

3

Fukuoka IC

Kagoshima

Gofukumachi Business Center

Sanix Hakata Building

Taihaku Street Business Center

Higashi Hie Business Center

An office building facing major arterial
roads Meiji-dori Street and Taihaku-doriStreet, and directly connected to
Gofukumachi Station on the city subway

A highly-convenient, station-front officebuilding that is a two-minute walk from
Hakata Station

Good location along Taihaku-dori Street, a
two-minute walk from Gion subway stationand ten-minute walk from Hakata Station

Directly connected to Higashi Hie subway
station, a two-minute ride to Hakata Stationand three-minute ride to Fukuoka Airport

17 Office Building

18 Office Building

19 Office Building

20 Office Building

6
10

Higashi Hie Business Center II

Higashi Hie Business Center III

An office building facing Tenjin Nishi-doriStreet where commercial facilities areconcentrated

A highly convenient office building locatedin the Tenjin area that features Kyushu’s
largest integration of urban functions

Directly connected to Higashi Hie subway
station, a two-minute ride to Hakata
Station and highly recognized for its
excellent business continuity plan (BCP)

FRC’s 3rd office building in the Higashi
Hie area, close to Higashi Hie subway
station and a two-minute ride to Hakata
Station

Others22 (residence)

Others23 (residence)

KyushuArea

27

Fukuoka Expressway,
Route 1 (Loop Line)

SubwayKuko Line

JR Sasaguri

13

FUKUOKA
PayPay DOME

21 24
Ohori Park

202

18

19
Hakata
1
16
12
14 20
2
3

17

22

Tenjin25
SubwayNanakumaLine

202

Others24 (residence)5

Fukuoka Airport

City House Keyaki DoriA tower-type rental condominium near
downtown Fukuoka, with traffic convenience and environment that matches awide range of generations

A high-quality rental condominium in a
popular residential area of Fukuoka,
featuring traffic and living convenience

Aqualia Chihaya

D-Wing Tower

A rental condominium comprised of units
mainly for singles and small families tomatch the local characteristics

A large, high-rise (20-story) rental
condominium, approximately a seven-minute walk from Tenjin subway station

FUKUOKA REIT CORPORATION

5

202

0

1km

Fukuoka
E

xpr
ess
wa

y R oute

op Line)5 (LoFukuoka metropolitan area
Other Kyushu areas(including Okinawa and Yamaguchi prefectures)

0 - 10% Others

Investment type

(Hotel, Residence, Logistics and other facilities)

8

FUKUOKA REIT CORPORATION

Investment area

40 - 70% Retail
20 - 50% Office buildings
0 - 30% Others

385

Amex Akasakamon Tower

Investment Policy
60 - 90%
10 - 30%

ine
aL
im
sh
go
Ka

202

Ni
sh
Omitetut su
a Te
Lin nj
e in

263

Line

15

JR

Others21 (residence)

Kyushu University Fukuoka Ex pr
Hakozaki Campus R oute 4 Kas essway,
uya Line
Site

ay
sw
es ne
pr Li
Ex ifu
an za
rb a
U D

Tenjin North Front Building

Hakata Bay

Okinawa

11

Tenjin Nishi-Dori Center Building

36

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Initiatives on Sustainability
Institution of Signatory

External Evaluation

Signing of the PRI and PFA21 as of September 2018

BELS (Building-Housing Energy-efficiency Labeling System) Evaluation

The GRESB Survey 2020

This is a system in which a third party evaluates and announces the energy-conservation
performance of non-residential buildings based on the “Guidelines for Evaluation of Energy

 rinciples for Responsible Investment
P(PRI) rinciples for Financial Action Towards
Pa Sustainable Society(Principles for Financial Action for the 21st Century)

Conservation Performance of Non-residential Buildings (2013).” Four properties owned by
the Fukuoka REIT corporation were certified.

For the third consecutive year, we participated in GRESB Real
Estate Assessment of GRESB (Global Real Estate Sustainability Benchmark) conducted in 2020, Received the rating of“Green Star” and “3 star” in the GRESB survey 2020.

Higashi Hie Business Center II

Higashi Hie Business Center

LOGICITY Minato Kashii

LOGICITY Hisayama

Green Building Certification
DBJ Green Building Certification
Fukuoka REIT has obtained DBJ Green Building Certification, a system by Development Bank of Japan Inc. (DBJ) to certify realestate properties evincing high environmental and social awareness for the following 11 properties.
5-starCanal City Hakata (2018), Canal City Hakata • B (2018)4-starPark Place Oita (2018), Canal City Business Center Building (2018),
LOGICITY Hisayama (2017), Konoha Mall Hashimoto (2017)3-starGofukumachi Business Center (2018), Higashi Hie Business Center (2018),
Higashi Hie Business Center II (2017)

1-star

SunLive City Kokura (2019), Marinoa City Fukuoka (Marina Side Building) (2019) reen Building Certificate Acquisition Ratio [as of August 31, 2020]
G
Green Building Certification Obtained for 79.8% of Entire Portfolio

Certificatedproperties

Aim to enhance the environmental performance of owned properties through external evaluation in order to help realize a sustainable society and maximize unitholder value over a medium to long term.

79.8%(based on total floor space)

FUKUOKA REIT CORPORATION

7

Changes to the Asset Management Fee Structure
The Management Fees 1 and 3 were reviewed for the purpose of further reinforcing the linkage between unitholder interest andthe asset management fee structure, and the following changes were resolved at the ninth General Meeting of Unitholders heldon May 26, 2020 for further enhancing unitholder value. The changes became effective on September 1, 2020 (beginning of the
33rd fiscal period)
Asset management fees

Calculation method[3 months from the day following the last day of the immediately preceding fiscal period]

Management Fee 1(based on total assets)

Total assets at the end of the immediately preceding fiscal period × 0.25% (previously 0.3%)
× number of days / 365[From the day following the last day of the period above to the end of the fiscal period](Total assets at the end of the immediately preceding fiscal period + value of acquired assets - valueof disposed assets) × 0.25% (previously 0.3%) × number of days / 365

Management Fee 2(based on operating revenue)

Operating revenue for the immediately preceding fiscal period × 2.0%

Management Fee 3(based on distributable profit)(Distributable amount before paying Management Fee 3 for the immediately preceding fiscal period)
× 3.6%(previously 2.0%)

Management Fee 4(acquisition fee)

Value of acquired assets × 0.5%
(Value of acquired assets × 0.25% in the case of acquisition from interested parties)

Management Fee 5(transfer fee)

Value of transferred assets × 0.5%
(Value of transferred assets × 0.25% in the case of transfer to interested parties)

FUKUOKA REIT CORPORATION

8

II. Semiannual Report

Overview of Asset Management

Overview of Asset Management

2. Management assessment(1) Brief history of the investment corporation

1. Changes in operating results and financial position
Fiscal Period(unit)

Operating revenues

mm yen[Leasing business revenues]

mm yen31st fiscal period

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

mm yen9,231[9,231]
5,913[5,250]
3,318
2,939
2,939
195,106[(0.2)]
77,500101,878[0.0]
98,9389,162[9,162]
5,888[5,226]
3,273
2,900
2,899
194,795[(0.2)]
77,500101,837[(0.0)]
98,9388,518[8,518]5,551[4,897]
2,966
2,587
2,586
199,004[2.2]
82,400101,525[(0.3)]
98,938

units

796,000

796,000

796,000

796,000

796,000(d)/(e)yen(f)

mm yen127,982
2,934
3,687[3,687][–]

127,987
2,939
3,693[3,693][–]

127,937
2,899
3,642[3,642][–]

127,5442,587
3,250[3,250][–]mm yenmm yenmm yenmm yen(a)

mm yen(b)

mm yen(c)

mm yen(d)

mm yen[Change from previous period]%[Change from previous period]%

Unitholders’ equity
Total number of investment
units outstanding
Net assets per unit
Total dividend
Dividend per unit

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

9,242[9,242]
5,936[5,274]
3,306
2,935
2,934
195,433[1.2]
77,500101,874[0.1]
98,938[Expenses related to leasing business]

Interest-bearing debt
Net assets

29th fiscal period(March 1, 2018 toAugust 31, 2018)

9,178[9,178]5,940[5,287]
3,238
2,861
2,860
193,112[8.9]
75,500101,799[8.6]
98,938Operating expenses
Operating income
Ordinary income
ProfitTotal assets

28th fiscal period(e)[Earnings dividend per unit]

yen[Dividend in excess of earnings per unit]

yen

127,888
2,860
3,593[3,593][–](Note 3)%

1.5 [3.1]

1.5 [3.0]

1.5 [3.0]

1.5 [3.0]

1.3 [2.6](Note 3)%

2.9 [5.8]

2.9 [5.8]

2.9 [5.7]

2.8 [5.7]

2.5 [5.0](d)/(b)

%

52.7

52.1

52.2

52.3

51.0

%

Ratio of ordinary income to total
assetsReturn on net assets
Ratio of net assets to total
assets(f)/(e)(Note 3)%[(0.2)]
100.0[(0.6)]
100.0

[0.1]
100.0

[0.1]
100.0

[(1.3)]
100.0(c)/(b)

%

39.1

39.7

39.7

39.8

41.4

properties

28

29

29

29

31

m2

576,907.98

580,665.27

580,664.27

580,662.77

591,021.51

%

99.6

99.7

99.6

99.7

99.7

mm yen

1,602

1,622

1,651

1,660

1,686

mm yen

657
5,493
184
4,462
5,606

947
5,591
181
4,557
5,725

476
5,633
184
4,591
5,767

465
5,596
182
4,559
5,728

790
5,307
184
4,273
5,368

[Change from previous period]

Payout ratio
Ratio of interest-bearing debt tototal assets at end of period (LTV)[Other reference information]
Number of investment
properties (at end of period)
Total leasable floor space(at end of period)

Occupancy rate
(at end of period)

Depreciation and amortization
expensesCapital expenditures
Leasing NOI
Days in fiscal period
FFO (Funds from Operation)
FFO per unityen

(Note 3)mm yendays(g)(Note 3) mm yen(g)/(e)yen(Note 1) Consumption tax is not included in operating revenues, etc.
(Note 2) In the above table, monetary amounts are rounded down to the nearest specified unit and percentage figures are rounded off to one decimal place.
(Note 3) The indicators are calculated by using the following methods. Furthermore, the figures in square brackets represent annualized value based on the number of days in each fiscal period.
Ratio of ordinary income to total assets
Return on net assets
Payout ratio
Leasing NOIFFO (Funds from Operation)

Ordinary income / average total assets
Average total assets = (Total assets at beginning of period + total assets at end of period) / 2
Profit / average net assets
Average net assets = (Net assets at beginning of period + net assets at end of period) / 2
Dividend per unit (excluding dividend in excess of earnings) / profit per unit
Profit per unit = Profit / total number of investment units outstanding
Leasing business revenues – expenses related to leasing business + depreciation and amortization expenses
Profit + depreciation and amortization expenses + impairment loss - gain or loss on sales of real estate

FUKUOKA REIT CORPORATION

9

Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on Investment Trusts andInvestment Corporations” (Act No. 198 in 1951 including later revisions, hereinafter the “Investment Trusts Act”) and listed on
the Tokyo Stock Exchange, Inc. and the Fukuoka Stock Exchange on June 21, 2005 as the nation’s first real estate investment
trust specializing in regional properties (code number: 8968). FRC invests in real estate throughout Kyushu (including Okinawa
Prefecture), with a central focus on Fukuoka City, and Yamaguchi Prefecture (hereinafter the “Fukuoka and Kyushu areas”) byusing expertise in regional characteristics, a strength in the real estate industry.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retail in Canal City
Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common space), a commercial complex where
specialty shops, cinema complex, theaters, amusement facilities, hotels and offices are integrally developed (hereinafter “Canal
City Hakata”). In the fiscal period under review (the 32nd fiscal period), FRC acquired three properties in total (Higashi Hie Business Center III on May 29, 2020, LOGICITY Wakamiya on June 30, 2020 and Home Plaza NAFCO at Park Place Oita on July 1,2020). As of the end of the 32nd fiscal period (August 31, 2020), FRC manages a total of 31 properties comprising 11 Retail, 9
Office buildings and 11 Others.

(2) Investment environment and portfolio performance
During the 32nd fiscal period, the Japanese economy continued to stay in a severe situation under the impact of the novel coronavirus (COVID-19) infection. Looking ahead, the economy is expected to continue picking up partly due to various politicalmeasures proving effective, although full attention should be paid to the COVID-19 trends as well as fluctuations in the financial
and capital markets.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy was in a situation in which consumer
spending was starting to pick up but exports and production decreased while labor supply - demand conditions and compensation of employees were both on a somewhat weak note. With regard to the outlook, attention should be paid to the impact of
the COVID-19 trends on the corporate and household sentiments, among other factors.
As for land price trends, the national average price in combined average for residential and commercial land took a downward
turn for the first time in 3 years, according to the 2020 Land Market Value Publication. By land type, residential land price showeda higher rate of decrease and commercial land price dropped for the first time in 5 years. Meanwhile, in Fukuoka City, the central
area of FRC’s investment targets, land prices continued rising for eight consecutive years, up 7.5% year-on-year for commercial
land and up 3.5% year-on-year for residential land.
Under such circumstances, FRC’s portfolio achieved a solid performance in the asset types of office buildings, logistics facilities and residential properties. On the other hand, monthly sales of Canal City Hakata and other major retail properties as well
as hotels have kept falling below the year-earlier level since March 2020.
When analyzing FRC’s portfolio (on an acquisition price basis) as of the end of the 32nd fiscal period by investment target area,
the investment ratio in the Fukuoka urban area accounted for 76.6%; when analyzing by property type, Retail, Office buildings,
and Others accounted for 58.0%, 27.7% and 14.3%, respectively.
On top of these efforts, FRC is engaged in promoting sustainability through environmental, 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 Asset Manager), which investigates specific targets andmeasures and supervises the progress in implementation of the measures with regard to the internal system, cooperation withrelated parties outside the company and information disclosure policy, etc. On the implementation side, FRC has established theSustainability 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 is engaged incontinuous operations related to the GRESB Real Estate Assessment (with Green Star rating), the Principles for Responsible
Investment (PRI) and the Principles for Financial Action for the 21st Century (PFA21) continuing operations and other initiatives.

FUKUOKA REIT CORPORATION

10

II. Semiannual Report

II. Semiannual Report

Overview of Asset Management

Overview of Asset Management(3) Summary of fundraising[Changes in market price of investment certificates]

As FRC conducted refinancing of 1,000 million yen as well as new financing of 4,900 million yen in the 32nd fiscal period, thebalance of its interest-bearing debt outstanding (including investment corporation bonds) at the end of the period totaled 82,400
million yen, with the loan-to-value ratio (ratio of interest-bearing debt (including investment corporation bonds) to total assets) at
41.4% and the ratio of fixed-interest rate debt (ratio of interest-bearing debt with fixed interest rates (including investment corporation bonds) to total interest-bearing debt) at 94.1% as of the same date. In addition, with regard to the commitment line
agreement (credit limit: 6,000 million yen) with The Bank of Fukuoka, Ltd. serving as the agent, FRC extended the commitment
period by two years, lengthening the remaining term of commitment to three years.
Going forward, FRC will continue its endeavors to reduce refinancing risks by dispersing debt repayment dates and extending
debt duration. At the same time, FRC will work to mitigate risks of rising interest rates by shifting to fixed-interest rate borrowings
and through other measures.

The highest and lowest (closing price) market prices on the Real Estate Investment Trust Section of the Tokyo Stock Exchange,
Inc., on which FRC’s investment certificates are listed, in each fiscal period are as follows:Moreover, the credit ratings assigned to FRC as of the end of the 32nd fiscal period are as follows:
Credit Rating Agency
Rating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)

Rating Type
Issuer Rating
Long-term Issuer Rating

RatingA+
AA−

Rating Outlook
StableStable(4) Summary of performance and dividend

Fiscal period
HighestLowestDate
July 2, 2004
November 8, 2004
June 20, 2005
July 21, 2005
September 7, 2006
March 1, 2011
March 1, 2013
March 1, 2014
April 27, 2015
March 1, 2018

Item
Established through private placement
Additional issue of investment units through private offering
Additional issue of new investment units through public offering
Additional issue of new investment units through third-party allotment
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering
Split of investment units
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering

Number of investment units
issued (units)
Increase
Balance250
250
82,80083,0507,000
90,0502,000
92,05015,000107,050
16,000123,050
14,950138,000
552,000
690,000
57,000747,000
49,000796,000

ProfitUnappropriated surplus
Undistributed earnings
Total dividends[Dividend per unit]

Earnings dividends[Earnings dividend per unit][Contribution refund per unit]

Unitholders’ capital(mm of yen) (Note 11)

Increase
125
41,4005,944
1,698
11,096
8,913
10,263–
11,701
7,795

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441
91,142
98,938Remarks(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)11

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

176,100 yen
159,900 yen

182,500 yen
166,000 yen

191,700 yen
167,900 yen

169,900 yen
72,500 yen(Of the contribution refund per unit,
distribution per unit of the reserve
for temporary difference
adjustments)

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

28th fiscal period

29th fiscal period

30th fiscal period

31st fiscal period

32nd fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

2,860,088
2,860,542
514
2,860,028[3,593 yen]
2,860,028[3,593 yen]–[–]

2,934,877
2,935,391
539
2,934,852[3,687 yen]
2,934,852[3,687 yen]–[–]

2,939,139
2,939,679
51
2,939,628[3,693 yen]
2,939,628[3,693 yen]–[–]

2,899,112
2,899,164
132
2,899,032[3,642 yen]
2,899,032[3,642 yen]–[–]

2,586,899
2,587,031
31
2,587,000[3,250 yen]
2,587,000[3,250 yen]
–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

(Note 8)(Note 9)(Note 10)(Note 1) FRC was established with an issue of investment units at 500,000 yen per unit.
(Note 2) New investment units were issued through private offering at the issue price of 500,000 yen per unit for the purpose of procuring funds for acquiring new properties, etc.
(Note 3) New investment units were issued through public offering at the issue price of 880,000 yen per unit (purchase price of 849,200 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 4) New investment units were issued through third-party allotment at the purchase price of 849,200 yen per unit.
(Note 5) New investment units were issued through public offering at the issue price of 766,360 yen per unit (purchase price of 739,772 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 6) New investment units were issued through public offering at the issue price of 576,083 yen per unit (purchase price of 557,078 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 7) New investment units were issued through public offering at the issue price of 710,580 yen per unit (purchase price of 686,529 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 8) FRC implemented a 5-for-1 split of its investment units.
(Note 9) New investment units were issued through public offering at the issue price of 212,257 yen per unit (purchase price of 205,290 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 10) New investment units were issued through public offering at the issue price of 164,414 yen per unit (purchase price of 159,102 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 11) No consideration has been given to the change in unitholders’ equity due to distribution of dividend in excess of earnings that came from reserve for temporary difference adjustments.

FUKUOKA REIT CORPORATION

31st fiscal period(March 1, 2019 toAugust 31, 2019)

With respect to the dividend (excluding dividend in excess of earnings) for the 32nd fiscal period, FRC determined to distributethe whole unappropriated surplus (except for the fraction amount, which is the dividend per unit of less than 1 yen) to be eligible
for special tax measures for an investment corporation (as stipulated in Article 67-15-1 of the Special Taxation Measures Act)
that allow FRC to deduct the maximum amount of earnings dividend from its taxable income. Accordingly, dividend per unit for
the fiscal period was 3,250 yen.
(thousands of yen)Of the contribution refund,
distribution of the reserve
for temporary difference
adjustments

Changes in unitholders’ capital from the incorporation of FRC to the end of the 32nd fiscal period are as follows:

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

4. Results of dividend, etc.

Contribution refund

3. Change in the number of investment units issued

29th fiscal period(March 1, 2018 toAugust 31, 2018)

177,600 yen
162,600 yen

Fiscal period

As a result of these management efforts, operating revenues totaled 8,518 million yen and operating income after excluding
operating expenses such as expenses related to leasing business and asset management fees totaled 2,966 million yen. Ordinary income was 2,587 million yen and profit amounted to 2,586 million yen. Management decided to make a dividend of 3,250
yen per unit to meet the requirements of special tax measures for an investment corporation (as stipulated in Article 67-15 of the
Act on Special Measures Concerning Taxation of Japan [Act No. 26 in 1957 including later revisions]). Under this act, an investment corporation is allowed to deduct the maximum amount of dividends paid to investors from its taxable income.

28th fiscal period

5. Future portfolio management policy and vital issues
FRC will further reinforce management and leasing capabilities by cooperating with property management companies including
sponsor companies, and secure and maintain the stable operation of the properties by making the most use of their advantages.
FRC will continue to make investments based on the basic policy stipulated in its Articles of Incorporation and its basic philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in “high growth potential
markets.” By geographic location, of the Fukuoka and Kyushu areas, FRC will invest 60% to 90% of its assets in the Fukuoka
metropolitan area, since the Fukuoka metropolitan area is expected to have a high population growth rate in the future. In addition to the Fukuoka metropolitan area, management has decided to actively acquire properties in major cities, if there are regionsor properties where FRC can generate investment merits through its knowledge of the local land. FRC will acquire high quality
properties through use of its advantages, such as information gathering ability in the areas, good knowledge of regional properties and close relations with the local business community and governments, so that investors can continue to invest in FRC withassurance.
FUKUOKA REIT CORPORATION

12

II. Semiannual Report

II. Semiannual Report

Overview of the Investment Corporation

Overview of Asset Management
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try to maintain a solid
financial structure.

6. Significant events that have occurred after the end of the 32nd fiscal
periodNo relevant items.

3. Matters related to directors(1) The names of FRC’s directors, etc. and their fees for the 32nd fiscal period are as
follows:
Title

Supervisory Directors
Independent Auditor

1. Summary of unitholders’ capital
Total number of authorized
investment units
Total number of investment
units outstanding
Number of unitholders

Major concurrent assignments

Total fee for each title for the
32nd fiscal period(thousands of yen) (Note 2)

Executive Director

Overview of the Investment Corporation

Fiscal period

Name of directors, etc.

28th fiscal period

29th fiscal period

30th fiscal period

31st fiscal period

32nd fiscal period

as of August 31, 2018as of February 28, 2019as of August 31, 2019as of February 29, 2020

as of August 31, 2020

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

796,000 units

796,000 units

796,000 units

796,000 units

796,000 units

10,49910,47810,551

10,473

14,4682. Matters related to investment units
The following table sets forth the major unitholders of FRC as of August 31, 2020.
Name

Investment units held (units)

Custody Bank of Japan, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Fukuoka Jisho Co., Ltd.
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
Custody Bank of Japan, Ltd. (Securities investment trust account)
NORTHERN TRUST CO. (AVFC) RE HCR00
STATE STREET BANK WEST CLIENT – TREATY 505234
MetLife, Inc.
Shikoku Railway Company
Nomura Securities Co., Ltd.
Total

169,654
86,221
73,13637,002
19,05914,083
11,597
10,2279,130
8,961
439,070

Percentage of total number ofinvestment units outstanding (%) (Note)
21.31
10.83
9.18
4.64
2.39
1.76
1.45
1.28
1.14
1.12
55.15

Etsuo Matsuyuki
Hiroyasu Shindo
Takashi Tanabe
Yasuo Kawasho
PricewaterhouseCoopers
Aarata LLC

CEO and Representative Director, Fukuoka Realty Co., Ltd.
Representative Council, Shindo Law Firm
Representative attorney at law at Tanabe Law Office
Representative Partner, Kawasho Authorize Accountant Office
–

13

3,600
9,000

(Note 1) The Executive Director and Supervisory Directors do not possess investment units of FRC under their own name or under another person’s name. Although there are cases where the Supervisory Directors may be directors of companies other than those stated above, none of the companies or those stated above have vested interest in FRC.
(Note 2) The fees for the Executive Director and Supervisory Directors are the amounts paid to them in the 32nd fiscal period, and the fee to the Independent Auditor is the amount payable to it (estimate) foraudits pertaining to the 32nd fiscal period.
(Note 3) Appointments of Executive Director and Supervisory Directors of FRC due to the expiration of their terms of office were made at the Ninth General Meeting of Unitholders held on May 26, 2020. Etsuo
Matsuyuki was reappointed as Executive Director. As for Supervisory Directors, Yasuo Kawasho was reappointed and Takashi Tanabe was newly appointed to the position as of May 29, 2020 in accordance with the resignation of Hiroyasu Shindo as of May 28, 2020 due to the expiration of his term of office.

(2) Policy on deciding to dismiss and not to reappoint the Independent Auditor
FRC will review at its Board of Directors meetings decisions regarding the dismissal of the Independent Auditor in accordancewith the provisions of the Investment Trusts Act, and review decisions not to reappoint the Independent Auditor following thecomprehensive consideration of the audit quality, audit fee and other various conditions.

4. Names of asset management company, asset custodian and generaladministrators as of the end of the 32nd fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as of August
31, 2020.
Category of entrustment
Asset Management Company
Asset Custodian
General Administrator (accounting matters, etc.)
General Administrator (administration of unitholders’ list)
General Administrator (administration of investment corporation bonds registry)
General Administrator (administration of investment corporation bonds registry)Name
Fukuoka Realty Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Mitsubishi UFJ Trust and Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.

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

FUKUOKA REIT CORPORATION

6,000

FUKUOKA REIT CORPORATION

14

II. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Status of FRC’s Assets under Management

1. FRC’s asset structure
Type of asset

Use

3. Details of real estate properties in the portfolio

Area(Note 1)

Real estate trust
beneficiary interest

as of August 31, 2020

The following table provides details of the real estate properties owned by FRC as of August 31, 2020.

Percentage of
total assets

Total value of
properties owned

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

–
–
–
–
–
–
75,02636,19845,344–20,303
5,464
12,458

–
–
–
–
–
–
38.5
18.6
23.3
–
10.4
2.8
6.4

–
–
–
–
–
1,821
74,852
37,03348,283–
20,171
5,408
11,433

–
–
–
–
–
0.9
37.6
18.6
24.3
–
10.1
2.7
5.7

194,795[182,352]

100.0[93.6]

199,004[187,589]

100.0[94.3]

Fukuoka metropolitan area
Other Kyushu areas
Fukuoka metropolitan area
Office buildings
Other Kyushu areas
Fukuoka metropolitan area
OthersOther Kyushu areas
Fukuoka metropolitan area
RetailOther Kyushu areas
Fukuoka metropolitan area
Office buildings
Other Kyushu areas
Fukuoka metropolitan area
OthersOther Kyushu areas
Deposits and other assets
Total amount of assets (Note 4)

32nd fiscal period

Total value of
properties owned

RetailReal estate

31st fiscal period
as of February 29, 2020

(Note 1) “Fukuoka metropolitan 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 “thenumber of workers and students aged 15 years or older (students including those aged 14 years or younger: particular reference) commuting between their homes and places of work or school” conducted by Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs and Communications. “Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka metropolitanarea).
(Note 2) “Total value of properties owned” is based on the value on the balance sheet (the value of real estate and real estate trust beneficiary interest is the book value after depreciation).
(Note 3) Concerning the “Percentage of total assets,” the figures are rounded off to one decimal place. The total of individual percentages in the above table may not equal 100%.
(Note 4) Figures in square brackets for “Total amount of assets” refer to the value and percentage of real estate owned in effect to the total amount of assets.

Real estate property namePark 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)

Sanix Hakata Building

Higashi Hie Business Center

The following is an overview of the major assets (top ten properties on a book value basis) owned by FRC as of August 31, 2020.

Tenjin Nishi-Dori Center Building

Canal City Hakata
Canal City Hakata·B
Park Place Oita (Note 4)
Canal City Business Center Building
Konoha Mall Hashimoto
Gofukumachi Business Center
LOGICITY Minato Kashii
Taihaku Street Business Center
SunLive City Kokura
Marinoa City Fukuoka (Marina Side Building)
Total

Total leasable
floor space (m2)(mm of yen)

29,61628,85820,29012,989
9,979
8,819
7,824
5,774
5,487
5,425
135,064

46,604.75
68,825.90
121,212.26
23,029.92
22,121.05
19,905.34
43,233.72
14,677.30
61,450.22
33,069.82
454,130.28

Total leased floor Occupancy rate(%) (Note 2)
space (m2)
46,604.75
68,474.76
121,212.26
22,834.52
22,121.05
19,905.34
43,233.72
14,444.57
61,450.22
33,069.82
453,351.01

100.0
99.5
100.0
99.2
100.0
100.0
100.0
98.4
100.0
100.0
99.8

(Note 1) The properties listed above are owned in the form of trust beneficiary interest.
(Note 2) “Occupancy rate” refers to the percentage of leased floor space to leasable floor space and the figures are rounded off to one decimal place.
(Note 3) “Percentage of total leasing business revenues” is rounded off to one decimal place.
(Note 4) The figures include Home Plaza NAFCO at Park Place Oita, which FRC acquired on July 1, 2020. The same shall apply hereafter.
(Note 5) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

Percentage of total
leasing businessrevenues (%) (Note 3)
11.9
15.3
13.1
7.3
8.3
6.5
Undisclosed (Note 5)
3.7
3.1
1.9
–

Tenjin North Front Building
Main use
RetailRetailRetailOffice buildings
RetailOffice buildings
Others
Office buildings
RetailRetail–Retail subtotal:

Canal City Business Center Building

2. Major assets owned by FRC
Book value

2-22, 1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City
2-1, 1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City1, 2-chome, Koen Dori Nishi, Oita City,
Oita
14-1, 2-chome, Kami Kuzuhara,
Kokura Minami Ward, Kitakyushu City
27-2, 2-chome, Hashimoto, Nishi
Ward, Fukuoka City
2-18, 2-chome, Usuki, Kagoshima
City, Kagoshima
1-5, 1-chome, Kozono, Higashi Ward,
Kumamoto City
9-12, 4-chome, Hanahata, Minami
Ward, Fukuoka City
370-3 Higashi Kushiwara, Kurume
City, Fukuoka
4-12, Tokai-cho, Kagoshima City,
Kagoshima
12-30, 2-chome, Odo, Nishi Ward,
Fukuoka City

Canal City Hakata·B

Taihaku Street Business Center

Real estate property name (Note 1)

Location

Canal City Hakata

Gofukumachi Business Center

Higashi Hie Business Center II
Higashi Hie Business Center III

2-25, 1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City
10-10, Kami Gofukumachi, Hakata
Ward, Fukuoka City
1-23, 2-chome, Hakataeki Higashi,
Hakata Ward, Fukuoka City
3-21 Gokushomachi, Hakata Ward,
Fukuoka City
1-2, 3-chome, Higashi Hie, Hakata
Ward, Fukuoka City
5-28, 2-chome, Tenjin, Chuo Ward,
Fukuoka City
4-20, 4-chome, Tenjin, Chuo Ward,
Fukuoka City
5-13, 1-chome, Higashi Hie, Hakata
Ward, Fukuoka City45, 4-chome, Higashi Hie, Hakata
Ward, Fukuoka City

Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha
Tosu Logistics Center
LOGICITY Minato Kashii
LOGICITY Hisayama
LOGICITY Wakamiya

Form ofownership

4-23, 2-chome, Maizuru, Chuo Ward,
Fukuoka City
16-21, 2-chome, Kego, Chuo Ward,
Fukuoka City
3-12, 4-chome, Chihaya, Higashi
Ward, Fukuoka City
10-38, 2-chome, Daimyo, Chuo Ward,
Fukuoka City
11-20, 1-chome, Hirao, Chuo Ward,
Fukuoka City
5-18, 1-chome, Chuo-cho, Oita City,
Oita
14-1, 2-chome, Nishi, Naha City,
Okinawa
1607 Aza Momota, Himekata-cho,Tosu City, Saga
3-4, 2-chome, Minato Kashii, Higashi
Ward, Fukuoka City
2335-3 Oaza Yamada, Hisayamamachi, Kasuya County, Fukuoka
1406 Shimoaruki, Miyawaka City,
Fukuoka

Others subtotal:
Total

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Real estate

Total leasable
floor space (m2)Period-end
appraisalvalue(mm of yen)
(Note 1)

Book value
at end ofperiodReal estate appraiser(mm of yen)

46,604.75

31,50029,616

68,825.90

29,70028,858

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

121,212.26

21,30020,290Japan Real Estate Institute61,450.22

8,440

5,487

Japan Real Estate Institute22,121.05

10,4009,979

Tanizawa Sogo Appraisal
Co., Ltd.

14,602.88

4,940

4,307

Japan Real Estate Institute6,968.66

2,750

1,968

Japan Real Estate Institute2,801.15

1,250

973

6,467.80

2,790

2,026

7,296.17

3,710

2,952

33,069.82

6,080

5,425

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

391,420.66

122,860

111,885

23,029.92

16,60012,98919,905.34

14,9008,819

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

6,293.75

6,410

3,756

Japan Real Estate Institute

14,677.30

9,090

5,774

Japan Real Estate Institute13,614.59

8,030

4,444

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

3,100

2,669

Japan Real Estate Institute5,252.41

4,380

2,469

Japan Real Estate Institute6,214.77

4,600

4,064

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

2,981.14

3,300

3,294

95,308.54

70,41048,283

4,821.25

1,840

1,668

2,710.86

1,140

901

5,619.69

1,860

1,169

Japan Real Estate Institute7,187.59

3,500

2,669

2,496.06

1,320

1,098

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

5,785.44

1,890

1,386

Japan Real Estate Institute3,758.76

2,880

2,853

Tanizawa Sogo Appraisal
Co., Ltd.

4,173.29

1,300

1,168

Japan Real Estate Institute43,233.72

8,910

7,824

24,505.65

5,270

4,838

(Note 2)

(Note 3)

1,821

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

–104,292.31
591,021.51

2,360
32,270225,540

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

27,401
187,571(Note1) “Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity with the method and standards for asset evaluation stipulated in FRC’s Articles ofIncorporation and rules stipulated by The Investment Trusts Association, Japan.
(Note 2) The figure is not indicated as repair work is carried out after the acquisition and the operation is scheduled to start around November 2020.
(Note 3) It is assumed that the repair work which was under way at the time of appraisal has been completed and the lease agreement based on the fixed-term lease option agreement has come into effect.

FUKUOKA REIT CORPORATION15FUKUOKA REIT CORPORATION

16

II. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Real estate property name

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

Number ofOccupancy
tenants at end rate at end ofof period
period(Note 1)

Canal 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)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
Higashi Hie Business Center III
Office buildings subtotal:

1 [48]
1 [46]
1 [103]
1
1 [124]
12
2
2
1
1
1
24 [341](Note 2)

1 [63]
36
16
1 [69]
1 [27]
1
11
2–
69 [225](%) (Note 3)

Total leasing Percentage ofTotal leasing Percentage of
Number ofOccupancy
business
total leasing
business
total leasing
tenants at end rate at end ofrevenues
business
revenues
businessof period
periodduring periods
revenues
during periods
revenues(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)

99.8
99.5
99.9
100.0
98.7
100.0
100.0
100.0
100.0
100.0
100.0

1,238
1,586
1,181
281
821
256
90
41
89
111
178

13.5
17.3
12.9
3.1
9.0
2.8
1.0
0.4
1.0
1.2
1.9

99.8

5,876

64.1

100.0
100.0
100.0
99.1
100.0
100.0
100.0
100.0
–

607
545
205
311
342
86
143
164
–

6.6
5.9
2.2
3.4
3.7
0.9
1.6
1.8
–

99.9

2,406

26.3

Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha

1 [63]
1 [39]
1 [103]
1 [134]
1 [96]
1
1

95.0
93.3
97.9
97.7
97.0
100.0
100.0

Tosu Logistics Center

1

100.0

65
36
59
114
39
63
68
Undisclosed

0.7
0.4
0.6
1.3
0.4
0.7
0.8
Undisclosed(Note 5)(Note 5)

Undisclosed(Note 2)

1 [50]
1 [45]
1 [106]
1
1 [126]
13
2
2
1
1
1
25 [348](Note 2)

1 [60]
36
16
1 [67]
1 [27]
1
11
2
5
74 [225]

99.9

5,157

60.6

99.2
100.0
100.0
98.4
100.0
100.0
100.0
100.0
94.1

624
554
207
318
349
86
145
164
47

7.3
6.5
2.4
3.7
4.1
1.0
1.7
1.9
0.6

2,497

29.3

1

100.0

64
38
59
117
38
63
43
Undisclosed

0.8
0.4
0.7
1.4
0.5
0.7
0.5
Undisclosed(Note 5)(Note 5)2

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)1

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)

–

–

–

99.2

863

10.1

99.7

8,518

100.0

100.0

(Note 5)(Note 5)LOGICITY Hisayama

1

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)LOGICITY Wakamiya (Note 6)

–

–

–

Others subtotal:–
11 [441]

99.2

879

9.6

–
11 [443]

Total

104 [1,007]

100.0

110 [1,016]

9,162

11.9
15.3
13.1
3.1
8.3
3.0
1.1
0.5
1.0
1.3
1.9

90.6
100.0
97.9
96.7
99.0
100.0
100.0

2

99.7

(%) (Note 4)

1,016
1,306
1,113
262
710
253
89
40
88
111
165

99.4

(Note 2)LOGICITY Minato Kashii(Note 2)(mm of yen)

100.0
99.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1 [61]
1 [42]
1 [103]
1 [133]
1 [98]
1
1

Undisclosed(Note 2)

Status of FRC’s Assets under Management(Note 2)
(Note 2)

(Note 1) “Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and office buildings among relevant properties. For the number of tenants in pass-throughmaster leasing properties, the number of sections stipulated in the tenancy agreements with end tenants is shown in square brackets. The Taihaku Street Business Center is an office building with aresidential tower. Its number of tenants comprises 11 for the office building and 56 for the residence in the 32nd fiscal period (12 for the office building and 57 for the residence in the 31st fiscal period).
(Note 2) The total of all the tenants in other than pass-through master leasing properties and the total number of sections stipulated in the tenancy agreements with end tenants for pass-through master leasing
properties is shown in square brackets in the subtotal and total columns for “Number of tenants.”(Note 3) “Occupancy rate” refers to the percentage of leased floor space to leasable floor space and the figures are rounded off to one decimal place.
(Note 4) “Percentage of total leasing business revenues” is rounded off to one decimal place, and the total of individual percentages in the above table may not equal 100%.
(Note 5) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.
(Note 6) Since the repair work is carried out after the acquisition and the operation is scheduled to start around November 2020, no rent, etc. have been incurred in the 32nd fiscal period.

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

7. List of specific transaction and forward exchange transaction contract
amount and status of fair value
The following table provides the contract amount of FRC’s specific transactions and the status of its fair value as of August 31,
2020.
Category
Off-market transaction

Contract amount, etc. (mm of yen)
Of which, exceeding 1 year

Type

(Note 1)

Interest rate swap transaction(Receivable floating; Payable fixed)
Total

23,70017,400(214)

23,70017,400(214)(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors.

8. Status of other assets
All real estate and real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in the portfolio” on page 16. There is no incorporation of other specified assets as of the end of the 32nd fiscal period.

9. Status of owned assets by country and region
As of the end of the 32nd fiscal period, no overseas real estate properties in countries or regions other than Japan are incorporated into FRC’s portfolio.

Capital Expenditures for Owned Real Estate
1. Planned capital expenditures
The following table provides amounts of major items of capital expenditures associated with currently planned renovations, etc.
for real estate properties owned by FRC as of the date of this Semiannual Report. The planned construction costs indicatedbelow may be partly classified as expenses. In addition, FRC will implement renewal construction work in order to maintain andimprove the competitiveness of properties in the market as well as tenant satisfaction, on top of the construction, facilities andreplacement work for which expenditures will be made regularly.
Planned construction cost
Real estate property
nameCanal City Hakata
Canal City Hakata·B

Location

PurposeTotal
Hakata Ward,
Fukuoka City
Hakata Ward,
Fukuoka City

Formation of tenant sections
Replacement of mechanical security systemmonitoring terminals

Park Place Oita

Oita City, Oita

Replacement of air-conditioning units

Taihaku Street
Business Center

Hakata Ward,
Fukuoka City

Renovation of external walls

From August 2020 toJanuary 2021
From December 2020 toAugust 2021
From October 2020 toNovember 2020
From May 2021 toAugust 2021

No relevant items.

6. Securities incorporated in the portfolio
No relevant items.
17(mm of yen)

Schedule

5. Details of the rights to operate public facilities, etc. in the portfolio

FUKUOKA REIT CORPORATION

Fair value(mm of yen) (Note 2)

FUKUOKA REIT CORPORATION

18

Construction
Amountcost
already paid

99

–

–

57

–

–

114

–

–

120

–

–

II. Semiannual Report

II. Semiannual Report

Capital Expenditures for Owned Real Estate

Expenses and Liabilities

2. Capital expenditures during the 32nd fiscal period

1. Details of expenses related to asset management

Capital expenditures for the real estate properties owned by FRC totaled 790 million yen in the 32nd period. Furthermore, FRC
incurred construction costs of 895 million yen in total in the period, including 92 million yen in repair and maintenance expenses
classified as expenses on the Statement of Income and 12 million yen in expenses for restoration to former state. The following
table provides the overview of major construction work that was completed in the 32nd fiscal period.

Real estate property nameLocation

Purpose

PeriodCanal City Hakata

Hakata Ward, Fukuoka City

Renovation of external walls

Canal City Hakata·B

Hakata Ward, Fukuoka City

Renovation of external walls

Canal City Hakata·B

Hakata Ward, Fukuoka City

Replacement of tide embankment(Seawall (water stops))

Park Place Oita

Oita City, Oita

Renovation of external walls

Park Place Oita

Oita City, Oita

Rooftop waterproofing

Sanix Hakata Building

Hakata Ward, Fukuoka City

Replacement of air-conditioning units

From August 2019 toJuly 2020
From August 2019 toJuly 2020
From April 2020 toJuly 2020
From March 2020 to
May 2020
From April 2020 to
May 2020
April 2020

Construction cost
(mm of yen)

88
176
57

(thousands of yen)
Item

(Note) Aside from the amounts of the asset management fees shown above, 19,200 thousand yen was paid in the 32nd fiscal period for asset management, capitalized in the acquisition costs, related to theacquisition of Higashi Hie Business Center III, LOGICITY Wakamiya and Home Plaza NAFCO at Park Place Oita.

48

As of the end of the 32nd fiscal period (August 31, 2020), FRC has the following debt from respective financial institutions.

29

Category

Aozora Bank

28th fiscal period

29th fiscal period

30th fiscal period

31st fiscal period

32nd fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)(September 1, 2019 toFebruary 29, 2020)(March 1, 2020 toAugust 31, 2020)

1,000
–
–
1,000

1,000
–
–
1,000

1,000
–
–
1,000

1,000
–
–
1,000

Mizuho Bank
Current The Norinchukin Bank
maturities The Hiroshima Bankof long- The Kitakyushu Bank
term debt
The Iyo Bank
The Higo Bank
SubtotalMizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu BankThe Iyo Bank
The Higo Bank

June 28, 2013

July 31, 2014

July 31, 2014

Balance as ofMarch 1,
2020

Balance as ofAugust 31,
2020

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note)

1,000

–

–
–
–
–
–
–
1,000
2,300
1,000
1,400
800
500
300

2,300
1,000
1,400
800
500
300
6,300
–
–
–
–
–
–

Repayment
date

Repayment
methodUse offunds

Description

0.469

June 30, 2020

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

0.835

July 30, 2021

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

0.835

July 30, 2021

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

August 29, 2014

4,000

4,000

1.010

August 31, 2022

Sumitomo Mitsui Banking
Corporation

June 30, 2015

1,600

1,600

0.790

June 30, 2022

Sumitomo Mitsui Trust Bank

July 31, 2015

1,500

1,500

0.564

July 31, 2023

Development Bank of Japan

August 31, 2015

4,000

4,000

0.880

August 31, 2023

The Bank of Fukuoka

August 31, 2015

400

400

0.419

August 31, 2022

The Nishi-Nippon City Bank
Long-term
The Bank of Fukuoka
debt

August 31, 2015

400

400

0.870

August 31, 2023

February 29, 2016

2,000

2,000

0.419

February 29, 2024

The Nishi-Nippon City Bank

February 29, 2016

2,000

2,000

0.440

February 29, 2024

Development Bank of Japan

February 29, 2016

2,000

2,000

0.620

February 28, 2025

Mizuho Bank

February 29, 2016

500

500

0.440

February 29, 2024

Shinsei Bank

July 29, 2016

700

700

0.400

July 31, 2024

September 30, 2016

300

300

0.413

September 30, 2025

December 30, 2016

1,500
100
100
100
100
100
100

1,500
100
100
100
100
100
100

0.718

December 30, 2025

Development Bank of JapanThe Oita Bank
The Kagoshima Bank
The Kitakyushu BankThe Eighteenth BankThe Shinwa Bank
The Hiroshima Bank
19

Drawdown
date

Development Bank of Japan

Sumitomo Mitsui Trust BankFUKUOKA REIT CORPORATION

520,263
7,344
57,1009,600
60,308654,617

2. Status of debt

FRC has deposited the following amounts from the cash flows generated during the 32nd fiscal period in order to fund largescale repair and maintenance work in the medium- to long-term, based on long-term repairs and maintenance plans preparedfor respective properties.
(millions of yen)


1,000
–
–
1,000

534,300
7,276
55,0309,600
55,888662,096

81

3. Reserves for long-term repair and maintenance plans

Balance of deposits at beginning of period
Deposits during the period
Amounts used from deposits during the period
Deposits carried forward to the next period

32nd fiscal period(March 1, 2020 to August 31, 2019)(a) Asset management fees(b) Asset custody fees(c) Administrative service fees(d) Directors’ compensations(e) Other operating expenses
Total

LenderFiscal period

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

FUKUOKA REIT CORPORATION

20

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Lump-sum uponmaturity

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

Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

No collateral/
No guaranteeII. Semiannual Report

II. Semiannual Report

Expenses and Liabilities
Category
LenderDrawdown
date

Expenses and Liabilities

Balance as ofMarch 1,
2020

Balance as ofAugust 31,
2020

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note)

Repayment
date

The Bank of Fukuoka

December 30, 2016

1,500

1,500

0.419

December 30, 2026

MUFG Bank

March 31, 2017

800

800

0.481

March 31, 2025

Resona Bank

March 31, 2017

600

600

0.658

March 31, 2027

The Higo Bank

March 31, 2017

300

300

0.481

March 31, 2025

The Bank of Fukuoka
The Nishi-Nippon City BankThe Oita Bank
The Kitakyushu Bank
The Miyazaki BankThe Shinwa BankThe Iyo BankThe Eighteenth Bank

June 30, 2017

1,300
1,000
700
700
700
600
500
500

1,300
1,000
700
700
700
600
500
500

0.777

Development Bank of Japan

June 30, 2017

1,800

1,800

0.650

December 31, 2026

The Bank of Fukuoka

July 31, 2017

2,000

2,000

0.792

July 31, 2027

The Nishi-Nippon City Bank

July 31, 2017

2,000

2,000

0.892

July 31, 2027

The Nishi-Nippon City Bank
The Bank of Fukuoka
The Oita Bank
The Kitakyushu BankThe Eighteenth BankThe Shinwa Bank
The Hiroshima Bank

August 31, 2017

500
500
100
100
100
100
100

500
500
100
100
100
100
100

0.850

Resona Bank

September 29, 2017

2,000

2,000

0.493

September 30, 2027

The Bank of Fukuoka
Long-term
Development Bank of Japan
debt
The Nishi-Nippon City Bank

December 29, 2017

1,500

1,500

0.812

December 30, 2027

December 29, 2017

500

500

0.680

December 30, 2027

February 28, 2018

1,900

1,900

0.750

February 29, 2028

Sumitomo Mitsui Trust Bank

February 28, 2018

1,100

1,100

0.600

February 26, 2027

MUFG Bank

February 28, 2018

1,500

1,500

0.500

February 27, 2026

Resona Bank

February 28, 2018

600

600

0.567

February 29, 2028

Development Bank of Japan

March 1, 2018

2,500

2,500

0.720

March 1, 2028

MUFG Bank

March 30, 2018

600

600

0.480

March 31, 2026

The Nishi-Nippon City Bank

March 30, 2018

600

600

0.802

March 31, 2028

The Bank of Fukuoka

March 30, 2018

500

500

0.802

March 31, 2028

Mizuho Bank

March 30, 2018

500

500

0.630

March 31, 2028

Sumitomo Mitsui Banking
Corporation

March 30, 2018

500

500

0.504

March 31, 2025

MUFG Bank

March 30, 2018

500

500

0.490

March 31, 2027

Sumitomo Mitsui Trust Bank

March 30, 2018

400

400

0.576

March 31, 2027

The Oita Bank

March 30, 2018

400

400

0.646

March 31, 2028

The Hiroshima Bank

March 30, 2018

400

400

0.646

March 31, 2028

Shinsei Bank

March 30, 2018

300

300

0.400

March 31, 2025

Sumitomo Mitsui Banking
Corporation

January 31, 2019

500

500

0.655

January 31, 2029

MUFG Bank

January 31, 2019

500

500

0.590

January 31, 2028

The Nishi-Nippon City Bank

January 31, 2019

400

400

0.419

January 31, 2029

The Bank of Fukuoka

January 31, 2019

300

300

0.419

January 31, 2029

The Oita Bank

February 28, 2019

200

200

0.334

February 27, 2026

FUKUOKA REIT CORPORATION

21

June 30, 2026

August 31, 2027

Repayment
methodLump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Lump-sum uponmaturity

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Lump-sum uponmaturity

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Use offunds
Refinance fund
Refinance fund
Refinance fund
Refinance fund

Refinance fund

Refinance fund
Refinance fund
Refinance fund

Refinance fund

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundAcquisition fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundCategory

Description

Drawdown
dateLenderNo collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

No collateral/
No guarantee

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

No collateral/
No guarantee

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

Balance as ofMarch 1,
2020

Balance as ofAugust 31,
2020

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note)

Repayment
date

Repayment
methodThe Kagoshima Bank

February 28, 2019

200

200

0.334

February 27, 2026

The Higo Bank

February 28, 2019

200

200

0.334

February 27, 2026

Resona Bank

February 28, 2019

200

200

0.488

February 28, 2029

Mizuho Bank
The Bank of Saga
The Higo Bank

July 31, 2019

1,200
500
500

1,200
500
500

0.521

July 31, 2029

The Norinchukin Bank

July 31, 2019

1,500

1,500

0.303

January 29, 2027

MUFG Bank

September 25, 2019

500

500

0.480

September 29, 2028

The Nishi-Nippon City Bank

February 28, 2020

2,500

2,500

0.480

February 28, 2030

Long-term Mizuho Bank
debt
Aozora Bank

February 28, 2020

1,700

1,700

0.420

February 28, 2030

June 30, 2020

–

1,000

0.569

June 28, 2030

Resona Bank

June 30, 2020

–

700

0.569

June 28, 2030

MUFG Bank

June 30, 2020

–

500

0.600

June 29, 2029

The Kagoshima Bank

June 30, 2020

–

500

0.465

June 30, 2028

Development Bank of Japan

July 31, 2020

–

1,500

0.530

July 31, 2030

Mizuho Bank

July 31, 2020

–

1,000

0.470

July 31, 2030

The Kitakyushu Bank

July 31, 2020

–

500

0.526

July 31, 2030

The Iyo Bank

July 31, 2020

–

200

0.526

July 31, 2030

71,50072,50071,10077,400Subtotal
Total

Use offunds

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fundLump-sum uponmaturity

Refinance fundLump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fund

Refinance fund

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundAcquisition fundAcquisition fundAcquisition fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundDescription
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee(Note) The average interest rate is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest rate of debt for which FRC conducted interest
rate swap transactions in order to hedge against interest rate fluctuation risks is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps

3. Investment corporation bonds
As of the end of the 32nd fiscal period (August 31, 2020), FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Decrease
Balance as of
Balance as ofMarch 1, during the fiscal August 31,
period2020
2020(mm of yen)

(mm of yen)

(mm of yen)(%)

Maturitydate

Maturity
methodUse

Description

CouponFirst Series ofUnsecured Bonds

December 30, 2013

2,000

–

2,000

1.32

December 29, 2023

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

Second Series ofUnsecured Bonds

July 31, 2017

2,000

–

2,000

1.00

July 30, 2032

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

Third Series ofUnsecured Bonds

July 31, 2018

1,000

–

1,000

1.20

July 30, 2038

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

5,000

–

5,000

Total

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

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

5. Subscription rights to shares
No relevant items.

FUKUOKA REIT CORPORATION

22

II. Semiannual Report

II. Semiannual Report

Acquisitions and Sales during the 32nd Fiscal Period

Acquisitions and Sales during the 32nd Fiscal Period

1. Acquisition and sale of real estate, asset-backed securities,
infrastructure assets, etc. and infrastructure-related assets, etc.
Acquisition
Property name
Higashi Hie Business Center III
LOGICITY WakamiyaHome Plaza NAFCO at Park Place Oita
Total

Acquisition date

(Note)(mm of yen)

Disposition date

3,290
1,700
990
5,980

June 30, 2020
July 1, 2020–

(1) Transaction status

Disposition

Acquisition priceMay 29, 2020

4. Transactions with interested parties, etc.

Disposition price(mm of yen)

–
–
–
–

–
–
–
–

Book value

Gain or loss on sale

(mm of yen)

(mm of yen)

–
–
–
–

–
–
–
–

(Note) Acquisition price is the amount (transaction price indicated in the sales agreement) excluding expenses (transaction brokerage fees, taxes and other public charges, etc.) required for the acquisition of therelevant real estate, etc.

2. Acquisition and sale of other assets

Sale amount, etc.

(thousands of yen)(thousands of yen)

5,980,000 (100.0%)– (–)

4,280,000 (71.6%)
4,280,000 (71.6%)

– (–)
– (–)

(Note 1) The figures in the above table refer to the amounts shown in the sales agreements.
(Note 2) Interested parties, etc. refer to the interested parties of the asset management company who have concluded an asset management agreement with FRC and are designated in Article 123 of the Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of these interested parties, etc., the above table indicates the business partner with which FRC conducted transaction
during the 32nd fiscal period.

FRC paid the following fees to the interested parties, etc. during the 32nd fiscal period. Furthermore, interested parties, etc.
refer to the interested parties of the asset management company who have concluded an asset management agreement with
FRC and are designated in Article 123 of the Enforcement Order of the Act on Investment Trusts and Investment Corporations.
Of these interested parties, etc., the below table indicates the business partners to which FRC paid fees, etc. during the 32nd
fiscal period.

3. Survey on prices of specified assets, etc.
(1) Real estate, etc.
Property name

Transaction
dateType of asset

Higashi Hie BusinessCenter III

Real estate in trust

Acquisition

LOGICITY Wakamiya

Real estate

Acquisition

Home Plaza NAFCO at
Real estate in trust
Park Place Oita

Acquisition

Total
Breakdown of transactions with interested parties, etc.
Fukuoka Jisho Co., Ltd.
Total

Purchase amount, etc.

(2) Amount of fees paid, etc.

No relevant items.

Acquisition or
disposition

Transaction amount, etc.
Category

May 29, 2020

Acquisition price ordisposition priceReal estateappraisal value(Note 1)(mm of yen)

(Note 2)(mm of yen)

3,290

June 30, 2020

1,700

July 1, 2020

990

Real estate appraiser

Tanizawa Sogo
Appraisal Co., Ltd.
Tanizawa Sogo
2,350
Appraisal Co., Ltd.
Japan Real Estate
1,100Institute
3,290

Appraisal
date
Category
April 1, 2020

Total paid fees (A)(thousands of yen)
(Note 1)

October 1, 2019

Property leasing brokerage fees (Note 2)

22,082June 1, 2020

Property management fees (Note 3)

317,668

Outsourcing fees (Note 2) (Note 4)

1,294,087

Other operating expenses (Note 2)

1,382,901(Note 1) Acquisition price is the amount (transaction price indicated in the sales agreement) excluding related expenses (transaction brokerage fees, taxes and other public charges, etc.) required for the acquisition of the relevant real estate, etc.
(Note 2) The above appraisals were valuated by applying the “Real Estate Appraisal Standards, Chapter 3: Valuation for price of real estate for securitization.”(2) Other
Other than the transactions described in “(1) Real estate, etc.” above, FRC carried out no transaction that was required to havethe value, etc. reviewed pursuant to the provisions of Article 201 of the Investment Trusts Act.

Breakdown of transactions with interested parties, etc.
Paid amount (B)Paid party(thousands of yen)

Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.

Percentage of total
amount(B) / (A)

8,789
7,515
119,674
188,769
610,957
533,104
90,844
189,547
259,805

(%)

39.8
34.0
37.7
59.4
47.2
41.2
7.0
13.7
18.8

(Note 1) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 32nd fiscal period. The amounts include construction work
fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd.
573,854 thousand yen
FJ. Entertainment Works Ltd. 319,167 thousand yen
Sunlife Co., Ltd.
48,418 thousand yen(Note 2) The property leasing brokerage fees, outsourcing fees and other operating expenses include property leasing brokerage fees, etc. paid to third parties through interested parties, etc.
(Note 3) The property management fees do not include the following construction supervision fees. In addition, of the fees below, the construction supervision fees paid upon acquiring real estate are includedin the acquisition cost of the relevant real estate.
Fukuoka Jisho Co., Ltd.
4,609 thousand yen
FJ. Entertainment Works Ltd.
15,222 thousand yen(Note 4) The outsourcing fees shown above are paid fees, etc. regarding building management outsourcing fees, and do not coincide with the outsourcing fees described in VIII. Notes to Financial Statements(Notes to statement of income) that include property management fees and others.

5. Transactions with the asset management company regarding
concurrent work conducted by the asset management company
The asset management company (Fukuoka Realty Co., Ltd.) does not concurrently conduct any class 1 financial instruments
transaction business, class 2 financial instruments transaction business, land and building transaction business or real estatesyndication business, and has no such transactions with FRC.

FUKUOKA REIT CORPORATION23FUKUOKA REIT CORPORATION

24

II. Semiannual Report

III. Independent Auditor's Report

Overview of Accounting
1. Assets, liabilities, principal and profits/loss
Please refer to the IV. Balance Sheet, V. Statement of Income, VI. Statement of Changes in Net Assets, VII. Cash Flow Statement, and VIII. Notes to Financial Statements on later pages of this report.

Independent Auditor’s Report

2. Changes in calculation method of depreciation
To the Board of Directors of Fukuoka REIT Corporation

No relevant items.

3. Changes in valuation method of real estate and infrastructure assets,
etc.
No relevant items.

4. Overview of self-managed investment trust beneficiary certificatesNo relevant items.

5. Disclosure on corporation owning foreign real estate

OpinionWe have audited the financial statements of Fukuoka REIT Corporation (the Company), which comprise the balance sheet as of August 31, 2020, and the statement of income, statement of changes in
net assets and cash flow statement for the six months period then ended, and a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as of August 31, 2020, and its financial performance and its cash
flows for the six months period then ended in accordance with accounting principles generally accepted in Japan.

No relevant items.

Basis for Opinion

6. Disclosure on real estate owned by corporation owning foreign realestateWe conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements inJapan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.

No relevant items.

Other

Responsibilities of Management and Those Charged with Governance for the Financial
Statements

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

Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern and disclosing, as applicable, matters related to going concern.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.

FUKUOKA REIT CORPORATION25FUKUOKA REIT CORPORATION

26

III. Independent Auditor's Report

IV. Balance Sheet(thousands of yen)Account

As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the purpose of the financial statement audit
is not to express an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company tocease to continue as a going concern.
• Evaluate whether the presentation and disclosures of the financial statements are in accordancewith accounting principles generally accepted in Japan, the overall presentation, structure andcontent of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with management regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide management with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Mitsuo Tsuruta
Designated Engagement Partner
Certified Public Accountant

Takashi Yabutani
Designated Engagement Partner
Certified Public Accountant		PricewaterhouseCoopers Aarata LLC
November 24, 2020

FUKUOKA REIT CORPORATION

27

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
OthersTotal current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Lands
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Vehicles and transport equipment in trust
Accumulated depreciation
Vehicles and transport equipment in trust, net
Tools and fixtures in trust
Accumulated depreciation
Tools and fixtures in trust, net
Lands in trust
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
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
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

31st fiscal period

32nd fiscal period(as of February 29, 2020)(as of August 31, 2020)*1*1

FUKUOKA REIT CORPORATION

5,417,020
4,664,012
659,262
288,251–
19,263
11,047,811

3,733,612
4,660,047
1,043,924
282,717
177,6133,570
9,901,484

–
–
–
–
–
–
–
101,501,588(31,914,629)
69,586,959
1,888,802(787,507)
1,101,295
1,480,805(549,601)
931,204
747
(628)
118
1,388,990(1,170,941)
218,048
104,918,451
15,669176,771,746

974,393–
974,393
17,045–17,045830,254
103,899,463(33,495,971)
70,403,492
2,047,268(817,728)
1,229,539
1,487,396(595,564)
891,831
747
(676)
70
1,391,058(1,194,239)
196,818
107,452,281
18,319182,014,046*1*1

5,545,883
34,9935,580,876

5,545,883
29,5195,575,402

17
10,000327,135
1,014,438
1,351,591
183,704,215

14
10,000327,135
1,138,352
1,475,502
189,064,950

36,244
7,671
43,915
194,795,942

34,142
3,835
37,978199,004,413

28

IV. Balance Sheet

V. Statement of Income(thousands of yen)Account

31st fiscal period

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

(thousands of yen)Account

Liabilities

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

Operating revenues

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

614,394

340,991

1,000,000

6,300,000

Accounts payable-other

19,45012,612

Accrued expenses

372,025355,374

Income taxes payable

1,041

967

191,370–

Advances received

1,082,899

Deposits received

867,707

Leasing revenues – real estate*18,515,052*1

7,912,804

Other leasing revenues – real estate*1

647,685*1

605,527

Total operating revenues

9,162,738

8,518,332

Operating expenses
Expenses related to leasing business*1 *2

5,226,888

Asset management fees

*1 *2

4,897,107

534,300

520,263

Asset custody fees

7,276

7,344

1,123,558

Administrative service fees

55,03057,100894,072

Director’s compensations

9,600

9,600

4,148,889

9,027,577

Other operating expenses

55,88860,308

Total operating expenses

5,888,984

5,551,725

Investment corporation bonds

5,000,000

5,000,000

Operating income

3,273,754

2,966,606

Long-term debt

71,500,000

71,100,000

Non-operating revenues

403,248366,654

Interest received

47

44

Accrued consumption taxes

Total current liabilities
Non-current liabilities

Tenant leasehold and security deposits
Tenant leasehold and security deposits received in trust*1

Total non-current liabilities
Total liabilities

11,984,384

Others674

502

88,809,124

88,451,039

Total non-operating revenues

722

546

92,958,013

97,478,617

Interest expenses

246,018

249,252

Interest expenses on investment corporation bonds

29,20029,200

Amortization of investment corporation bond issuance
expenses

2,102

2,102

11,905,875*1

Net assets
Unitholders’ equity
Unitholders’ capital

98,938,764

98,938,764

Unappropriated surplus

2,899,164

2,587,031

Total surplus

2,899,164

2,587,031

101,837,928

101,525,796

Surplus

Total unitholders’ equity
Total net assets*3

Total liabilities and net assets

101,837,928
194,795,942*3

101,525,796
199,004,413

Non-operating expenses

Amortization of investment unit issuance expenses

3,835

3,835

Financing related expenses

93,136

94,848Others3737374,330

379,275

Ordinary income

2,900,146

2,587,877

Profit before income taxes

2,900,146

2,587,877

1,048

974

Total non-operating expenses

Income taxes-current
Income taxes-deferred

(14)

3

Total income taxes

1,033

978

ProfitFUKUOKA REIT CORPORATION

29

2,899,112

2,586,899

Surplus brought forward

51

132

Unappropriated surplus

2,899,164

2,587,031

FUKUOKA REIT CORPORATION

30

VI. Statement of Changes in Net Assets

VII. Cash Flow Statement

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

Balance as of September 1, 2019

Unitholders’ capital
98,938,764

Account(thousands of yen)

Surplus
Unappropriated surplus
2,939,679

Total unitholders’ equity
101,878,444

Total net assets
101,878,444

Changes in the current fiscal period

2,900,146

2,587,877

Depreciation and amortization expenses

1,660,510

1,686,347

Amortization of investment corporation bond issuance expenses

2,102

2,102

Amortization of investment unit issuance expenses

3,835

3,835

Interest received

(47)

(44)

275,218

278,452

45,437(384,662)–(177,613)

Increase (decrease) in accrued consumption taxes(70,509)(191,370)

Increase (decrease) in operating accounts payable

9,652(3,385)

Increase (decrease) in accounts payable-other

8,530(6,241)

Increase (decrease) in accrued expenses

2,509(20,452)

Increase (decrease) in advances received

28,44040,659

Increase (decrease) in deposits expenses(493,780)

26,365Decrease (increase) in prepaid expenses(16,638)

5,534

Decrease (increase) in long-term prepaid expenses(76,811)(123,914)

Others, net(14,848)

3,154

Subtotal

4,263,749

3,726,644

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

Profit2,899,112

2,899,112

2,899,112

Decrease (increase) in operating accounts receivables

Balance as of February 29, 2020–

(40,515)(40,515)(40,515)

98,938,764

2,899,164

101,837,928

101,837,928

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

Item
Balance as of March 1, 2020

Unitholders’ capital
98,938,764

Surplus
Unappropriated surplus

Total unitholders’ equity

Total net assets

Decrease (increase) in consumption taxes refund receivable

Interest income received

2,899,164

101,837,928

101,837,928

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

Profit2,586,899

2,586,899

2,586,899

Net cash provided by (used in) investment activities(312,132)(312,132)(312,132)

Purchase of property, plant and equipment

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of August 31, 2020

32nd fiscal period(March 1, 2020 to August 31, 2020)

Profit before income taxes

Interest expenses

Total of changes in the current fiscal period

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

Net cash provided by (used in) operating activities

Unitholders’ Equity
Item(thousands of yen)Interest expenses paid
Income taxes paid–
98,938,764

2,587,031

101,525,796

101,525,796

Net cash provided by (used in) operating activities

47

44(277,320)(274,651)(733)(1,048)3,985,742

3,450,990–(1,809,655)

Purchase of property, plant and equipment in trust(289,074)(5,371,496)

Proceeds from tenant leasehold and security deposits

24,51329,788

Repayments of tenant leasehold and security deposits(13,906)(66,382)

Proceeds from tenant leasehold and security deposits in trust

198,619

316,851

Repayments of tenant leasehold and security deposits in trust(139,812)(238,343)

Proceeds from restricted trust deposits

1,315

5,296

Payments for restricted trust deposits(2,339)(2,074)(220,683)(7,136,015)–

6,400,000

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–

(6,400,000)

Proceeds from long-term debt

4,700,000

5,900,000

Repayments of long-term debt

(4,700,000)(1,000,000)

Dividends paid

(2,938,346)(2,899,126)(2,938,346)

2,000,873

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

FUKUOKA REIT CORPORATION

31(1,684,151)
10,032,589

10,032,589*1

FUKUOKA REIT CORPORATION

826,7119,205,877

32*1

8,348,438

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Significant accounting policies)
1. Depreciation method for non-current assets(Notes to accounting standards not yet adopted)(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The useful lives of major categories of property, plant and equipment including trust assets are as follows:		 Buildings:
10 – 65 years
		 Structures:
15 – 60 years
		 Machinery and equipment:
15 – 30 years
		 Vehicles and transport equipment:
7 years
		 Tools and fixtures:
5 – 20 years(2) Intangible assets
Intangible assets are amortized utilizing the straight-line method.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.

2. Accounting for deferred assets

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

3. Standards for recognition of revenues and expenses

Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses the methodof charging the corresponding amounts of assessed taxes to the current fiscal period as expenses related
to leasing business.
The amount equivalent to property taxes, etc. for the initial fiscal year paid to the seller as settlementmoney upon acquisition of real estate or trust beneficiary interests in real estate as entrusted property are
not expensed but capitalized as part of the acquisition cost of the relevant property.
No amount equivalent to property taxes, etc. was capitalized in the acquisition cost of real estate, etc. forthe 31st fiscal period. The amount equivalent to property taxes, etc. capitalized in the acquisition cost ofreal estate, etc. was 12,272 thousand yen for the 32nd fiscal period.

4. Method of hedge accounting(1) Method of hedge accounting
Deferred hedge accounting is applied for interest rate swap transactions. However, special accounting isapplied for interest rate swap transactions that satisfy the requirements for special accounting.
(2) Hedging instruments and hedged items
Hedging instrument: interest rate swap transactions
Hedged items: interest rates of borrowings(3) Hedging policy
FRC conducts derivative transactions to hedge interest rate fluctuation risks for floating-rate borrowings
based on FRC’s Articles of Incorporation.
(4) Method for assessing the effectiveness of hedging
Assessment of the effectiveness of hedging is omitted as requirements are satisfied for special accounting for interest rate swap transactions.

5. Scope of funds (cash and cash equivalents) in cash flow The funds (cash and cash equivalents) in the cash flow statement consist of cash on hand and cash in trust;statement
deposits that can be withdrawn at any time and deposits in trust; and short-term investments with amaturity of 3 months or less from the date of acquisition, which are readily convertible to cash and bear
only an insignificant risk of value fluctuation.
6. Other significant items fundamental to preparing thefinancial statements(1) Accounting methods for trust beneficiary interests in real estate as entrusted property
Regarding trust beneficiary interests in owned real estate as entrusted property, all asset and liability
accounts of the entrusted properties as well as all revenue and expense accounts generated by the entrusted properties are recorded in relevant accounts on the balance sheet and statement of income.
Furthermore, the following material accounts are separately stated on the balance sheet for entrusted
properties recorded in relevant accounts.
➀ Cash and deposits in trust➁	Buildings in trust, structures in trust, machinery and equipment in trust, vehicles and transport equipment in trust, tools and fixtures in trust, lands in trust and construction in progress in trust➂ Leasehold right in trust➃ Other intangible assets in trust➄ Lease and guarantee deposits in trust➅ Tenant leasehold and security deposits received in trust(2) Accounting for consumption taxes
National and local consumption taxes are accounted with the consumption taxes excluded.

FUKUOKA REIT CORPORATION

33• Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 (revised 2020) issued by the Accounting Standards Board of Japan (ASBJ) on March 31, 2020)• Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30 (revised 2020) issued
by ASBJ on March 31, 2020)• Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19 (revised 2020)
issued by ASBJ on March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) jointly developed a comprehensive accounting standard for revenue recognition, and issued it as Revenue from Contracts with Customers (IFRS 15 issued by IASB and Topic 606 issued by FASB) in May 2014. IFRS 15 is applicable for accounting periods beginning on January 1, 2018 and thereafter, and Topic 606 is applicable for accounting periods beginning after
December 15, 2017. In accordance with this, the ASBJ has developed a comprehensive accounting standard for revenue
recognition and issued it together with its implementation guidance.
In developing the accounting standard for revenue recognition, the ASBJ made it a basic policy to adopt the basic
principles of IFRS 15 as a starting point. By doing so, the ASBJ established the accounting standard from the viewpointof comparability, which is a benefit for securing consistency with IFRS 15, between financial statements based on Japanese GAAP and those based on other accounting standards. Alternative treatments were also added, to the extent thatthey do not harm the comparability, in cases where there are items to be considered in the actual practices conducted inJapan to date.
(2) Scheduled date of adoption
FRC will adopt the accounting standard, etc. from the beginning of the fiscal period ending February 2022.
(3) Impact of adoption of the accounting standard, etc.
The amount of impact on the financial statements by the adoption of the Accounting Standard for Revenue Recognition,etc. is being assessed at present.

• Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30 issued by ASBJ on July 4, 2019)• Accounting Standard for Financial Instruments (ASBJ Statement No. 10 (revised 2019) issued by ASBJ on July 4, 2019)• Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31 issued by ASBJ
on July 4, 2019)• Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19 (revised 2020)
issued by ASBJ on March 31, 2020)(1) Overview
IASB and FASB have established detailed guidance for fair value measurement (IFRS 13 “Fair Value Measurement” underthe International Financial Reporting Standards and Topic 820 “Fair Value Measurement” of the Accounting Standards
Codification under the U.S. accounting standards) containing almost the same content. In light of this, the ASBJ worked
to secure consistency of the Japanese accounting standards with the international accounting standards, mainly in termsof the guidance on and disclosure of the fair value of financial instruments, and announced the Accounting Standard for
Fair Value Measurement, etc.
The basic policy of the ASBJ for the development of the Accounting Standard for Fair Value Measurement was to adopt
all provisions of the IFRS 13 as a rule by using a unified calculation method, from the viewpoint of improving the comparability between the financial statements of the Japanese and foreign companies. Moreover, in consideration of the practices conducted in Japan to date, the ASBJ determined to establish other treatments for individual items, to the extent
that they do not greatly harm the comparability between the financial statements.
(2) Scheduled date of adoption
FRC will adopt the accounting standards, etc. from the beginning of the fiscal period ending February 2022.

FUKUOKA REIT CORPORATION

34

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to balance sheet)(3) Impact of adoption of the accounting standards, etc.
The amount of impact on the financial statements by the adoption of the Accounting Standard for Fair Value Measurement, etc. is being assessed at present.

• Accounting Standard for Disclosure of Accounting Estimates (ASBJ Statement No. 31 issued by ASBJ on March 31, 2020)*1. Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:	(thousands of yen)

Buildings in trust
Lands in trust• Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections (ASBJ Statement No.
24 (revised 2020) issued by ASBJ on March 31, 2020)(1) Overview
Given the recommendation to investigate enhancement of note information regarding the "accounting principles andprocedures adopted in cases when provisions of relevant accounting standards are not clear," the ASBJ has made necessary amendments and published the Accounting Standard for Accounting Policy Disclosures, Accounting Changes andError Corrections.
Furthermore, the ASBJ has determined that, when enhancing the note information regarding the "accounting principles
and procedures adopted in cases when provisions of relevant accounting standards are not clear," the provisions in theNotes on Corporate Accounting Principles (Note 1-2) shall be followed as before in order to avoid any impact on thepractices taken to date when the provisions of relevant accounting standards are clear.
(2) Scheduled date of adoption
FRC will adopt the accounting standard from the end of the fiscal period ending August 2021.

FUKUOKA REIT CORPORATION

35

32nd fiscal period
as of August 31, 2020

5,969,526
16,101,020
22,070,547

Total(1) Overview
With regard to the "sources of estimation uncertainty" for which disclosure is required under Paragraph 125 of the International Accounting Standards ("IAS") 1 "Presentation of Financial Statements" ("IAS 1") issued by IASB in 2003, requests
were made for the ASBJ to investigate the requirement of disclosure of such information in the form of notes under theJapanese GAAP as useful information for users of financial statements. Accordingly, the ASBJ has developed and published the Accounting Standard for Disclosure of Accounting Estimates (the "Accounting Standard").
The basic policy of the ASBJ for the development of the accounting standard was to provide general principles (disclosure objectives), instead of expanding required information in the notes, and let companies determine specific disclosure
contents in light of the disclosure objectives. In developing the Standard, the ASBJ referred to the provisions of the Paragraph 125 of the IAS 1.
(2) Scheduled date of adoption
FRC will adopt the accounting standard from the end of the fiscal period ending August 2021.

31st fiscal period
as of February 29, 2020

Secured liabilities are as follows:	

5,973,107
16,101,020
22,074,128(thousands of yen)

Tenant leasehold and security deposits received in trust

31st fiscal period

32nd fiscal period

as of February 29, 2020

as of August 31, 2020

1,235,869

1,089,814

2. Balance of unused committed line of credit
FRC has executed committed line of credit agreements with its banks primarily to conduct efficient and dynamic cash management.
[Committed line of credit agreement 1]
	(thousands of yen)

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of period

31st fiscal period

32nd fiscal period

as of February 29, 2020

as of August 31, 2020

6,000,000–
6,000,000[Committed line of credit agreement 2]
	(thousands of yen)

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of period

31st fiscal period

32nd fiscal period

as of February 29, 2020

as of August 31, 2020

7,000,000–
7,000,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
	(thousands of yen)
31st fiscal period

32nd fiscal period

as of February 29, 2020

as of August 31, 2020

50,0006,000,000–
6,000,000

50,000FUKUOKA REIT CORPORATION

36

7,000,000–
7,000,000

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to statement of income)(Notes to financial instruments)*1. Breakdown of revenues and expenses related to real estate leasing business.


A. Real estate leasing business revenues
Leasing revenues - real estate		Rents
		 Common charges
		 Parking revenues
Other leasing revenues - real estate		 Incidental income
		 Other miscellaneous income
Total real estate leasing business revenues
B. Expenses related to real estate leasing business
Expenses related to leasing business		 Outsourcing fees		 Repair and maintenance expenses
		 Taxes and other public charges
		 Insurance premiums and trust compensation
		 Utilities expenses
		 Depreciation and amortization expenses
		 Other expenses related to real estate leasing businessTotal expenses related to real estate leasing business
C. Revenues and expenses related to real estate leasing business (A - B)(thousands of yen)
31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

6,968,555
1,095,890
450,606

8,515,052

610,648
37,037

647,685
9,162,738

1,898,749
116,285
734,254
51,676505,975
1,660,510
259,435

5,226,888
5,226,888
3,935,850*2. Transactions with affiliated companies.
	

6,531,941
1,056,349
324,513568,375
37,152

1,611,755
92,463
743,726
49,290479,907
1,686,347
233,617

7,912,804

605,527
8,518,332

4,897,107
4,897,107
3,621,224(thousands of yen)Item

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

Expenses related to real estate leasing business

1,430,201

970,797(Notes to statement of changes in net assets)
Total number of authorized investment units and total number ofinvestment units outstanding
Total number of authorized investment units
Total number of investment units outstanding

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

10,000,000 units
796,000 units

10,000,000 units
796,000 units(Notes to cash flow statement)*1. Relationship between the balance of cash and cash equivalents at end of period and the amounts of the corresponding accounts on the balance sheet.
	(thousands of yen)
31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents

5,417,020
4,664,012(48,444)
10,032,589

3,733,612
4,660,047(45,221)
8,348,438

1. Matters concerning status of financial instruments(1) Policy on handling financial instruments
In order to secure stable earnings and steady growth of assets under management, FRC procures funds primarily throughborrowings from financial institutions, issuance of investment corporation bonds or issuance of investment units for property
acquisitions, repair and maintenance work, repayment of interest-bearing debt and other purposes.
In procuring interest-bearing debt, FRC borrows funds primarily in long-term, fixed interest debt based on the policy of
establishing a solid financial structure, and conducts conservative operations intended to secure financial stability and liquidity by dispersing debt payment dates and utilizing committed lines of credit and through other measures.
With regard to surplus funds, FRC manages them as various deposits and savings, etc. to support efficient management
while considering security.
FRC conducts derivative transactions only for the purpose of hedging the risk of future interest rate fluctuation, and not forthe purpose of speculation.
(2) Description of financial instruments and associated risks, and risk management structure
Debt and investment corporation bonds are funds procured primarily for acquiring real estate trust beneficiary interests andrefinancing of borrowings. Borrowings and investment corporation bonds are exposed to liquidity risks upon debt payment
dates, but FRC works to mitigate these risks by such measures as appropriately controlling the ratio of interest-bearing debt
to total assets and executing commitment line agreements with local financial institutions that are lenders to secure on-handliquidity.
In addition, borrowings with floating interest rates are exposed to interest rate fluctuation risks. However, FRC works to
reduce the risks by such measures as adjusting the ratio of the balance of borrowings with floating interest rates to totalborrowings in accordance with the financial environment and other factors. FRC conducts derivative transactions (specifically interest rate swap transactions) for part of its borrowings with floating interest rates in order to hedge the risk of futurefluctuations in the rates of interest payable. Furthermore, assessment of the effectiveness of these interest rate swaps isomitted as it has been determined that they have met the requirements for special accounting. FRC executes and manages
its derivative transactions in accordance with its financial derivative transaction management policies and, it does so only withfinancial institutions it determines to have a certain level of creditworthiness, by reference to their credit ratings, to reducecounterparty risks.
FRC manages surplus funds in large time deposits. Such deposits are subject to the risks of failure of the financial institutions holding the deposits as well as other credit risks. FRC mitigates the risks by limiting its deposits to financial institutions
with a certain level of creditworthiness, by reference to their credit ratings, as well as by setting short durations for these
deposits.
Tenant leasehold and security deposits received in trust are deposits from tenants and are exposed to liquidity risks if
tenants move out before the contracts expire. FRC mitigates this risk by such measures as securing on-hand liquidity.
(3) Supplementary explanation on matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, may include values based on reasonablecalculations when there is no market price. Certain assumptions are made in calculating those values, and there may becases where the values will vary when different assumptions are used.
As for the contract value and other conditions of derivative transactions indicated in “2. Matters concerning fair value offinancial instruments,” the contract value is not an indicator of the market risks related to such transactions.

(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

(Notes to leases)
The future lease revenues under the non-cancellable operating leases [as lessor] are as follows:	

Due within 1 year
Due after 1 year
Total

(thousands of yen)

31st fiscal period

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

5,695,320
15,560,264
21,255,584

6,332,101
15,549,606
21,881,707

FUKUOKA REIT CORPORATION37FUKUOKA REIT CORPORATION

38

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

2. Matters concerning fair value of financial instruments(Note 3) Amount of redemption of monetary claims scheduled to be due after closing of accounts (as of February 29, 2020)

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding fairvalues and the difference between these amounts as of February 29, 2020. Please note that the following table does not include
those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheet
5,417,020
4,664,012
10,081,033–
1,000,000
5,000,000
71,500,000
419,185
77,919,185––

Fair value(Note 1)

Difference

5,417,020
4,664,012
10,081,033–
1,000,000
5,337,675
74,470,281
419,185
81,227,141
–
–

–
–
–
–
–
337,675
2,970,281–
3,307,956––

	(thousands of yen)Due in 1 year or less
5,417,020
4,664,012
10,081,033

Cash and deposits
Cash and deposits in trust
Total

Amount of redemption of monetary claims scheduled to be due after closing of accounts (as of August 31, 2020)

	(thousands of yen)Due in 1 year or less
3,733,612
4,660,047
8,393,659

Cash and deposits
Cash and deposits in trust
Total(Note 4) Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of February 29, 2020))

	(thousands of yen)
Long-term debt
Investment corporationbonds

Due in 1 year or less
1,000,000

1 to 2 years
6,300,000

2 to 3 years
6,000,000

3 to 4 years
10,400,000

4 to 5 years
2,700,000

Due after 5 years
46,100,000

–

–

–

2,000,000–

3,000,000

Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of August 31, 2020)

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding fairvalues and the difference between these amounts as of August 31, 2020. Please note that the following table does not include
those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheet
3,733,612
4,660,047
8,393,659–
6,300,000
5,000,000
71,100,000
378,477
82,778,477––

Fair value(Note 1)(thousands of yen)
Long-term debt
Investment corporationbonds

Due in 1 year or less
6,300,000

1 to 2 years
6,000,000

2 to 3 years
5,900,000

3 to 4 years
5,200,000

4 to 5 years
3,900,000

Due after 5 years
50,100,000

–

–

–

2,000,000–

3,000,000

Difference

3,733,612
4,660,047
8,393,659–
6,324,877
5,221,458
73,501,725
378,068
85,426,130
–
–

–
–
–
–
24,877
221,458
2,401,725(408)
2,647,653––(Note 1) Calculation method for fair value of financial instruments(1) Cash and deposits, (2) Cash and deposits in trust and (3) Short-term debt
		 As these are settled within a short period of time, the fair value is approximately the same as the book value and is thus stated at that book value.
(4) Current maturities of long-term debt, (5) investment corporation bonds and (6) Long-term debt
		The fair value of long-term debt with fixed interest rates (including debt with practical fixed interest rates through interest rate swaps) and investment corporation bonds (the “debt, etc.”) is
calculated by discounting the total amount of principal and interest by the rate assumed as being applicable in the event of a new drawdown of similar debt, etc.
		The fair value of long-term debt with floating interest rates is based on the book value, as the contract terms require the interest rates to be revised in a certain period of time (within six months) andthus is considered to be nearly equal to the book value.
(7) Tenant leasehold and security deposits received in trust		The fair value of tenant leasehold and security deposits received in trust, which are deposited by the lessees, is calculated by discounting the future cash flows of such deposits by a reasonably
estimated rate that takes into account the term remaining until the reimbursement deadline and credit risks.
(8) Derivative transactions
		 Please refer to (Notes to derivative transactions)(Note 2) Financial instruments for which determination of fair value is considered extremely difficult.

		(Notes to investment securities)
31st fiscal period (as of February 29, 2020)
Not applicable.

32nd fiscal period (as of August 31, 2020)
Not applicable.

(Notes to derivative transactions)
1. Derivatives to which hedge accounting is not applied
31st fiscal period (as of February 29, 2020)
Not applicable.

32nd fiscal period (as of August 31, 2020)
Not applicable.

(thousands of yen)
31st fiscal period

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

Tenant leasehold and security deposits received in trust (*)

11,486,690

11,605,906(*) Tenant leasehold and security deposits received in trust are not subject to the requirement to disclose fair value, as it is considered extremely difficult to determine the fair value. This is because future
cash flows cannot be estimated since there is no market price and it is difficult to assume the reimbursement dates due to the possibility of cancellation, renewal and re-execution of lease contracts bylessees even if the contract terms are fixed, and because the past rate of tenants moving out of the properties owned by FRC may not be indicative of future move out rates as they are too specific toindividual circumstances.

FUKUOKA REIT CORPORATION39FUKUOKA REIT CORPORATION

40

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to equity method income and earnings)
2. Derivatives to which hedge accounting is applied

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

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

Not applicable as FRC does not have any affiliated companies.

The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing of accounts
for each method of hedge accounting.
(thousands of yen)Type of derivative transactions,etc.

Main hedged
itemInterest rate swap transaction
Special accounting for interest rate swaps
Receivable floating; Payable fixedLong-term debt

Method of hedge accounting

Contract amount, etc.
Of which,exceeding 1 year
23,700,000

23,700,000

Fair
value

Calculation
method for thefair value(*)–

32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable as FRC does not have any affiliated companies.

(Notes to transactions with related parties)
1. Transactions with related parties(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt for accounting purposes. Accordingly, their fair value is included in the fair value of the relevant
long-term debt (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

(1) Parent company and major corporate unitholders
31st fiscal period (from September 1, 2019 to February 29, 2020)

32nd fiscal period (as of August 31, 2020)
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing of accounts
for each method of hedge accounting.
Classification

Name

Location

CapitalBusiness
description

Other
affiliates

Fukuoka
Jisho Co.,Ltd.

Hakata Ward,
Fukuoka City

100,000

General realestatebusiness(thousands of yen)
Method of hedge accounting
Special accounting for interest rate swaps

Type of derivative transactions,etc.

Main hedged
itemInterest rate swap transaction
Receivable floating; Payable fixedLong-term debt

Contract amount, etc.
Of which,exceeding 1 year
23,700,000

17,400,000

Fair
value

Calculation
method for thefair value(*)–(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt for accounting purposes. Accordingly, their fair value is included in the fair value of the relevant
long-term debt (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

(Notes to retirement benefits)(Note 2)

FRC’s share of
voting rights, etc.

Descriptionofrelationship(thousands of yen)

Descriptionoftransaction

Transaction
amountCategory

Balance at
end ofperiodConsignment Consignment
Ownership in FRC
of real estate of real estate
Direct [9.09%]
management, management,
Indirect [0.86%]
etc.
etc. (Note 1)

1,430,201

Operatingaccounts
payable80,427[or ownership of suchin FRC](Note 3)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Canal City Hakata, Canal City Hakata·B, Canal City Business Center and Taihaku Street
Business Center. The lease contract is a master lease type with pass-through rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues.
For properties covered by the said type of agreements, the above table shows figures that regard end tenants as direct lessees.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

32nd fiscal period (from March 1, 2020 to August 31, 2020)

31st fiscal period (as of February 29, 2020)
Not applicable as FRC does not have any retirement benefit system.

Classification

Name

Location

CapitalBusiness
description

32nd fiscal period (as of August 31, 2020)
Not applicable as FRC does not have any retirement benefit system.
Other
affiliates

Fukuoka
Jisho Co.,Ltd.

Hakata Ward,
Fukuoka City

100,000(Note 3)(Notes to tax effect accounting)
1. Breakdown of primary causes for occurrence of deferred tax assets and deferred tax liabilities.
(thousands of yen)

31st fiscal period

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

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

17
17
17

14
14
14

2. Breakdown of significant causes of the difference between the effective statutory income tax rate and the effective income tax rate after application of tax effect accounting.
(%)
31st fiscal period

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

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

FUKUOKA REIT CORPORATION

31.30(31.29)
0.02
0.04

41

31.25
(31.24)0.03
0.04(Note 3)General realestatebusiness

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

Descriptionofrelationship(thousands of yen)
Descriptionoftransaction

Purchase ofreal estate,
Consignment
etc. (Note 1)
Ownership in FRC
of real estate
Direct [9.19%]
Consignment
management,
Indirect [0.76%]
of real estateetc.
management,
etc. (Note 2)

Transaction
amountCategory

Balance at
end ofperiod4,280,000––

Operatingaccounts
payable49,000(Note 4)

970,797(Note 4)(Note 4)(Note 1) Transaction terms and conditions are determined in reference to appraisal values by third parties and after negotiating on prices.
(Note 2) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 3) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Taihaku Street Business Center. The lease contract is a master lease type with passthrough rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues.
For the property covered by the said type of agreement, the above table shows figures that regard end tenants as direct lessees.
(Note 4) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

(2) Affiliated companies, etc.
31st fiscal period (from September 1, 2019 to February 29, 2020)
Not applicable.

32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable.

FUKUOKA REIT CORPORATION

42

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(3) Sister companies

2. Parent company and major affiliated companies

31st fiscal period (from September 1, 2019 to February 29, 2020)Classification

Name

Location

Subsidiaries
of otheraffiliates

FJ.
Entertainment Hakata Ward,
Works Ltd. Fukuoka City

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,Ltd.

Capital

20,000(Note 2)

Hakata Ward,
Fukuoka City

200,000

FRC’s share ofBusiness voting rights, etc. Description of Description of Transaction
description [or ownership of relationship transaction
amountsuch in FRC]
Consignment Consignment
Real estateof real estate of real estate
920,425–(Note 5)businessmanagement, management,
etc.
etc. (Note 1)
Asset
Asset
management Payment ofmanagementof FRC, etc.
asset
534,300of FRC and–andmanagement(Note 5)otherconcurrent
fees(Note 4)businesses
service ofofficer (Note 3)(thousands of yen)
Category

Operatingaccounts
payableBalance at
end ofperiodClassification

Subsidiaries
of otheraffiliates

Subsidiaries
of otheraffiliates

Name

Location

FJ.
Entertainment Hakata Ward,
Works Ltd. Fukuoka City

Capital

20,000(Note 2)

Fukuoka
Realty Co.,Ltd.

Hakata Ward,
Fukuoka City

200,000

FRC’s share ofBusiness voting rights, etc. Description of Description of Transaction
description [or ownership of relationship transaction
amountsuch in FRC]
Consignment Consignment
Real estateof real estate of real estate 1,018,539–(Note 6)businessmanagement, management,
etc.
etc. (Note 1)
Asset
Asset
management Payment ofmanagementof FRC, etc.
asset
520,263of FRC and–andmanagement(Note 6)otherconcurrent
fees(Note 5)businesses
service ofofficer (Note 4)(Note 5)31st fiscal period (from September 1, 2019 to February 29, 2020)

32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable.

(Notes to asset retirement obligations)
31st fiscal period (from September 1, 2019 to February 29, 2020)

Accruedexpenses

266,685

Not applicable.

(Note 5)32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable.

(Notes to properties for lease)
FRC owns retail, office buildings and residential properties for lease in the Kyushu area centering on Fukuoka Prefecture. The
following table provides the book value recorded on the balance sheet, amount of change during the period and fair value ofthese properties for lease.
(thousands of yen)(thousands of yen)
Category

Operatingaccounts
payableBalance at
end ofperiodUse

Retail171,911(Note 6)

Office buildings
Accruedexpenses

245,498(Note 6)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded with FJ. Entertainment Works Ltd. a building lease and management consignment agreement for Canal City Hakata, Canal City Hakata·B, Canal City Business Center and Konoha
Mall Hashimoto, and a real estate lease and management consignment agreement for Park Place Oita. The relevant lease agreements are master lease type with pass-through rent, in which rents andother proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the properties covered by the said type of the agreements, the above table shows figures thatregard end tenants as direct lessees.
(Note 3) For Canal City Hakata, Canal City Hakata·B and Canal City Business Center indicated in (Note 2), the master lease and property management company was changed from Fukuoka Jisho Co., Ltd. to FJ.
Entertainment Works Ltd. as of June 1, 2020.
(Note 4) Etsuo Matsuyuki, Executive Director of FRC, concurrently serves as a CEO & Representative Director of Fukuoka Realty Co., Ltd.
(Note 5) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 6) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

(4) Directors and major individual unitholders

Not applicable.

157,315(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded with FJ. Entertainment Works Ltd. a real estate lease and management consignment agreement for Park Place Oita and a building lease and management consignment agreementfor Konoha Mall Hashimoto. The agreements are master lease type with pass-through rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s
revenues. For the properties covered by the said type of the agreements, the above table shows figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, Executive Director of FRC, concurrently serves as a CEO & Representative Director of Fukuoka Realty Co., Ltd.
(Note 4) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

32nd fiscal period (from March 1, 2020 to August 31, 2020)

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

OthersTotal

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period
Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period
Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period
Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period

32nd fiscal period (from March 1, 2020 to August 31, 2020)
Not applicable.

43

111,234,313
664,304
111,898,617
122,860,000

45,654,752(309,254)
45,345,497
66,100,000

45,345,497
2,938,761
48,284,259
70,410,000

25,948,258(175,446)
25,772,812
30,160,000

25,772,812
1,633,758
27,406,571
32,270,000

183,547,603(1,194,979)
182,352,623
219,260,000

182,352,623
5,236,824
187,589,448
225,540,000(Note 1) Amount recorded on the balance sheet is the cost of acquisition less accumulated depreciation.
(Note 2) Of the amount of change during the 31st fiscal period, the amount of increase is primarily attributable to capital expenditures (465 million yen), and the amount of decrease is primarily attributable todepreciation and amortization expenses (1,660 million yen). Of the amount of change during the 32nd fiscal period, the amount of increase is primarily attributable to acquisition of three properties(Higashi Hie Business Center III, LOGICITY Wakamiya and Home Plaza NAFCO at Park Place Oita) (6,132 million yen in total) and capital expenditures (790 million yen), and the amount of decrease is
primarily attributable to depreciation and amortization expenses (1,686 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers.

Not applicable.

FUKUOKA REIT CORPORATION

111,944,592(710,278)
111,234,313
123,000,000

FUKUOKA REIT CORPORATION

44

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

The following table provides the income (loss) from properties for lease.
(thousands of yen)
Use

RetailOffice buildings

OthersTotal

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

Amount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing business

5,876,637
3,617,050
2,259,586

5,157,908
3,266,262
1,891,645

2,406,720
1,233,266
1,173,453

2,497,317
1,241,579
1,255,738

879,380
376,570
502,809863,106
389,265
473,840

9,162,738
5,226,888
3,935,850

8,518,332
4,897,107
3,621,224(Note) Real estate leasing business revenues and expenses related to real estate leasing business are comprised of leasing business revenues and accompanying expenses (outsourcing fees, depreciation andamortization expenses, taxes and other public charges, etc.), and are recorded as Leasing revenues - real estate, Other leasing revenues - real estate and Expenses related to leasing business, respectively.

(2) Information by region(a) Operating revenues
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating revenues
recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of property, plant and equipment recorded on the balance sheet.

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

(Notes to per unit information)
31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

Net assets per unit (yen)Profit per unit (yen)127,937
3,642

127,5443,249(Note 1) Profit per unit was calculated by dividing the profit by the daily weighted average number of investment units. Diluted profit per unit is not stated as there are no dilutive investment units.
(Note 2) Profit per unit was calculated based on the following data:

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

2,899,112–
2,899,112
796,000

Profit (thousands of yen)Amounts not attributable to ordinary unitholders (thousands of yen)
Profit attributable to ordinary investment units (thousands of yen)
Average number of units during the fiscal period (units)(Notes to segment information)[Segment information]
Descriptions omitted as FRC has a single business segment of real estate leasing business.

2,586,899–
2,586,899
796,000(Notes to cash distributions)[Related information]



31st fiscal period (from September 1, 2019 to February 29, 2020)(1) Information by product and service
Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers exceed 90% of operating revenues recorded in the statement of income.

(2) Information by region(a) Operating revenues
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating revenues
recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of property, plant and equipment recorded on the balance sheet.

Account

32nd fiscal period (from March 1, 2020 to August 31, 2020)(1) Information by product and service
Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers exceed 90% of operating revenues recorded in the statement of income.

31st fiscal period

32nd fiscal period(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

I. Unappropriated surplus

2,899,164

2,587,031

II. Total dividend[Dividend per investment unit]
III. Surplus brought forward

2,899,032[3,642 yen]132

2,587,000[3,250 yen]31

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

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

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

(thousands of yen)

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

(Notes to significant subsequent events)
No relevant items.

(Schedule of securities)
Not applicable.

FUKUOKA REIT CORPORATION45FUKUOKA REIT CORPORATION

46

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Schedule of contract amount, etc. and fair value of derivative transactions
andforward exchange transactions)(thousands of yen)
Category

Type(Note 1)

Interest rate swap transaction
Receivable floating; Payable fixed

Off-market transaction

Contract amount, etc.
Of which, exceeding 1 year

Total

Fair value(Note 2)

Buildings
Structures
Land
Buildings in trust
Structures in trust
Machinery and equipment
Total
property, in trust
plant and Vehicles and transport
equipment equipment in trust
Tools and fixtures in trust
Land in trust
Construction in progressin trust
Subtotal
Leasehold right in trust
Total
Other intangible assets inintangible
trust
assetsSubtotal
Total

July 30, 2021

Refinance fundNo collateral/
No guarantee

0.835

July 30, 2021

Refinance fundNo collateral/
No guarantee

170,000–

The Bank of Nagasaki(Note 2)–

121,428

121,428–

The Oita Bank

(Note 2)–

121,428

121,428–(Note 2)–72,85772,857–(Note 2)–

1,250,000

1,250,000–(Note 2)–250,000

250,000–

The Nishi-Nippon City
Bank

(Note 2)–

1,214,285

1,214,285–

Resona Bank

(Note 2)–

170,000

170,000–

The Bank of Nagasaki(Note 2)–

121,428

121,428–

The Oita Bank

(Note 2)–

121,428

121,428–

The Bank of Saga

(Note 2)–72,85772,857––6,400,000

6,400,000–

Aozora Bank

1,000,000–

1,000,000–

Mizuho Bank–

2,300,000–

2,300,000–

1,000,000–

1,000,000–

1,400,000–

1,400,000–

800,000–

800,000–

500,000–

500,000–

300,000–

300,000

1,000,000

6,300,000

1,000,000

6,300,000

Mizuho Bank

2,300,000–

2,300,000–

The Norinchukin Bank

1,000,000–

1,000,000–

The Hiroshima Bank

1,400,000–

1,400,000–

The Kitakyushu Bank

800,000–

800,000–

The Iyo Bank

500,000–

500,000–

The Higo Bank

300,000–

300,000–

Development Bank of Japan

4,000,000––

4,000,000

1.010

August 31, 2022

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui Banking
Corporation

1,600,000––

1,600,000

0.790

June 30, 2022

Refinance fundNo collateral/
No guarantee

1,500,000––

1,500,000

0.564

July 31, 2023

Refinance fund4,000,000––

4,000,000

0.880

August 31, 2023

Refinance fund

The Bank of Fukuoka

400,000––

400,000

0.419

August 31, 2022

Refinance fund

The Nishi-Nippon City Bank

400,000––

400,000

0.870

August 31, 2023

Refinance fund

The Bank of Fukuoka

2,000,000––

2,000,000

0.419

February 29, 2024

Refinance fund

The Nishi-Nippon City Bank

2,000,000––

2,000,000

0.440

February 29, 2024

Refinance fundDevelopment Bank of Japan

2,000,000––

2,000,000

0.620

February 28, 2025

Refinance fund

Balance as ofAccumulated Depreciation
August 31,
depreciation for the period
2020
974,393––
17,045––830,254––
103,899,463
33,495,971
1,581,342
2,047,268
817,728
30,221

Net property
andRemarks
equipment(Note)
974,393(Note)
17,045(Note)
830,254(Note)
70,403,492(Note)
1,229,539

1,194,239–

23,297–

196,818
107,452,281

15,6692,978

327

18,319––18,319211,195,055
5,545,883

6,923,499–

327–

218,118,227
5,545,883

36,104,181–

1,680,872–

182,014,046
5,545,883

81,417––

81,41751,8985,474

29,5195,627,301
216,822,356–
6,923,499–
327

5,627,301
223,745,528

51,89836,156,080

5,474
1,686,347

5,575,402
187,589,448(Note)

Coupon(%)

2,000,000
2,000,000
1,000,000

Maturity date

December 29,
1.32
2023

(Note)The Norinchukin Bank
Current
maturities The Hiroshima Bankof long- The Kitakyushu Bank
term debt
The Iyo Bank

Maturity
methodUse

Description

Lump-sumupon maturity

Repayment ofdebt

No collateral/
No guarantee

Repayment ofdebt

No collateral/
No guarantee

Repayment ofdebt

No collateral/
No guarantee(Note 1)

1.00

July 30,2032

Lump-sumupon maturity

1.20

July 30,
2038

Lump-sumupon maturity(Note 1)

(Note 1)

(Note 2)

(Note 2)

(Note 2)5,000,000


1 to 2 years–

FUKUOKA REIT CORPORATION

2 to 3 years–
47

3 to 4 years
2,000,000

The Bank of Saga
Short-term
The Bank of Fukuoka
debt
Resona Bank

Subtotal(Note)(Note 1) The bonds may be repurchased and cancelled by FRC at any time on and after the date following the payment date, unless otherwise determined by the book-entry transfer agent.
(Note 2) The bonds are subject to the limited pari passu clause among specified investment corporation bonds.
(Note 3) Amount of redemption of investment corporation bonds scheduled to be due within 5 years after period end.

Due in 1 year or less
–

0.835

170,000(Schedule of investment corporation bonds)

Category
Investment corporation bonds

No collateral/
No guarantee–

1,391,058
107,452,281–

Refinance fund

(Note 2)––5,000,000

June 30, 2020

Resona Bank

Not applicable.

Total

0.469

–

2,067
2,533,829–

No collateral/
No guarantee

1,214,285

1,388,990
104,918,451

1,000,000

Refinance fund

1,214,285(Schedule of other specified assets)

July 31, 2018

July 31, 2020–

(Note) The main increase in the 32nd fiscal period is due to acquisition of Higashi Hie Business Center III, LOGICITY Wakamiya and Home Plaza NAFCO at Park Place Oita and construction work at properties.

Third Series ofUnsecured Bonds

0.411(Note 2)70–

No collateral/
No guarantee

The Nishi-Nippon City
Bank

47

2,000,000

Refinance fund(214,158)

676

July 31, 2017

July 31, 2020

17,400,000

747

Second Series ofUnsecured Bonds

0.411

23,700,000––

No collateral/
No guarantee––

2,000,000

Acquisition fund

250,000

747(thousands of yen)

June 30, 2020

250,000

891,831(thousands of yen)

0.391

–

45,963(thousands of yen)

No collateral/
No guarantee(Note 2)595,564

December 30,
2013

Acquisition fundResona Bank

1,487,396

First Series ofUnsecured Bonds

June 30, 2020––

Balance as ofAugust 31,
2020

0.391

1,250,000

6,591

Decreaseduring the
fiscal period

Use of funds Description

1,250,000

1,480,805

Balance as ofMarch 1,
2020

Repayment
date

–

–
–
–
–
–

Issue date

Balance as of Average
August 31, interest rate(%) (Note 1)
2020(Note 2)

974,393
17,045830,254
2,397,874
158,465

Issue

Decrease

The Bank of Fukuoka(thousands of yen)

Decrease

Increase(214,158)



Increase

LenderBalance as ofMarch 1,
2020

17,400,000(Schedule of property, plant and equipment, and intangible assets)
Type of asset

Category(thousands of yen)

23,700,000(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors.

Balance as ofMarch 1,
2020–––
101,501,588
1,888,802(Scheduleof debt)


The Higo Bank
SubtotalLong-term Sumitomo Mitsui Trust Bank
debt
Development Bank of Japan(thousands of yen)Mizuho Bank

500,000––

500,000

0.440

February 29, 2024

Refinance fund

4 to 5 years–

Shinsei Bank

700,000––

700,000

0.400

July 31, 2024

Refinance fund

FUKUOKA REIT CORPORATION48

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

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

LenderBalance as ofMarch 1,
2020

Sumitomo Mitsui Trust Bank

300,000––

300,000

Development Bank of Japan

1,500,000––

1,500,000

The Oita Bank

100,000––

100,000

The Kagoshima Bank

100,000––

100,000

The Kitakyushu Bank

100,000––

100,000

The Eighteenth Bank

100,000––

100,000

The Shinwa Bank

100,000––

100,000

The Hiroshima Bank

100,000––

100,000

The Bank of Fukuoka

1,500,000––

1,500,000

0.419

December 30, 2026

Refinance fund

MUFG Bank

800,000––

800,000

0.481

March 31, 2025

Refinance fundResona Bank

600,000––

600,000

0.658

March 31, 2027

Refinance fund

The Higo Bank

300,000––

300,000

0.481

March 31, 2025

Refinance fund

The Bank of Fukuoka

1,300,000––

The Nishi-Nippon City Bank

1,000,000–

The Oita Bank

700,000

The Kitakyushu Bank

Category

Increase

Decrease

Balance as of Average
August 31, interest rate(%) (Note 1)
2020

Repayment
date

Use of funds Description
No collateral/
No guarantee

Balance as ofMarch 1,
2020

Category
LenderIncrease

Decrease

Balance as of Average
August 31, interest rate(%) (Note 1)
2020

Repayment
date

Use of funds Description

Mizuho Bank

500,000––

500,000

0.630

March 31, 2028

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui Banking
Corporation

500,000––

500,000

0.504

March 31, 2025

Refinance fundNo collateral/
No guarantee

MUFG Bank

500,000––

500,000

0.490

March 31, 2027

Refinance fund

Sumitomo Mitsui Trust Bank

400,000––

400,000

0.576

March 31, 2027

Refinance fund

The Oita Bank

400,000––

400,000

0.646

March 31, 2028

Refinance fund

The Hiroshima Bank

400,000––

400,000

0.646

March 31, 2028

Refinance fund

Shinsei Bank

300,000––

300,000

0.400

March 31, 2025

Refinance fund

Sumitomo Mitsui Banking
Corporation

500,000––

500,000

0.655

January 31, 2029

Refinance fund

MUFG Bank

500,000––

500,000

0.590

January 31, 2028

Refinance fund

The Nishi-Nippon City Bank

400,000––

400,000

0.419

January 31, 2029

Refinance fund

The Bank of Fukuoka

300,000––

300,000

0.419

January 31, 2029

Refinance fund

1,300,000

The Oita Bank

200,000––

200,000

0.334

February 27, 2026

Refinance fund–

1,000,000

The Kagoshima Bank

200,000––

200,000

0.334

February 27, 2026

Refinance fund––

700,000

200,000––

200,000

0.334

February 27, 2026

Refinance fund

700,000––

700,000

200,000––

200,000

0.488

February 28, 2029

Refinance fund

The Miyazaki Bank

700,000––

700,000

1,200,000––

1,200,000

The Shinwa Bank

600,000––

600,000

The Bank of Saga

500,000––

500,000

0.521

July 31, 2029

Refinance fund

The Iyo Bank

500,000––

500,000

The Higo Bank

500,000––

500,000

The Eighteenth Bank

500,000––

500,000

The Norinchukin Bank

1,500,000––

1,500,000

0.303

January 29, 2027

Refinance fundLong-term Development Bank of Japan
debt
The Bank of Fukuoka

1,800,000––

1,800,000

0.650

December 31, 2026

Refinance fund

500,000––

500,000

0.480

September 29, 2028

Refinance fund

2,000,000––

2,000,000

0.792

July 31, 2027

Refinance fund

The Nishi-Nippon City Bank

2,500,000––

2,500,000

0.480

February 28, 2030

Refinance fund

The Nishi-Nippon City Bank

2,000,000––

2,000,000

0.892

July 31, 2027

Refinance fundMizuho Bank

1,700,000––

1,700,000

0.420

February 28, 2030

Refinance fund

The Nishi-Nippon City Bank

500,000––

500,000

Aozora Bank–

1,000,000–

1,000,000

0.569

June 28, 2030

Refinance fund

The Bank of Fukuoka

500,000––

500,000

Resona Bank–

700,000–

700,000

0.569

June 28, 2030

Acquisition fund

The Oita Bank

100,000––

100,000

MUFG Bank–

500,000–

500,000

0.600

June 29, 2029

Acquisition fund

The Kitakyushu Bank

100,000––

100,000

The Kagoshima Bank–

500,000–

500,000

0.465

June 30, 2028

Acquisition fund

The Eighteenth Bank

100,000––

100,000

Development Bank of Japan–

1,500,000–

1,500,000

0.530

July 31, 2030

Refinance fund

The Shinwa Bank

100,000––

100,000

Mizuho Bank–

1,000,000–

1,000,000

0.470

July 31, 2030

Refinance fund

The Hiroshima Bank

100,000––

100,000

The Kitakyushu Bank–

500,000–

500,000

0.526

July 31, 2030

Refinance fundResona Bank

2,000,000––

2,000,000

0.493

September 30, 2027

Refinance fund

The Iyo Bank–

200,000–

200,000

0.526

July 31, 2030

Refinance fund

The Bank of Fukuoka

1,500,000––

1,500,000

0.812

December 30, 2027

Refinance fund71,500,000

5,900,000

6,300,000

71,100,000

Development Bank of Japan

500,000––

500,000

0.680

December 30, 2027

Refinance fund72,500,000

18,600,000

13,700,000

77,400,000

The Nishi-Nippon City Bank

1,900,000––

1,900,000

0.750

February 29, 2028

Refinance fund

Sumitomo Mitsui Trust Bank

1,100,000––

1,100,000

0.600

February 26, 2027

Refinance fund

MUFG Bank

1,500,000––

1,500,000

0.500

February 27, 2026

Refinance fundResona Bank

600,000––

600,000

0.567

February 29, 2028

Refinance fund

2,500,000––

2,500,000

0.720

March 1, 2028

Acquisition fund

MUFG Bank

600,000––

600,000

0.480

March 31, 2026

Refinance fund

The Nishi-Nippon City Bank

600,000––

600,000

0.802

March 31, 2028

Refinance fund

The Bank of Fukuoka

500,000––

500,000

0.802

March 31, 2028

Refinance fundDevelopment Bank of JapanFUKUOKA REIT CORPORATION

49

0.413

0.718

0.777

0.850

September 30, 2025

December 30, 2025

June 30, 2026

August 31, 2027

Refinance fund

Refinance fund

Refinance fund

Refinance fundNo collateral/
No guarantee

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

No collateral/
No guarantee

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

No collateral/
No guarantee

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

The Higo Bank
Long-term
Resona Bank
debt
Mizuho BankMUFG Bank

Subtotal
Total

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest rate of debt for which FRC conducted interest
rate swap transactions is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The debts were made based on the commitment line agreements between FRC and respective banks.
(Note 3) Amount of repayment of long-term debt scheduled to be due within 5 years after period end.

(thousands of yen)

Category
Long-term debt

1 to 2 years
6,000,000

2 to 3 years
5,900,000

3 to 4 years
5,200,000

FUKUOKA REIT CORPORATION

4 to 5 years
3,900,000

50