21st Fiscal Period

Report on Performance andManagement Status (Semiannual Report)
September 1, 2014 to February 28, 2015

Fukuoka REIT
Corporation

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

I. Overview of Fukuoka REIT Corporation
To Our Unitholders
We would like to express our sincere appreciation to all unitholders for your continued support of
Fukuoka REIT Corporation (FRC).
We are pleased to report on the performance results and management status of FRC for the 21stfiscal period (September 1, 2014 to February 28, 2015).
FRC started as Japan's first REIT specializing in regional properties. Its mission is to raise capital for the
Fukuoka and Kyushu areas from Japanese and overseas prime investors by incorporating high quality
properties into its portfolio, and thus contribute to the vitalization and enhancement of the attractivenessof the urban landscape of the areas. Since our listing in June 2005, we have exhibited consistent growth
and achieved stable performance through the support of our unitholders and sponsor companies.
During the fiscal period under review, the Japanese economy remained on course for a modest
recovery despite weakness observed in consumer spending and other aspects. Looking ahead, with
Etsuo Matsuyuki
the employment and income environment continuing to improve, the economy is expected to keep
CEO & Representative Director
recovering moderately thanks to a drop in crude oil prices as well as various political measures proving
Fukuoka REIT Corporation
effective. In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy was
also on track for a modest recovery, with public investment kept at a high level and capital investment steadily picking up due to theconsistently improving employment and income environment, although consumer spending remained somewhat weak in certain areas.
As for land price trends, the national average over the past year from January 2014 decreased at a slower pace for residential landand shifted from a decrease to a leveling-off for commercial land for the first time in seven years, according to the Land Price Survey
announced in March 2015. In Fukuoka City, the central area of FRC’s investment targets, land prices continued rising for the third
consecutive year, recording a year-on-year increase of 3.8% for commercial land and 2.2% for residential land.
Under such circumstances, Canal City Hakata, FRC’s flagship property, continued to generate sales surpassing the forecast,boosted by demand from inbound foreign tourists and other factors. Other existing properties also operated solidly under ourmanagement, leading to the average occupancy rate of all properties FRC owns to be 99.6% at the end of the 21st fiscal period.
Moreover, in November 2014, we acquired a rental condominium located in the Yakuin/Hirao area, one of the most popular residential
areas in Fukuoka City, for 1.1 billion yen, which expanded our assets under management to 165.7 billion yen (based on acquisition
price).
As a result of these management endeavors, net income for the fiscal period surpassed the forecast, bringing the dividend per unit
to 3,435 yen.
Going forward, FRC will continue to exert its strengths as a REIT specializing in regional properties and quickly respond to market
changes, while receiving the support and cooperation from powerful sponsors who are leaders in the Kyushu business world. As we
do so, we will strive to achieve stable growth of our portfolio in the medium to long term and secure stable earnings through steadyasset management. We at FRC are also resolved to pursue our mission of maximizing investor interests based on our management
philosophy of “Act Local, Think Global.”
We greatly appreciate your continued support and cooperation.

[Notice] New Property Acquisitions and Issuance of New Investment Units (Including Plans) (Note 1)· On March 27, 2015, FRC acquired LOGIPORT Island-city Hakata.
· On April 8, 2015, FRC announced “Fukuoka REIT Concludes Agreement to Purchase a New Retail Property” (Note 2) and “Noticeon Issuance of New Investment Units.”
The issuance of new investment units will mark the first capital increase for FRC since March 2013. FRC will continue its
endeavors to expand the size of assets under management, which should contribute to maximizing investor interests.
(Note 1) This notice is based on the information available as of April 8, 2015.
(Note 2) This refers to the press release concerning acquisition of Marinoa City Fukuoka (Marina Side Building).

CONTENTS
I.

Overview of Fukuoka REIT Corporation
To Our Unitholders
Financial Summary
ProfileHighlights of the Latest Offering

1
2
3
5

II. Semiannual Report
III. Independent Auditor's Report
IV. Balance Sheets
V. Statements of Income
VI. Statements of Changes in Net Assets
VII. Cash Flow Statements
VIII. Notes to Financial Statements

FUKUOKA REIT CORPORATION

1

6
22
23
25
26
27
28

I. Overview of Fukuoka REIT Corporation

Financial Summary
Financial Highlights for 21st Fiscal Period (ended February 2015)
Dividend per unit came to 3,435 yen, surpassing the forecast by 85 yen.
Category(unit)

17th fiscal period

18th fiscal period

19th fiscal period

20th fiscal period

21st fiscal period(September 1, 2012 toFebruary 28, 2013)(March 1, 2013 toAugust 31, 2013)(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)(September 1, 2014 to
February 28, 2015)

Operating revenues

mm yen

7,200

7,565

7,574

7,779

7,789

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

mm yen

4,444

4,751

4,732

4,800

4,829

mm yen

1,268

1,343

1,354

1,387

1,390

mm yen

2,622

2,848

2,801

2,824

2,860

Ordinary income

mm yen

2,005

2,272

2,239

2,263

2,370

Net income

mm yen

2,004

2,271

2,238

2,262

2,369

yen

16,28916,458

16,219

3,278

3,435

units

123,050

138,000

138,000

690,000

690,000

Total assets (at end of period)

mm yen160,574

167,857

167,492

167,824

167,369

Total net assets (at end of period)

mm yen71,182

81,712

81,67981,70381,811

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

181

184

181

184

181

20

23

23

24

25

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

751

886

868

894

1,003

Total leasable floor space (at end of period)m2

448,867.34

466,824.38

466,087.01

475,682.05

478,197.10

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

%

99.3

98.8

98.1

99.3

99.6

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

Business Forecasts for 22nd and 23rd Fiscal Periods
FRC expects dividend per unit to grow even after the capital increase through issuance of new investment units.
21st fiscal period

22nd fiscal period

23rd fiscal period(September 1, 2014 to February 28, 2015)(March 1, 2015 to August 31, 2015)(September 1, 2015 to February 29, 2016)(unit)

Results

Forecast

Forecast

Operating revenues

mm yen

7,789

8,163

8,204

Leasing NOI (Note)

mm yen

4,829

5,159

5,174

Depreciation and amortization
expenses

mm yen

1,390

1,471

1,497

Operating income

mm yen

2,860

3,086

3,063

Ordinary income

mm yen

2,370

2,578

2,585

Net income

mm yen

2,369

2,577

2,584

Dividend per unityen (1)

3,435

–

–

Latest dividend forecast per unityen (2)

3,350

3,450

3,460

Difference from forecast

yen (1)-(2)

+85

–

–

690,000

747,000

747,000

Category

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

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

FUKUOKA REIT CORPORATION

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I. Overview of Fukuoka REIT Corporation

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

Overview of the Investment Corporation
Fukuoka REIT Corporation

Name:

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

Sponsors

5%
The Bank of Fukuoka, Ltd.

5%

5%

5%

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

50%
Fukuoka Jisho Co., Ltd. (Note)

Outsidedirector

10%

Outsidedirector

Fukuoka Realty Co., Ltd.

Saibu Gas Co., Ltd.

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

5%

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

KYUSHU RAILWAY COMPANYRoyal Holdings Co., Ltd.

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

Financial Highlights
Total assets

167.3 bn yen (as of February 28, 2015)

Total debt

70.7 bn yen (as of February 28, 2015)

LTV (Total debt / Total assets)

S&P
Credit ratings

42.3% (as of February 28, 2015)

A−(Stable)R&I

A＋(Stable)JCR

AA−(Stable)Investment Unit Price
Investment unit price

227,000 yen(as of February 28, 2015)

Total number of investment units outstanding

690,000 units(as of February 28, 2015)

Market capitalization

156.6 bn yen(Unit price × Units outstanding)(as of February 28, 2015)

Net assets per unit

118,567 yen(as of February 28, 2015)

Market net assets per unit (Note)

139,486 yen(as of February 28, 2015)

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

I. Overview of Fukuoka REIT Corporation

ProfileDividend Performance
21st fiscal period end

February 28, 2015

21st fiscal period dividend

3,435 yen per unit

(semiannual periods ending every February and August)21st fiscal period days

181 days

Dividend yield

3.1% {(Dividend / Days × 365) / Unit price (as of February 28, 2015)}

(yen)
3,802
3,726
3,672 3,699 3,674 3,609
4,000 （19,014）3,687
3,475 3,479 3,356（18,632）3,468（18,360）（18,499）（18,438）（18,373）（18,049）
3,293 3,384 3,324 3,238 3,257 3,291 3,243（17,397）（17,377）（17,341）
3,435（16,922）（16,783）（16,621）（16,465）（16,458）（16,289）（16,219）3,278（16,193）
3,000

2,000

1,000

0

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

99.3

98.8

17th

18th

19th

20th

21st

99.3

99.6

20th

21st

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

Portfolio Property Occupancy Rate (at end of period)
FRC has maintained a portfolio property occupancy rate of 97% or higher since listing.
（%）
100

99.8

99.0

99.4

99.4

99.7

98.8

99.4

99.2

98.8

99.1

99.0

99.6

98.6

98.1

95

97.0

98.1

90

85

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

19th

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

Overview of the AssetManager
Name:

Investment type (based on acquisition price)

Fukuoka Realty Co., Ltd.

Representative: Etsuo Matsuyuki
CEO & Representative
Director
Address:

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

Established:

December 26, 2003

29.3%

62.3%
Investment area (based on acquisition price)

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

TEL:

Office buildings

RetailFukuoka metropolitan area

76.6%

Total leasable floor space2

Capital:200,000,000 yen(Note) Figures are based on properties owned as of February 28, 2015.

FUKUOKA REIT CORPORATION

4

Other
Kyushu areas

23.4%

Occupancy rate at end of period
99.6%

478,197.10m

Others 8.4%

I. Overview of Fukuoka REIT Corporation

Highlights of the Latest Offering
Realizing solid growth of assets under management through acquisitions of selected blue-chip properties
Achieving external growth by taking advantage of the sponsor pipelines and local networks
3 Maintaining and increasing dividends stably and maximizing investor interests
4 Securing stable financial standing
1
2

Portfolio at End of August 2014

Number ofproperties

Acquisition
price

24

164,654

properties

Acquisition of New Properties

Appraisal value(Note 1)

Number ofproperties

Acquisition
pricemillion yen

properties

3

14,500172,491 +million yen

Portfolio after Acquisition of New Properties

Appraisal value(Note 2)

Number ofproperties

Acquisition
priceAppraisal value

million yen

properties

27

179,154

187,131

14,640 =million yen(Note 3)

million yen

million yen(Note 1) The appraisal value as of the end of February 2015 is indicated.
(Note 2) The total of the appraisal values upon acquisition of the two properties acquired in the 22nd fiscal period and the appraisal value as of the end of February 2015 of the property acquired in the 21stfiscal period is indicated.
(Note 3) The total of the appraisal values of properties in the Portfolio at End of August 2014 and Acquisition of New Properties is indicated.

Capacity for additional acquisitions
Approx. 36,000 million yen(mm of yen) (Properties)(%)
60

200,000 30
Properties acquired from outside parties

Properties acquired from sponsor companies

Number of properties

150,000
20
LT V

100,000
80,133
6,633

87,933
14,433

94,933
14,433

114,844 118,394 118,394
110,103
104,693
17,604 21,154 21,154
16,493
16,493

124,294 124,294 127,294 127,294
24,104 24,104 27,104 27,104

Number of properties

156,274
149,594 149,594 153,674
53,484 56,084
49,40449,404LTV

163,404 163,404 164,654

179,154
165,754

72,184
61,684

61,68462,93450

64,03410

40

50,00073,5000 073,50088,20080,50093,61097,24097,24097,240100,190 100,190 100,190 100,190 100,190 100,190 100,190 100,190 101,720 101,720 101,720 101,720

106,970

2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st After acquisition of(Aug 2005) (Feb 2006) (Aug 2006) (Feb 2007) (Aug 2007) (Feb 2008) (Aug 2008) (Feb 2009) (Aug 2009) (Feb 2010) (Aug 2010) (Feb 2011) (Aug 2011) (Feb 2012) (Aug 2012) (Feb 2013) (Aug 2013) (Feb 2014) (Aug 2014) (Feb 2015) new properties

30* Kominedai Community Mall, acquired in the 3rd fiscal period and sold in the 6th fiscal period, was omitted from the acquired assets presented above.
* Higashi Hie Business Center, acquired in the 10th fiscal period, was acquired both from an outside party and a sponsor. Accordingly, its acquisition price has been divided equally and added to the acquisition
price of assets acquired from outside parties and acquired from sponsor companies, respectively.
* As the senior equity interest in an anonymous partnership managed by CCH Bridge Y.K. was redeemed in the 14th fiscal period, it is excluded from total acquired assets from the 14th fiscal period onward.
* Assets acquired from sponsor companies include properties acquired through arrangements made by the sponsor companies.

Acquisition of New Properties
FRC has acquired three properties, all of which are located in the Fukuoka urban area, its major investment target area.
Total acquisition price

Property name14,500 million yen

Total appraisal value

14,640 million yen

Acquired in the 21st period

Acquired in the 22nd period

Acquired in the 22nd period

Granfore Yakuin Minami

LOGIPORT Island-city Hakata

Marinoa City Fukuoka (Marina Side Building)

Others1,100 million yen
1,190 million yen (Note)

Others8,150 million yen
8,180 million yen

Retail5,250 million yen
5,270 million yen

2-Chome, Minato Kashii, Higashi Ward, Fukuoka City

1-Chome, Odo, Nishi Ward, Fukuoka City

March 27, 2015
Outside party

May 1, 2015
SponsorExternal view of property

Investment type
Acquisition priceAppraisal value
Location
Acquisition dateSeller1-Chome, Hirao, Chuo Ward, Fukuoka City

November 4, 2014
Outside party(Note) The appraisal value as of the end of February 2015 is indicated.

FUKUOKA REIT CORPORATION

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II. Semiannual Report
Overview of Asset Management
1. Changes in operating results and financial position
17th fiscal period

18th fiscal period

19th fiscal period

20th fiscal period

mm yen7,200[7,200]
4,578[4,025]
2,622
2,005
2,004
160,574[0.6]
71,182[0.0]
69,177

7,565[7,565]
4,716[4,157]
2,848
2,272
2,271
167,857[4.5]
81,712[14.8]
79,441

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

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

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

Fiscal Period(unit)

Operating revenues

mm yen[Leasing business revenues]

mm yenOperating expenses

mm yen[Expenses related to leasing business]

mm yenOperating income
Ordinary income
Net income
Total assets

mm yenmm yen(a)

mm yen(b)

mm yen(c)

mm yen[Change from previous period]

Net assets%[Change from previous period]%

Unitholders’ equity
Total number of investment
units outstanding(September 1, 2012 toFebruary 28, 2013)(March 1, 2013 toAugust 31, 2013)(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)

21st fiscal period(September 1, 2014 to
February 28, 2015)

units

123,050

138,000

138,000

690,000

690,000

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

578,480

592,119

118,376

118,410

118,567

Total dividend
Dividend per unit(e)

mm yen(e)/(d)yen

2,271
16,458[16,458][–]

2,238
16,219[16,219]
[–]

2,261
3,278
[3,278]
[–]

2,370
3,435
[3,435][–](d)[Earnings dividend per unit]

yen[Dividend in excess of earnings per unit]

yen

2,004
16,289[16,289][–](Note 4)%

1.3 [2.5]

1.4 [2.7]

1.3 [2.7]

1.3 [2.7]

1.4 [2.9](Note 4)%

2.8 [5.7]

3.0 [5.9]

2.7 [5.5]

2.8 [5.5]

2.9 [5.8](c)/(b)

%

44.3

48.7

48.8

48.7

48.9

%
(e)/(a)%[(0.3)]
100.0

[4.4]
100.0

[0.1]
100.0

[(0.1)]
100.0

[0.2]
100.0

20

23

23

24

25

448,867.34

466,824.38

466,087.01

475,682.05

478,197.10

99.3

98.8

98.1

99.3

99.6

1,268

1,343

1,354

1,387

1,390

431
4,444
181

612
4,751
184

848
4,732
181

740
4,800
184

328
4,829
181

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

Payout ratio【Other reference information】
Number of investment
properties
properties at end of period
Total leasable floor space atm2
end of period
Occupancy rate at end of%
periodDepreciation and amortization
mm yenexpenses
mm yenCapital expenditures(Note 4) mm yen
Leasing NOI
days
Days in fiscal period(Note 1) Consumption tax is not included in operating revenues, etc.
(Note 2) In the above table, monetary amounts are rounded down to the nearest specified unit and percentage figures are rounded off to one decimal place.
(Note 3) FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. Accordingly, net assets per unit have been calculated based on the assumption that the split ofinvestment units was conducted at the beginning of the 19th fiscal period.
(Note 4) The indicators are calculated by using the following methods. Furthermore, the figures in square brackets represent annualized value based on the number of days in each fiscal period.
Ratio of ordinary income to total assets
Return on net assets
Leasing NOI

Ordinary income / average total assets
Average total assets = (Total assets at beginning of period + total assets at end of period) / 2
Net income / average net assets
Average net assets = (Net assets at beginning of period + net assets at end of period) / 2
Leasing business revenues – expenses related to leasing business + depreciation and amortization expenses

FUKUOKA REIT CORPORATION

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II. Semiannual Report

Overview of Asset Management
2. Management situation(1) Brief history of the investment corporation
Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on Investment Trusts andInvestment Corporations” (Act No. 198 in 1951 including later revisions, hereinafter the “Investment Trusts Act”) and listed on
the Tokyo Stock Exchange Group Inc. and the Fukuoka Stock Exchange on June 21, 2005 as the nation’s first real estate
investment trust specializing in regional properties (code number: 8968). FRC invests in real estate throughout Kyushu (including
Okinawa Prefecture), with a central focus on Fukuoka City, and Yamaguchi Prefecture (hereinafter the “Fukuoka/Kyushu area”)
by turning regionality, characteristics in the real estate industry, into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retail in Canal
City Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common space), a commercial complex
where specialty shops, cinema complex, theaters, amusement facilities, hotels and offices are integrally developed (hereinafter“Canal City Hakata”). As of the end of the 21st fiscal period (February 28, 2015), FRC manages a total of 25 properties
comprising ten Retail, seven Office buildings and eight Others.

(2) Investment environment and portfolio performance
During the 21st fiscal period, the Japanese economy remained on course for a modest recovery despite weakness observed inconsumer spending and other aspects. Looking ahead, with the employment and income environment continuing to improve,the economy is expected to keep recovering thanks to a drop in crude oil prices as well as various political measures proving
effective. In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy was also on track for amodest recovery, with public investment kept at a high level and capital investment steadily picking up due to the consistently
improving employment and income environment, although consumer spending remained somewhat weak in certain areas.
As for land price trends, the national average over the past year from January 2014 decreased at a slower pace forresidential land and shifted from a decrease to a leveling-off for commercial land for the first time in seven years, according to
the Land Price Survey 2015. In Fukuoka City, the central area of FRC’s investment targets, land prices continued rising at anaccelerated rate for the third consecutive year, recording a year-on-year increase of 3.8% for commercial land and 2.2% forresidential land.
Under such circumstances, FRC focused on stringently selective investment in accordance with its investment policy. This
led to the acquisition of Granfore Yakuin Minami (acquisition price: 1,100 million yen) on November 4, 2014. For existing
properties, FRC continued its efforts to reinforce competitive advantages and customer drawing ability at Canal City Hakata
and other major retail facilities, and focused on maintaining and increasing the occupancy rate of its owned properties. As
a result of these endeavors, the average occupancy rate of all properties FRC owns was 99.6% at the end of the 21st fiscal
period.
When analyzing FRC’s portfolio (on an acquisition price basis) by investment target area, the investment ratio in the Fukuoka
urban area accounted for 76.6%; when analyzing by property type, Retail, Office buildings, and Others accounted for 62.3%,
29.3% and 8.4%, respectively.

(3) Summary of fundraising
In the 21st fiscal period, FRC refinanced 500 million yen in short-term debt that matured in September 2014 for the sameamount in debt that matures in five years. As a result, the balance of interest-bearing debt outstanding (including the investment
corporation bonds) at the end of the 21st fiscal period totaled 70,775 million yen, with the loan-to-value ratio (ratio of interestbearing debt (including the investment corporation bonds) to total assets) at 42.3%. In addition, FRC concluded an interest
rate swap agreement (notional principal of 2,500 million yen) on February 25, 2015. This brought the ratio of fixed-interest rate
debt (including investment corporation bonds) at the end of the fiscal period to 75.7%. Going forward, FRC will continue its
efforts to reduce refinancing risks by dispersing the debt repayment dates and increasing the average length of time until debt
maturity, and to mitigate risks of rising interest rates by shifting to fixed-interest rate borrowings and through other measures.
Furthermore, FRC made a resolution as of April 8, 2015 on the issuance of new investment units (57,000 units) in order toprocure funds for acquiring a new specified asset.
FUKUOKA REIT CORPORATION

7

II. Semiannual Report

Overview of Asset Management
Moreover, the credit ratings assigned to FRC as of the end of the 21st fiscal period are as follows:
Credit Rating Agency

Rating Type

RatingRating Outlook

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

Long-term Corporate Credit Rating
Short-term Corporate Credit RatingA−
A−2

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

Issuer Rating

A+

StableLong-term Senior Debts Rating

AA−

StableJapan Credit Rating Agency, Ltd. (JCR)(4) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 7,789 million yen and operating income after excluding
operating expenses such as expenses related to rent business and asset management fees totaled 2,860 million yen. Ordinary
income was 2,370 million yen and net income was 2,369 million yen.
Management decided to make a dividend of 3,435 yen per investment unit to meet the requirements of special tax measures
for an investment corporation (as stipulated in Article 67-15 of the Act on Special Measures Concerning Taxation [Act No. 26
in 1957 including later revisions, hereinafter the “Special Taxation Measures Act”]). Under this law, an investment corporation isallowed to deduct the maximum amount of dividends paid to investors from its taxable income.

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

Item

Unitholders’ capital

Remarks(mm of yen)

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

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(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.

[Changes in market price of investment certificates]
The highest and lowest (closing price) market prices on the Real Estate Investment Trust Section of the Tokyo Stock
Exchange, on which FRC’s investment certificates are listed, in each fiscal period are as follows:
Fiscal period
HighestLowest17th fiscal period

18th fiscal period

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

19th fiscal period

20th fiscal period

769,000 yen
536,000 yen

893,000 yen
704,000 yen

868,000 yen
708,000 yen

171,400 yen
171,000 yen

199,000 yen
157,100 yen(September 1, 2012 toFebruary 28, 2013)(March 1, 2013 toAugust 31, 2013)(Note 2)
(March 1, 2014 toAugust 31, 2014)

21st fiscal period(Note 2)
(September 1, 2014 to
February 28, 2015)

244,400 yen
186,200 yen(Note 1) The highest and lowest prices of the investment unit price are based on the closing prices on the Real Estate Investment Trust Section of the Tokyo Stock Exchange.
(Note 2) In accordance with the 5-for-1 split of FRC’s investment units with March 1, 2014 as the effective date, the investment units are traded at the price after ex rights, starting on February 26, 2014.

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II. Semiannual Report

Overview of Asset Management
4. Results of dividend, etc.
With respect to the dividend for the 21st fiscal period, FRC determined to distribute the whole unappropriated surplus (except
for the fraction amount, which is the dividend per unit of less than 1 yen) to be eligible for special tax measures for an investment
corporation (as stipulated in Article 67-15 of the Special Taxation Measures Act) that allow FRC to deduct the maximum amountof earnings dividend from its taxable income. Accordingly, dividend per unit for the fiscal period was 3,435 yen.
(thousands of yen)
Fiscal period
Unappropriated surplus
Undistributed earnings
Total dividends[Dividend per unit]

Earnings dividends[Earnings dividend per unit]

Contribution refund[Contribution refund per unit]

17th fiscal period

18th fiscal period(September 1, 2012 toFebruary 28, 2013)

19th fiscal period(March 1, 2013 toAugust 31, 2013)

2,004,391
29
2,004,361[16,289 yen]
2,004,361[16,289 yen]–[–]

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

2,271,226
22
2,271,204[16,458 yen]
2,271,204[16,458 yen]

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

–

–

[–]

21st fiscal period(March 1, 2014 toAugust 31, 2014)[–](September 1, 2014 to
February 28, 2015)

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

2,370,18737
2,370,150[3,435 yen]
2,370,150[3,435 yen]–[–]

5. Future portfolio management policy and vital issues
FRC will further reinforce management and leasing capabilities by cooperating with property management companies including
sponsor companies even in a weak consumer spending environment, and secure and maintain the stable operation of theproperties by making the most use of their advantages.
FRC will continue to make investments based on the basic policy stipulated in its Articles of Incorporation and its basic
philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in “high growthpotential markets.” By geographic location, of Fukuoka and Kyushu areas, FRC will invest 60% to 90% of its assets in the
Fukuoka urban area, since the Fukuoka urban area is expected to have a high population growth rate in the future. In addition
to the Fukuoka urban area, management has decided to actively acquire properties in major cities, if there are regions orproperties where FRC can generate investment merits through its knowledge of the local land. FRC will acquire high quality
properties with adequate use of its advantages, such as information gathering ability in the areas, good knowledge of regional
properties and close relations with the local business community and governments, so that investors can continue to invest in
FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try to maintain asolid financial structure.

6. Significant events that have occurred after the end of the 21st fiscal period
No relevant items.
(Reference Information)
FRC made a resolution at its Board of Directors meeting held on April 8, 2015 to issue new investment units (57,000 units) inorder to procure funds to acquire a new specified asset.

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II. Semiannual Report

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

17th fiscal period

18th fiscal period

19th fiscal period

20th fiscal period

2,000,000 units

2,000,000 units

2,000,000 units

10,000,000 units

10,000,000 units

123,050 units

138,000 units

138,000 units

690,000 units

690,000 units

7,495

8,470

7,156

7,386

7,350

as of February 28, 2013

as of August 31, 2013

as of February 28, 2014

as of August 31, 2014

21st fiscal period

as of February 28, 2015

2. Matters related to investment units
The following table sets forth the major unitholders of FRC as of February 28, 2015.
Investment units held (units)

NameJapan Trustee Service Bank, Ltd. (Trust account)
Fukuoka Jisho Co., Ltd.
Trust & Custody Service Bank, Ltd. (Securities investment trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
MetLife, Inc.
Kazuhiko Enomoto
Shikoku Railway Company
Trust & Custody Service Bank, Ltd. (Cash in trust taxable account)
Joyo Bank, Ltd.
Total

223,480
64,77537,39035,296
26,583
17,045
11,985
9,130
8,741
8,570
442,995

Percentage of total number ofinvestment units outstanding (%) (Note)
32.38
9.38
5.41
5.11
3.85
2.47
1.73
1.32
1.26
1.24
64.20

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

3. Matters related to directors(1) The names of FRC’s directors, etc. and their fees for the 21st fiscal period are as
follows:
Title

Name of directors, etc.

Major concurrent assignments

Total fee for each title forthe 21st fiscal period(thousands of yen) (Note 2)

CEO and Representative Director
Supervisory Directors
Independent Auditor

Etsuo Matsuyuki
Takashi Shinohara
Hiroyasu Shindo
PricewaterhouseCoopers Aarata

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

–

6,000
3,600
8,700

(Note 1) The CEO and Representative Director and Supervisory Directors do not possess investment units of FRC under their own name or under another person’s name. Although there are cases where theSupervisory Directors may be directors of companies other than those stated above, none of the companies or those stated above have vested interest in FRC.
(Note 2) The fees for the CEO and Representative Director and Supervisory Directors are the amounts paid to them in the 21st fiscal period, and the fee to the Independent Auditor is the amount payable to it(estimate) for audits pertaining to the 21st fiscal period.

(2) Policy on deciding to dismiss and not to reappoint the Independent Auditor
FRC will review at its Board of Directors meetings regarding the dismissal of the Independent Auditor in accordance withthe 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.

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II. Semiannual Report

Overview of the Investment Corporation
4. Names of asset management company, asset custodian and generaladministrators as of the end of the 21st fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as ofFebruary 28, 2015.
Category of entrustment

Name

Asset Management Company

Fukuoka Realty Co., Ltd.

Asset Custodian

Mitsubishi UFJ Trust and Banking Corporation

General Administrator (accounting matters, etc.)

Mitsubishi UFJ Trust and Banking Corporation

General Administrator (administration of unitholders’ list)

Sumitomo Mitsui Trust Bank, Limited

General Administrator (administration of investment corporation bonds registry)

Sumitomo Mitsui Banking Corporation

Status of FRC’s Assets under Management
1. FRC’s asset structure
20th fiscal period
Type of asset

Area

Use

21st fiscal period

as of August 31, 2014

Total value of
properties held

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

as of February 28, 2015

Percentage of
total assets

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

Percentage of
total assets(%) (Note 3)

Fukuoka urban area

65,85339.2

65,542

39.2

Other Kyushu areas

36,18321.6

35,885

21.4

Fukuoka urban area

44,622

26.6

44,25926.4

Other Kyushu areas

–

–

–

–

Fukuoka urban area

9,679

5.8

10,799

6.5

Other Kyushu areas

2,791

1.7

2,759

1.6

Deposits and other assets

8,695

5.2

8,123

4.9

Total amount of assets (Note 4)

167,824[159,128]100.0[94.8]

167,369[159,265]100.0[95.2]

RetailReal estate in trust

Office buildings

Others(Note 1) “Fukuoka urban area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City for school and work, according to the 2010 census, which states “the numberof workers and students aged 15 years or older (students including those aged 14 years or younger: particular reference) commuting between their homes and places of work or school” conducted by
Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs and Communications.
“Other Kyushu area” refers to the Fukuoka and Kyushu area excluding the Fukuoka urban area.
(Note 2) “Total value of properties held” is based on the value on the balance sheets (the value of real estate in trust is the book value after depreciation).
(Note 3) Concerning the “Percentage of total assets,” the numbers are rounded off to one decimal place. The total of individual percentages in the above table may not equal 100%.
(Note 4) Figures in square brackets for “Total amount of assets” refer to the value and percentage of real estate held in effect to the total amount of assets.

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II. Semiannual Report

Status of FRC’s Assets under Management
2. Major assets owned by FRC
The following is an overview of the major assets owned by FRC as of February 28, 2015.
Real estate property name (Note 1)

Book value(mm of yen)

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

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

Main use

Canal City Hakata

30,78446,483.22

46,483.22

100.0

15.8

RetailCanal City Hakata·B

28,39868,806.12

68,806.12

100.0

20.6

RetailPark Place Oita

17,599109,603.80

109,281.06

99.7

15.2

RetailSunLive City Kokura

6,006

61,450.22

61,450.22

100.0

3.8

RetailSquare Mall Kagoshima Usuki

4,701

14,602.88

14,602.88

100.0

3.3

RetailKumamoto Intercommunity SC

2,120

6,968.66

6,968.66

100.0

1.2

RetailAEON Hara Shopping Center

5,316

27,313.53

27,313.53

100.0

2.7

RetailHanahata SC

1,043

2,801.15

2,801.15

100.0

0.5

RetailKurume Higashi Kushiwara SC

2,227

6,467.80

6,467.80

100.0

1.1

RetailK’s Denki Kagoshima

3,228

7,296.17

7,296.17

100.0

1.4

Retail

101,427

351,793.55

351,470.81

99.9

65.6

Canal City Business Center Building

13,63523,030.44

23,030.44

100.0

8.0

Office building

Gofukumachi Business Center

9,578

19,905.34

19,802.20

99.5

6.4

Office building

Sanix Hakata Building

4,059

6,293.76

6,293.76

100.0

2.5

Office building

Taihaku Street Business Center

6,498

14,677.27

14,601.45

99.5

3.8

Office building

Higashi Hie Business Center

5,009

13,695.51

13,518.89

98.7

4.3

Office building

Tenjin Nishi-Dori Center Building

2,711

3,339.32

3,339.32

100.0

1.1

Office building

Tenjin North Front Building

2,766

5,252.38

5,252.38

100.0

1.7

Office building

44,25986,194.02

85,838.44

99.6

27.7

Amex Akasakamon Tower

1,826

4,821.25

4,755.14

98.6

0.8

OthersCity House Keyaki Dori

999

2,710.86

2,635.91

97.2

0.5

OthersAqualia Kego

2,707

7,415.36

6,981.74

94.2

1.5

OthersAqualia Chihaya

1,241

5,619.69

5,520.03

98.2

0.7

Others

D-Wing Tower

2,828

7,187.58

6,796.62

94.6

1.5

OthersHotel FORZA Oita

1,480

5,785.44

5,785.44

100.0

0.8

OthersTosu Logistics Center

1,279

4,173.29

4,173.29

100.0

0.5

OthersGranfore Yakuin Minami

1,195

2,496.06

2,346.46

94.0

0.3

OthersOthers subtotal:

13,55940,209.53

38,994.63

97.0

6.6

Total

159,246

478,197.10

476,303.88

99.6

100.0

Retail subtotal:

Office buildings subtotal:(Note 1) The properties listed above are owned in the form of trust beneficiary interest.
(Note 2) “Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the numbers are rounded off to one decimal place.
(Note 3) “Percentage of total leasing business revenue” is rounded off to one decimal place. The percentage of total leasing business revenue of respective properties in the above table may not equal 100%.

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II. Semiannual Report

Status of FRC’s Assets under Management
3. Details of real estate properties in the portfolio
The following table provides details of the real estate properties owned by FRC as of February 28, 2015.

Real estate property nameForm ofownership

Location

2-22, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka City
2-1, 1-Chome, Sumiyoshi,
Canal City Hakata·B
Hakata Ward, Fukuoka City1, 2-Chome, Koen Dori Nishi,
Park Place Oita
Oita City
14-1, 2-Chome, Kami Kuzuhara,
SunLive City Kokura
Kokura Minami Ward, Kitakyushu
City, Fukuoka
2-18, 2-Chome, Usuki,
Square Mall Kagoshima Usuki
Kagoshima City, Kagoshima
1-5, 1-Chome, Kozono, HigashiKumamoto Intercommunity SC
Ward, Kumamoto City
27-52, 6-Chome, Hara, Sawara
AEON Hara Shopping Center
Ward, Fukuoka City
9-12, 4-Chome, Hanahata,
Hanahata SC
Minami Ward, Fukuoka City
370-3 Higashi Kushiwara,
Kurume Higashi Kushiwara SC
Kurume City, Fukuoka
4-12, Tokai-cho, Kagoshima
K’s Denki Kagoshima
City, Kagoshima
Retail subtotal:
2-25, 1-Chome, Sumiyoshi,
Canal City Business Center Building
Hakata Ward, Fukuoka City
10-10, Kami Gofukumachi,
Gofukumachi Business Center
Hakata Ward, Fukuoka City
1-23, 2-Chome, Hakataeki
Sanix Hakata Building
Higashi, Hakata Ward, Fukuoka
City
3-21 Gokushomachi, Hakata
Taihaku Street Business Center
Ward, Fukuoka City
1-2, 3-Chome, Higashi Hie,
Higashi Hie Business Center
Hakata Ward, Fukuoka City
5-28, 2-Chome, Tenjin, Chuo
Tenjin Nishi-Dori Center Building
Ward, Fukuoka City
4-20, 4-Chome, Tenjin, Chuo
Tenjin North Front Building
Ward, Fukuoka City
Office buildings subtotal:
4-23, 2-Chome, Maizuru, Chuo
Amex Akasakamon Tower
Ward, Fukuoka City
16-21, 2-Chome, Kego, Chuo
City House Keyaki DoriWard, Fukuoka City
13-17, 2-Chome, Kego, Chuo
Aqualia Kego
Ward, Fukuoka City
3-12, 4-Chome, Chihaya,
Aqualia Chihaya
Higashi Ward, Fukuoka City
10-38, 2-Chome, Daimyo, Chuo
D-Wing Tower
Ward, Fukuoka City
5-18, 1-Chome, Chuo-cho,Hotel FORZA Oita
Oita City
1607 Momota, Himekata-cho
Tosu Logistics Center
Aza, Tosu City
11-20, 1-Chome, Hirao, Chuo
Granfore Yakuin Minami
Ward, Fukuoka City
Others subtotal:
Total
Canal City Hakata

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest

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

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

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

46,483.22

32,60030,78468,806.12

29,30028,398109,603.80

18,131

17,599Japan Real Estate Institute61,450.22

7,750

6,006

Japan Real Estate Institute14,602.88

5,200

4,701

Japan Real Estate Institute6,968.66

2,610

2,120

Japan Real Estate Institute27,313.53

4,540

5,316

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

2,801.15

1,180

1,043

6,467.80

2,660

2,227

7,296.17

3,550

3,228

351,793.55

107,521

101,427

23,030.44

14,50013,635

19,905.34

12,7009,578

6,293.76

4,860

4,059

Japan Real Estate Institute

14,677.27

6,900

6,498

Japan Real Estate Institute13,695.51

6,260

5,009

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

2,850

2,711

Japan Real Estate Institute5,252.38

3,020

2,766

Japan Real Estate Institute86,194.02

51,09044,2594,821.25

1,810

1,826

2,710.86

1,000

999

7,415.36

3,470

2,707

Japan Real Estate Institute

5,619.69

1,530

1,241

Japan Real Estate Institute7,187.58

3,170

2,828

Tanizawa Sogo Appraisal
Co., Ltd.

5,785.44

1,610

1,480

Japan Real Estate Institute4,173.29

1,290

1,279

Japan Real Estate Institute2,496.06

1,190

1,195

Tanizawa Sogo Appraisal
Co., Ltd.

40,209.53
478,197.10

15,070173,681

13,559159,246

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

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

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

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II. Semiannual Report

Status of FRC’s Assets under Management
21st fiscal period

20th fiscal period(March 1, 2014 to August 31, 2014)

Real estate property name

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
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
AEON Hara Shopping Center
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Retail subtotal:
Canal City Business Center Building
Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center
Higashi Hie Business Center
Tenjin Nishi-Dori Center Building
Tenjin North Front Building
Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Kego
Aqualia Chihaya
D-Wing Tower
Hotel FORZA Oita
Tosu Logistics Center
Granfore Yakuin Minami

1 [48]
1 [48]
1 [106]
1
12
2
1
2
1
1
23 [222](Note 2)

1 [61]
33
18
1 [67]
1 [22]
1
11
66 [213](Note 2)

1 [61]
1 [41]
1 [121]
1 [104]
1 [130]
1
1–

Others subtotal:

7 [459]Total

96 [894](Note 2)
(Note 2)(%) (Note 3)(September 1, 2014 to February 28, 2015)

Total leasing Percentage ofTotal leasing Percentage of
Number ofOccupancy
business
total leasing
business
total leasing
tenants at end rate at end ofrevenuebusiness
revenuebusinessof period
periodduring period
revenueduringperiodrevenue(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)

100.0
99.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,228
1,608
1,218
292
256
90
212
40
88
111

15.8
20.7
15.7
3.8
3.3
1.2
2.7
0.5
1.1
1.4

99.9

5,149

66.2

100.0
94.8
95.9
98.4
98.7
100.0
100.0

607
485
201
300
333
86
130

7.8
6.2
2.6
3.9
4.3
1.1
1.7

98.0

2,143

27.6

92.2
97.8
92.6
98.9
95.5
100.0
100.0

64
38
111
57
115
63
36

0.8
0.5
1.4
0.7
1.5
0.8
0.5

–

–

–

96.4

486

6.3

1 [66]
1 [41]
1 [123]
1 [103]
1 [131]
1
1
1 [93]
8 [559]

99.3

7,779

100.0

103 [1,003]

1 [48]
1 [50]
1 [104]
1
12
2
1
2
1
1
23 [222](Note 2)

1 [61]
36
19
1 [70]
1 [22]
1
13
72 [222](Note 2)

(Note 2)
(Note 2)(mm of yen)(%) (Note 4)

100.0
100.0
99.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,230
1,607
1,183
292
254
89
212
40
88
111

15.8
20.6
15.2
3.8
3.3
1.2
2.7
0.5
1.1
1.4

99.9

5,111

65.6

100.0
99.5
100.0
99.5
98.7
100.0
100.0

622
497
195
297
332
86
129

8.0
6.4
2.5
3.8
4.3
1.1
1.7

99.6

2,161

27.7

98.6
97.2
94.2
98.2
94.6
100.0
100.0
94.0

65
37
113
57
113
63
42
24

0.8
0.5
1.5
0.7
1.5
0.8
0.5
0.3

97.0

516

6.6

99.6

7,789

100.0

(Note 1) “Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and office buildings among relevant properties. For the number of tenants in pass-throughmaster leasing properties, the number of sections stipulated in the tenancy agreements with end tenants is shown in square brackets. The Taihaku Street Business Center is an office building witha residential tower. Its number of tenants comprises 12 for the office building and 58 for the residence in the 21st fiscal period (12 for the office building and 55 for the residence in the 20th 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 masterleasing 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 total leased floor space to total leasable floor space and the numbers are rounded off to one decimal place.
(Note 4) “Percentage of total leasing business revenue” is rounded off to one decimal place, and the total of individual percentages in the above table may not equal 100%.

4. Securities incorporated in the portfolio
No relevant items.

FUKUOKA REIT CORPORATION

14

II. Semiannual Report

Status of FRC’s Assets under Management
5. List of specific transaction contract amount and status of fair value
The following table provides the contract amount of specific transaction by FRC and the status of its fair value as of February
28, 2015.
Contract amount, etc.
Category

Of which,exceeding 1 year

(Note 1)

Interest rate swap transaction(Payable fixed; Receivable floating)

Off-market transaction
Total

Fair value(mm of yen)Type

(mm of yen)
(Note 2)

20,50018,500(109)

20,50018,500(109)(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.

6. Status of other assets
All real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in theportfolio” on page 13. There is no incorporation of other specified assets as of the end of the 21st fiscal period.

7. Status of owned assets by country and region
As of the end of the 21st fiscal period, no overseas real estate properties in countries or regions other than Japan areincorporated into FRC’s portfolio.

Capital Expenditures for Owned Real Estate
1. Planned capital expenditures
The following table provides major items of capital expenditures associated with currently planned renovations, etc. for realestate properties owned by FRC as of the date of this Semiannual Report. Furthermore, the planned construction costs
indicated below include portions that are classified as expenses in accounting. In addition, FRC will implement renewal
construction work in order to maintain and improve the competitiveness of properties in the market as well as tenantsatisfaction, on top of the construction, facilities and replacement work for which expenditures will be made regularly.
Planned construction cost
(mm of yen)

Real estate property
nameLocation

PurposeSchedule
Total

Amount paid
Amountduring thealready paid
periodCanal City Hakata

Hakata Ward,
Fukuoka City

Common area repairs and improvements

From April 2015
to January 2016

256

–

–

Canal City Hakata·B

Hakata Ward,
Fukuoka City

Common area repairs and improvements

From February 2015
to February 2016

605

11

11

Park Place Oita

Oita City, Oita

Common area repairs and improvements

From September 2015
to February 2016

115

–

–

Canal City BusinessCenter Building

Hakata Ward,
Fukuoka City

Common area repairs and improvements

From September 2015
to December 2015

26

–

–

Gofukumachi Business Hakata Ward,
CenterFukuoka City

Common area repairs and improvements

From May 2015
to February 2016

120

–

–

Taihaku Street
Business Center

Common area repairs and improvements

From June 2015
to August 2015

57

–

–

Hakata Ward,
Fukuoka CityFUKUOKA REIT CORPORATION

15

II. Semiannual Report

Capital Expenditures for Owned Real Estate
2. Capital expenditures during the 21st fiscal period
The following table provides the overview of major construction work that was completed in the 21st fiscal period out of thecapital expenditures totaling 328 million yen. Furthermore, FRC conducted construction of 552 million yen in total in the 21stfiscal period, combined with the 217 million yen in repair and maintenance expenses that were classified as expenses inaccounting and 5 million yen in expenses for restoration to former state.
Real estate property nameLocation

PurposeConstruction cost

Period(mm of yen)

Canal City Hakata

Hakata Ward, Fukuoka City

Common area repairs and improvements

November 2014

21

Canal City Hakata･B

Hakata Ward, Fukuoka City

Common area repairs and improvements

From November 2014
to February 2015

99

Park Place Oita

Oita City, Oita

Common area repairs and improvements

From November 2014
to February 2015

52

Gofukumachi Business Center

Hakata Ward, Fukuoka City

Common area repairs and improvements

February 201510

Tenjin Nishi-Dori Center Building

Chuo Ward, Fukuoka City

Common area repairs and improvements

From November 2014
to February 201533

3. Reserves for long-term repair and maintenance plans
FRC has deposited the following amounts from the cash flows generated during the 21st fiscal period in order to fund largescale repair and maintenance work in the medium- to long-term future, based on long-term repairs and maintenance plans
prepared for respective properties.
(millions of yen)
Fiscal period

17th fiscal period(September 1, 2012 toFebruary 28, 2013)

18th fiscal period(March 1, 2013 toAugust 31, 2013)

Balance of deposits at beginning of period

838

350

Deposits during the period

350

Amounts used from deposits during the period

838

Deposits carried forward to the next period

350

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

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

21st fiscal period(September 1, 2014 to
February 28, 2015)

700

700

800

350

–

100

–

–

–

–

–

700

700

800

800

FUKUOKA REIT CORPORATION

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II. Semiannual Report

Expenses and Liabilities
1. Details of expenses related to asset management(thousands of yen)
20th fiscal period

Item
(a)
(b)
(c)
(d)
(e)

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

Asset management fees
Asset custody fees
Administrative service fees
Directors’ compensations
Other operating expenses
Total(September 1, 2014 to
February 28, 2015)

456,040
6,332
51,1739,600
65,200588,346454,6526,241
47,8009,600
60,246
578,540(Note) Aside from the amounts of the asset management fees shown above, 6,250 thousand yen was paid for asset management related to the acquisition of Tosu Logistics Center (with the amount includedin the acquisition cost of the property) during the 20th fiscal period, and 5,500 thousand yen was paid for asset management related to the acquisition of Granfore Yakuin Minami (with the amountincluded in the acquisition cost of the property) during the 21st fiscal period.

2. Status of debt
As of the end of the 21st fiscal period (February 28, 2015), FRC has the following debt from respective financial institutions.
Category
LenderShort-term
debt

Balance as Average
Balance as
Drawdown of September 1, of February 28, interest
date
2015
rate (%)
2014(mm of yen)

The Bank of Fukuoka (Note 2)
Resona Bank (Note 2)
The Nishi-Nippon City Bank

August 25,
2014

Resona Bank (Note 2)
The Bank of Nagasaki (Note 2)
Oita Bank (Note 2)
The Bank of Saga (Note 2)
SubtotalAugust 25,
2014(Note 2)

Resona Bank

September 30,
2010
August 31,
2009

Development Bank ofJapan
Sumitomo Mitsui Banking
June 30, 2010
Corporation
Sumitomo Mitsui Trust
July 29, 2011
Bank

Current
maturities
of long-term The Bank of Fukuoka
March 1, 2011debt
The Nishi-Nippon City Bank March 1, 2011

Repayment
methodUse offunds

Description

0.496

September 25, Lump-sum
upon maturity
2014

Refinance
fund

No collateral/
No guarantee

0.496

September 25, Lump-sum
upon maturity
2014

Refinance
fund

No collateral/
No guarantee(Note 1)

166
33

–
–

214

–

30
21
21
12
500

–
–
–
–
–

300

–

4,000

4,000

1,200

1,200

1,000

1,000

–

2,000

–

2,000

September 30, Lump-sum
Refinance No collateral/
2014
upon maturity
fund
No guarantee
August 31,
Lump-sum
Refinance No collateral/
1.950
2015
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
1.100 June 30, 2015
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
1.041 July 31, 2015
upon maturity
fund
No guarantee
February 29,
Lump-sum Acquisition No collateral/
0.650
2016
upon maturity
fund
No guarantee
Lump-sum Acquisition No collateral/
February 29,
0.774
2016
upon maturity
fund
No guarantee
February 29,
Lump-sum Acquisition No collateral/
0.795
2016
upon maturity
fund
No guarantee
February 29,
Lump-sum
Refinance No collateral/
1.117
2016
upon maturity
fund
No guarantee
1.325

Development Bank ofJapan

March 1, 2011

–

2,000

Mizuho Bank

February 29,
2012

–

500

6,500

12,700

2,250

2,175

2.200 June 30, 2017

4,000

4,000

2.170

1,500

1,500

0.650

2,000

–

0.650

2,000

–

0.774

2,000

–

0.795

2,000

2,000

1.305

Subtotal
Development Bank ofJapan
Development Bank ofJapan

Long-term
debt(mm of yen)

Repayment
dateJune 30, 2009

August 31,
2009
December 30,
The Bank of Fukuoka
2010
March 1,The Bank of Fukuoka
2011
March 1,The Nishi-Nippon City Bank
2011
Development Bank ofMarch 1,
Japan
2011
July 29,
The Bank of Fukuoka
2011

FUKUOKA REIT CORPORATION

17

August 31,
2016
December 30,
2016
February 29,
2016
February 29,
2016
February 29,
2016(Note 3)Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sum
July 31, 2017upon maturity

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

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

Expenses and Liabilities
Category
LenderJuly 29,2011
The Dai-Ichi Life Insurance
July 29,
Company
2011
July 29,
Shinsei Bank
2011
December 30,
The Bank of Fukuoka
2011
December 30,
The Hiroshima Bank
2011
December 30,
Oita Bank
2011
December 30,
The Eighteenth Bank
2011
December 30,
The Shinwa Bank
2011
December 30,
The Kitakyushu Bank
2011
January 31,
The Kagoshima Bank
2012
January 31,
Resona Bank
2012
Sumitomo Mitsui Banking
January 31,
Corporation2012
February 29,
Mizuho Bank
2012
Mitsubishi UFJ Trust andMarch 1,Banking Corporation2012
Sumitomo Mitsui Banking
March 30,
Corporation
2012
March 30,
Resona Bank
2012
March 30,
The Higo Bank
2012
The Bank of Fukuoka
The Nishi-Nippon City Bank
Oita Bank
The Miyazaki Bank
June 29,
The Shinwa Bank
2012
The Iyo Bank
The Bank of Saga
The Eighteenth Bank
The Kitakyushu Bank
Sumitomo Mitsui Trust
SeptemberBank28, 2012
SeptemberResona Bank28, 2012
February 1,
The Nishi-Nippon City Bank
2013
February 28,
The Nishi-Nippon City Bank
2013
February 28,
Mizuho Bank
2013
Sumitomo Mitsui Trust
February 28,
Bank
2013
Mitsubishi UFJ Trust andFebruary 28,
Banking Corporation2013
February 28,
Aozora Bank
2013
Mitsubishi UFJ Trust andMarch 29,
Banking Corporation
2013
The Nishi-Nippon City Bank

Long-term
debt

Balance as Average
Balance as
Drawdown of September 1, of February 28, interest
date
2015
rate (%)
2014(mm of yen)

(mm of yen)

Repayment
date

Repayment
methodUse offunds

Description(Note 1)

2,000

2,000

1.305

July 31, 2017

1,000

1,000

1.800

July 31, 2018

1,000

1,000

1.208

July 29, 2016

1,500

1,500

0.800

500

500

1.182

500

500

1.182

500

500

1.182

500

500

1.182

500

500

1.182

100

100

1.168

400

400

1.218

500

500

1.338

500

–

1.117

2,000

2,000

1.170

500

500

1.203

600

600

1.253

300

300

1.203

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

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

600

600

0.600

2,000

2,000

1.033

2,500

2,500

0.697

1,900

1,900

0.695

1,700

1,700

0.695

1,100

1,100

0.745

1,500

1,500

0.545

600

600

0.545

600

600

0.550

December 30,
2017
December 30,
2016
December 30,
2016
December 30,
2016
December 30,
2016
December 30,
2016
January 31,
2017
January 31,
2017
January 31,
2019
February 29,
2016
March 31,2017
March 31,2017
March 31,2017
March 31,2017

0.858 June 30, 2017

FUKUOKA REIT CORPORATION

18

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

Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guaranteeII. Semiannual Report

Expenses and Liabilities
Balance as Average
Balance as
Drawdown of September 1, of February 28, interest
date
2015
rate (%)
2014

Category
Lender(mm of yen)Aozora Bank

Long-term
debtJune 28, 2013

Mizuho Bank
The Norinchukin Bank
The Bank of Saga
Mizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu BankThe Iyo Bank
The Higo Bank

The Bank of TokyoMitsubishi UFJ
Subtotal
Total

1,000

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

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

4,000

4,000

–

500

62,15069,15056,075
68,775

July 31, 2014

August 29,
2014
September 25,
2014

Repayment
methodUse offunds

Description

0.600 June 30, 2020

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

0.538

July 31, 2019

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

0.835

July 30, 2021

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

August 31,
Lump-sum2022
upon maturity
September 25, Lump-sum
0.520
2019
upon maturity

Refinance
fund
Refinance
fund

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

1,000

July 31, 2014

Development Bank of Japan(mm of yen)

Repayment
date

1.010

(Note 1) The average interest is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest 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.
(Note 2) The debts were made based on the commitment line agreements between FRC and respective banks.
(Note 3) The debt is subject to repayment of 75 million yen on the final day of every 6 months following the final day of December 2009 as the initial repayment date, with 1,875 million yen to be repaid on
the final repayment date. Furthermore, as the 150 million yen scheduled for repayment within a year is included in Long-term debt for the convenience of comparison, the balances do not match thefigures recorded on the balance sheets as Current maturities of long-term debt and Long-term debt payable.

3. Status of investment corporation bonds
As of February 28, 2015, FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Balance as of
Balance as
Decrease during
September 1,of February 28,
the fiscal period
2014
2015
(mm of yen)
(mm of yen)First Series ofDecember 30,
Unsecured Bonds
2013

2,000

CouponMaturitydate

Maturity
methodUse

Description

1.32

December 29,
2023

Lump-sumupon maturity

Repaymentof debt

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

–

2,000

(Note 1)

(Note 2)

(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.

Acquisitions and Sales during the 21st Fiscal Period
1. Acquisition and sale of real estate and asset-backed securities, etc.
Acquisition
Asset type
Real estate in trust

Name of real estate
Granfore Yakuin Minami

Acquisition dateNovember 4, 2014

Sale

Acquisition price(mm of yen)Transfer date
–

1,100

Gain or loss on
saleBook value

Sale price(mm of yen)

(mm of yen)–

(mm of yen)––

(Note) The acquisition price refers to the amount (purchasing price shown on the purchasing contract) not including expenses for the acquisition of the relevant property (transaction brokerage fees and taxes
and other public charges, etc.).

FUKUOKA REIT CORPORATION

19

II. Semiannual Report

Acquisitions and Sales during the 21st Fiscal Period
2. Acquisition and sale of other assets
No relevant items.

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

Asset typeTransactiondateAcquisition price Real estateor sale price appraisal value(Note 2)
(Note 1)(mm of yen)

Acquisition

November 4,
Granfore Yakuin Minami Real estate in Trust
2014

Real estate appraiser

Appraisal date

(mm of yen)

1,170 Tanizawa Sogo Appraisal Co., Ltd

1,100

September 1,
2014(Note 1) The acquisition price refers to the amount (purchasing price shown on the purchasing contract) not including expenses for the acquisition of the relevant property (transaction brokerage fees and taxes
and other public charges, etc.).
(Note 2) The appraisal value above is based on the “Real Estate Appraisal Standards, Specific Thesis Chapter 3: Appraisal on Prices of Real Estate Subject to Securitization.”(2) Other
Of those transactions carried out by FRC that are required to have the value, etc. reviewed pursuant to the provisions of Article
201 of the Investment Trusts Act, no transaction was subject to the review for the 21st fiscal period other than the transactions
described in (1) above.

4. Transactions with interested parties and major shareholders(1) Transaction status
No relevant items.

(2) Amount of fees paid, etc.
FRC paid the following fees to the interested parties, etc. during the 21st fiscal period.
Category

Total paid fees(A)(thousands of yen)

Property leasing brokerage fees (Note 2)
Property management fees (Note 3)
Outsourcing fees (Note 2) (Note 5)

Other operating expenses (Note 2)

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

Fukuoka Jisho Co., Ltd.
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
291,894
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,247,844 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,168,176 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.

8,211
200
173,873
106,075
887,360
198,439
61,026
194,056
213,089
1,827

15,507

53.0
1.3
59.6
36.3
71.1
15.9
4.9
16.6
18.2
0.2

(Note 1) Interested parties, etc. refer to the interested parties, etc. of the asset management company who has concluded an asset management agreement with FRC, as designated in Article 123 of the
Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of these interested parties, etc., the above table indicates the paid parties to which FRC paid fees during the 21stfiscal period.
(Note 2) The property leasing brokerage fees, outsourcing fees and other operating expenses include property leasing brokerage fees, etc. paid to third parties through interested parties, etc.
(Note 3) The property management fees do not include the following construction supervision fees. In addition, of the fees below, the construction supervision fees paid upon acquiring real estate are includedin the acquisition cost of the relevant real estate.
		 Fukuoka Jisho Co., Ltd.
10,079 thousand yen
		 Park Place Oita Co., Ltd.
4,311 thousand yen(Note 4) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 21st fiscal period. The amounts include construction
work fees paid to third parties through interested parties, etc.
		 Fukuoka Jisho Co., Ltd.
315,082 thousand yen
		 Park Place Oita Co., Ltd.
101,661 thousand yen
		 Sunlife Co., Ltd.
30,604 thousand yen(Note 5) The outsourcing fees shown above are paid fees, etc. regarding building management outsourcing fees, and do not coincide with the Outsourcing fees described in VIII. Notes to financial statements(Notes to statements of income) that include property management fees and others.

FUKUOKA REIT CORPORATION

20

II. Semiannual Report

Acquisitions and Sales during the 21st Fiscal Period
5. Transactions with the asset management company regarding
concurrent work conducted by the asset management company
The asset management company (Fukuoka Realty Co., Ltd.) concurrently conducts land and building transaction business but
there was no relevant transaction conducted in the 21st fiscal period. Moreover, the asset management company does notconcurrently conduct any of the class 1 financial instruments transaction business, class 2 financial instruments transaction
business or real estate syndication business, and has no such transactions with FRC.

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

2. Changes in calculation method of depreciation
No relevant items.

3. Changes in valuation method of real estate
No relevant items.

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

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

FUKUOKA REIT CORPORATION

21

III. Independent Auditor's Report

FUKUOKA REIT CORPORATION

22

IV. Balance Sheets(thousands of yen)
21st fiscal period

20th fiscal period

Account(as of August 31, 2014)(as of February 28, 2015)

AssetsCurrent assets
Cash and deposits

2,694,272

2,545,162

Cash and deposits in trust

4,639,900

4,438,305

Operating accounts receivable

402,318

318,677

Prepaid expenses

300,402248,214

Deferred tax assets

27

9

4,606

4,209

8,041,528

7,554,578

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

78,108,929(16,980,269)

Structures in trust

1,302,682

Accumulated depreciation(448,860)

Machinery and equipment in trust

584,075

Accumulated depreciation(220,194)

Vehicles and transport equipment in trust

747

Accumulated depreciation(103)

Tools and fixtures in trust

1,211,618

Accumulated depreciation(833,434)

Lands in trust*1

61,128,659

79,100,573(18,259,209)

60,841,364

1,311,964
853,822(484,118)

827,846585,826
363,880(241,057)

344,768

747
643

(151)

596

1,248,071
378,183
94,622,667*1(877,740)

370,331*1

95,084,266–

18,696

157,347,858

157,487,870

1,765,318

1,765,318

15,661

12,318

1,780,979

1,777,637

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

100,000

100,000

Long-term prepaid expenses

508,992

411,366

Total investment and other assets

618,992

521,366

159,747,830

159,786,874

Investment corporation bond issuance expenses

18,34017,357

Investment unit issuance expenses

16,627

11,084

Total deferred assets

34,96728,442

167,824,326

167,369,896

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

Total noncurrent assets
Deferred assets

Total assets

FUKUOKA REIT CORPORATION

23

IV. Balance Sheets(thousands of yen)Account

21st fiscal period

20th fiscal period(as of August 31, 2014)(as of February 28, 2015)

Liabilities
Current liabilities
Operating accounts payable

411,578

Short-term debt payable

507,169

500,000–

6,650,000

12,850,000

Accounts payable - other

18,55524,807

Accrued expenses

332,545

330,419

Income taxes payable

1,162

734

115,105

168,301

Advances received

924,259

930,019

Deposits received

1,042,954

673,421

Total current liabilities

9,996,162

15,484,873

Investment corporation bonds

2,000,000

2,000,000

Long-term debt payable

62,000,000

55,925,000

Current maturities of long-term debt

Accrued consumption taxes

Noncurrent liabilities

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

316,668*1

Total noncurrent liabilities

11,808,124

316,031*1

11,832,568

76,124,793

70,073,599

86,120,955

85,558,472

79,441,236

79,441,236

Unappropriated surplus

2,262,134

2,370,187

Total surplus

2,262,134

2,370,187

Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus

Total unitholders’ equity
Total net assets

81,703,371*3Total liabilities and net assets

81,703,371
167,824,326

FUKUOKA REIT CORPORATION

24

81,811,423*381,811,423
167,369,896

V. Statements of Income(thousands of yen)
20th fiscal period

Account

21st fiscal period(March 1, 2014 toAugust 31, 2014)(September 1, 2014 to
February 28, 2015)

Operating revenues
Leasing revenues - real estate*1

7,285,942*1

7,342,920

Other leasing revenues - real estate*1494,039

7,779,981 *1

446,484*1, *2

4,366,790

7,789,404

Operating expenses
Expenses related to leasing business
Asset management fees

*1, *2456,040

4,350,094
454,652

Asset custody fees

6,332

6,241

Administrative service fees

51,17347,800

Director’s compensations

9,600

9,600

Other operating expenses

65,200Operating income

4,955,136

60,2462,824,845

4,928,634
2,860,769

Non-operating revenues
Interest received

696

Others

370

660
1,067

1,675

2,336

Non-operating expenses
Interest expenses

419,763

365,592

Interest expenses on investment corporation bonds

13,265

13,098

Amortization of investment corporation bond issuance
expenses982

982

Amortization of investment unit issuance expenses

5,542

5,542

122,956

107,117

Financing related expenses
Others15562,52615

492,348

Ordinary income

2,263,386

2,370,757

Net income before income taxes

2,263,386

2,370,757

Income taxes-current

1,301

Income taxes-deferred

15

Net income

867
1,317

18

885

2,262,068

2,369,872

Surplus brought forward

66

314

Unappropriated surplus

2,262,134

2,370,187

FUKUOKA REIT CORPORATION

25

VI. Statements of Changes in Net Assets
20th fiscal period (March 1, 2014 to August 31, 2014)
Item
Balance as of March 1, 2014
Changes in the current fiscal period
Dividend of surplus
Net income
Total of changes in the current fiscal period
Balance as of August 31, 2014

(thousands of yen)
Total unitholders’ equity

79,441,236

Unitholders’ Equity
Surplus
Unappropriated surplus
2,238,288

81,679,524

81,679,524–
79,441,236(2,238,222)
2,262,068
23,8462,262,134(2,238,222)
2,262,068
23,84681,703,371(2,238,222)
2,262,068
23,84681,703,371

Unitholders’ capital

21st fiscal period (September 1, 2014 to February 28, 2015)

Item
Balance as of September 1, 2014
Changes in the current fiscal period
Dividend of surplus
Net income
Total of changes in the current fiscal period
Balance as of February 28, 2015

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

79,441,236

Unitholders’ Equity
Surplus
Unappropriated surplus
2,262,134

81,703,371

81,703,371–
79,441,236(2,261,820)
2,369,872
108,052
2,370,187(2,261,820)
2,369,872
108,052
81,811,423(2,261,820)
2,369,872
108,052
81,811,423

Unitholders’ capital

FUKUOKA REIT CORPORATION

26

Total net assets

VII. Cash Flow Statements(thousands of yen)
20th fiscal period

Account

21st fiscal period(March 1, 2014 toAugust 31, 2014)(September 1, 2014 to
February 28, 2015)

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

2,263,386

2,370,757

Depreciation and amortization expenses

1,387,232

1,390,656

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

982

982

5,542

5,542

Interest received

(696)

(660)

Interest expenses

433,029

378,691

Decrease (increase) in operating accounts receivables(134,557)

83,640

Increase (decrease) in accrued consumption taxes(43,995)

53,196

Increase (decrease) in operating accounts payable

47,85839,903

Increase (decrease) in accounts payable-other(7,758)

6,930

Increase (decrease) in accrued expenses

12,717

2,084

Increase (decrease) in advances received

69,862

5,759

Increase (decrease) in deposits expenses

377,724(369,533)

Decrease (increase) in prepaid expenses(41,327)

52,187

Decrease (increase) in long-term prepaid expenses(65,418)

97,625

Others, net

21,465865

Subtotal

4,326,046

4,118,629

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

696

660

(434,417)(382,901)(1,542)(1,295)3,890,783

3,735,093(2,174,806)(1,473,781)

Net cash provided by (used in) investment activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust(4,322)–

Proceeds from tenant leasehold and security deposits

5,098

30

Repayments of tenant leasehold and security deposits(13,534)(667)

Proceeds from tenant leasehold and security deposits in trust

272,627

84,091

Repayments of tenant leasehold and security deposits in trust(399,382)(59,648)

8,018

5,754

Proceeds from restricted trust deposits
Payments for restricted trust deposits(6,419)(8,406)(2,312,721)(1,452,627)

3,000,000–

Repayments of short-term debt payable(2,500,000)(500,000)

Proceeds from long-term debt payable

14,000,000

500,000

Repayments of long-term debt payable(14,375,000)(375,000)

Dividends paid

(2,240,158)(2,260,823)

Net cash provided by (used in) financial activities(2,115,158)(2,635,823)

Net cash provided by (used in) investment activities
Net cash provided by (used in) financial activities
Proceeds of short-term debt payable

Net increase (decrease) in cash and cash equivalents(537,096)(353,356)

Balance of cash and cash equivalents at beginning of period

7,810,809

7,273,713

Balance of cash and cash equivalents at end of period

7,273,713*1

FUKUOKA REIT CORPORATION

27*16,920,356

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

2. Accounting for deferred assets

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

3. Standards for recognition of revenues and expenses

Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses themethod of charging the corresponding amounts of assessed taxes to the current fiscal period as expenses
related to leasing business.
Furthermore, FRC includes an amount equivalent to the property taxes, etc. paid to the sellers during
the first fiscal year as an acquisition cost, not as expenses, in connection with the acquisition of real estateor entrusted beneficiary interests in real estate as entrusted property. Property taxes, etc. capitalized inacquisition cost amounted to 806 thousand yen for the fiscal period ended February 28, 2015.

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

5. Scope of funds (cash and cash equivalents) in cash
flow statements

The funds (cash and cash equivalents) in the cash flow statements consist of cash on hand and cashin trust; deposits that can be withdrawn at any time and deposits in trust; and short-term investments witha maturity of 3 months or less from the date of acquisition, which are readily convertible to cash and bear
only an insignificant risk of value fluctuation.

6. Other significant items fundamental to preparing
the financial statements(1) Accounting methods for trust beneficiary interests in real estate as entrusted property
Regarding trust beneficiary interests in owned real estate as entrusted property, all asset and liability
accounts of the entrusted properties as well as all revenue and expense accounts generated by theentrusted properties are recorded in relevant accounts on the balance sheets and statements ofincome.
Furthermore, the following material accounts are separately stated on the balance sheets for entrusted
properties recorded in relevant accounts.
① Cash and deposits in trust② Buildings in trust, structures in trust, machinery and equipment in trust, vehicles and transport
equipment in trust, tools and fixtures in trust, lands in trust and construction in progress in trust③ Leasehold right in trust④ Other intangible assets in trust⑤ Lease and guarantee deposits in trust⑥ Tenant leasehold and security deposits received in trust(2) Accounting for consumption taxes
National and local consumption taxes are accounted with the consumption taxes excluded.

FUKUOKA REIT CORPORATION

28

VIII. Notes to Financial Statements(Notes to balance sheets)*1. Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:(thousands of yen)
20th fiscal period

21st fiscal period

as of August 31, 2014

as of February 28, 2015

Buildings in trust

6,414,216

6,276,793

Lands in trust

11,618,595

11,618,595

18,032,812

17,895,389

Total
Secured liabilities are as follows:(thousands of yen)
20th fiscal period

21st fiscal period

as of August 31, 2014

Tenant leasehold and security deposits
received in trust

as of February 28, 2015

1,970,029

1,946,509

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)
20th fiscal period

21st fiscal period

as of August 31, 2014

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of February 28, 2015

6,000,000
200,000

6,000,000–

5,800,000

6,000,000[Committed line of credit agreement 2](thousands of yen)
20th fiscal period

21st fiscal period

as of August 31, 2014

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of February 28, 2015

7,000,000
300,000

7,000,000–

6,700,000

7,000,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
(thousands of yen)
20th fiscal period

21st fiscal period

as of August 31, 2014

as of February 28, 2015

50,00050,000FUKUOKA REIT CORPORATION

29

VIII. Notes to Financial Statements(Notes to statements of income)*1. Breakdown of revenues and expenses related to real estate leasing business.
(thousands of yen)
20th fiscal period

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

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

5,799,993
1,049,298
436,650(September 1, 2014 to
February 28, 2015)

5,873,652
1,059,769
409,498

7,285,942

454,086
39,953429,118
17,366494,039
7,779,981

1,580,675
156,850
588,777
54,077440,926
1,387,232
158,249

1,539,738
217,903
588,547
53,152423,722
1,390,656
136,372

4,366,790
4,366,790
3,413,191*2. Transactions with affiliated companies.

(thousands of yen)
20th fiscal period

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

Expenses related to real estate leasing business(September 1, 2014 to
February 28, 2015)

1,320,399

1,366,769(Notes to statements of changes in net assets)
Total number of authorized investment units and total number of investment units issued.
20th fiscal period

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

Total number of authorized investment units
Total number of investment units issued(September 1, 2014 to
February 28, 2015)

10,000,000 units
690,000 units

10,000,000 units
690,000 units(Notes to cash flow statements)*1. Relationship between the balance of cash and cash equivalents at end of period and the amounts of the corresponding accounts on the balance sheets.
(thousands of yen)
20th fiscal period

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

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents(September 1, 2014 to
February 28, 2015)

2,694,272
4,639,900(60,459)
7,273,713

2,545,162
4,438,305(63,111)6,920,356(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

FUKUOKA REIT CORPORATION

30

7,342,920

446,484
7,789,404

4,350,094
4,350,094
3,439,309

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

20th fiscal period

21st fiscal period

as of August 31, 2014

Due within 1 year
Due after 1 year

as of February 28, 2015

6,392,191
26,265,684
32,657,876

Total

6,118,585
23,906,537
30,025,123(Notes to financial instruments)
1. Matters concerning status of financial instruments(1) Policy on handling financial instruments
In order to secure stable earnings and steady growth of assets under management, FRC procures funds primarily throughborrowings from financial institutions, issuance of investment corporation bonds or issuance of investment units forproperty acquisitions, repair and maintenance work, repayment of interest-bearing debt and other purposes.
		 In procuring interest-bearing debt, FRC borrows funds primarily in long-term, fixed interest debt based on the policyof establishing a solid financial structure, and conducts conservative operations intended to secure financial stability andliquidity by dispersing debt payment dates and utilizing committed lines of credit and through other measures.
		 With regard to surplus funds, FRC manages them as various deposits and savings, etc. to support efficient management
while considering security.
		 FRC conducts derivative transactions only for the purpose of hedging the risk of future interest rate fluctuation, and not
for the purpose of speculation.
(2) Description of financial instruments and associated risks, and risk management structure
Short-term debt, long-term debt and investment corporation bonds are funds procured primarily for acquiring real estate
trust beneficiary interests and refinancing of borrowings. Borrowings and investment corporation bonds are exposed
to liquidity risks upon debt payment dates, but FRC works to mitigate these risks by such measures as appropriately
controlling the ratio of interest-bearing debt to total assets and executing commitment line agreements with local financial
institutions that are lenders to secure on-hand liquidity.
		
In addition, borrowings with floating interest rates are exposed to interest rate fluctuation risks. However, FRC works
to reduce the risks by such measures as adjusting the ratio of the balance of borrowings with floating interest rates tototal borrowings in accordance with the financial environment and other factors. FRC conducts derivative transactions(specifically interest rate swap transactions) for part of its borrowings with floating interest rates in order to hedge the risk
of future fluctuations in the rates of interest payable. Furthermore, assessment of the effectiveness of these interest rate
swaps is omitted as it has been determined that they have met the requirements for special accounting. FRC executes andmanages its derivative transactions in accordance with its financial derivative transaction management policies and, it does
so only with financial institutions it determines to have a certain level of creditworthiness, by reference to their credit ratings,
to reduce counterparty risks.
		 FRC manages surplus funds in large time deposits. Such deposits are subject to the risks of failure of the financial
institutions holding the deposits as well as other credit risks. FRC mitigates the risks by limiting its deposits to financial
institutions with a certain level of creditworthiness by reference to their credit ratings as well as by setting short durations
for these deposits.
		 Tenant leasehold and security deposits received in trust are deposits from tenants and are exposed to liquidity risks if
tenants move out before the contracts expire. FRC mitigates this risk by such measures as securing on-hand liquidity.
(3) Supplementary explanation on matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, may include values based on reasonablecalculations when there is no market price. Certain assumptions are made in calculating those values, and there may becases where the values will vary when different assumptions are used.
		 As for the contract value and other conditions of derivative transactions indicated in “2. Matters concerning fair value offinancial instruments”, the contract value is not an indicator of the market risks related to such transactions.
FUKUOKA REIT CORPORATION

31

VIII. Notes to Financial Statements

2. Matters concerning fair value of financial instruments
The following table includes the book values for financial instruments as recorded on the balance sheets, the corresponding
fair values and the difference between these amounts as of August 31, 2014. Please note that the following table does notinclude those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)

(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheets
2,694,272
4,639,900
7,334,173
500,000
6,650,000
2,000,000
62,000,000
1,339,123
72,489,123––

Fair value(Note 1)

2,694,272
4,639,900
7,334,173
500,000
6,750,816
2,038,783
62,422,741
1,320,120
73,032,461––

Difference––––
100,816
38,783422,741(19,003)543,338––

The following table includes the book values for financial instruments recorded on the balance sheets, the corresponding
fair values and the difference between these amounts as of February 28, 2015. Please note that the following table does notinclude those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)

(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheets
2,545,162
4,438,305
6,983,468–
12,850,000
2,000,000
55,925,000
1,307,270
72,082,270––

Fair value(Note 1)

2,545,162
4,438,305
6,983,468–
12,926,300
2,059,492
56,268,941
1,297,720
72,552,454––

Difference––––
76,30059,492
343,941(9,550)470,184––(Note 1) Calculation method for fair value of financial instruments(1) Cash and deposits, (2) Cash and deposits in trust and (3) Short-term debt
		 As these are settled within a short period of time, the fair value is approximately the same as the book value and is thus stated at that book value.
(4) Current maturities of long-term debt, (5) investment corporation bonds and (6) Long-term debt
The fair value of long-term debt with fixed interest rates (including debt with practical fixed interest rates through interest rate swaps) and investment corporation bonds (the “debt, etc.”) is
calculated by discounting the total amount of principal and interest by the rate assumed as being applicable in the event of a new drawdown of similar debt, etc.
The fair value of long-term debt with floating interest rates is based on the book value, as the contract terms require the interest rates to be revised in a certain period of time (within six months)
and thus is considered to be nearly equal to the book value.
(7) Tenant leasehold and security deposits received in trust
The fair value of tenant leasehold and security deposits received in trust, which are deposited by the lessees, is calculated by discounting the future cash flows of such deposits by a reasonably
estimated rate that takes into account the term remaining until the reimbursement deadline and credit risks.
(8) Derivative transactions
		 Please refer to (Notes to derivative transactions)

FUKUOKA REIT CORPORATION

32

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

(thousands of yen)
20th fiscal period

21st fiscal period

as of August 31, 2014

Tenant leasehold and security deposits
received in trust

as of February 28, 2015

10,469,001

10,525,298

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 reexecution of lease contracts by lessees, 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 to individual circumstances.
(Note 3) Amount of redemption of monetary claims scheduled to be due after closing of accounts (August 31, 2014).

(thousands of yen)Due in 1 year or less
Cash and deposits
Cash and deposits in trust
Total

2,694,272
4,639,900
7,334,173

Amount of redemption of monetary claims scheduled to be due after closing of accounts (February 28, 2015)(thousands of yen)Due in 1 year or less
Cash and deposits
Cash and deposits in trust
Total

2,545,162
4,438,305
6,983,468(Note 4) Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of August 31, 2014).

(thousands of yen)
Long-term debt
Investment corporation bonds

Due in 1 year or less
6,650,000–

1 to 2 years
11,650,000–

2 to 3 years
20,450,000–

3 to 4 years
10,200,000–

4 to 5 years
4,200,000–

Due after 5 years
15,500,000
2,000,000

Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of February 28, 2015).

(thousands of yen)
Long-term debt
Investment corporation bonds

Due in 1 year or less
12,850,000–

1 to 2 years
10,250,000–

2 to 3 years
23,875,000–

FUKUOKA REIT CORPORATION

3 to 4 years
2,100,000–

33

4 to 5 years
8,400,000–

Due after 5 years
11,300,000
2,000,000

VIII. Notes to Financial Statements(Notes to derivative transactions)
1. Derivatives to which hedge accounting is not applied
20th fiscal period (as of August 31, 2014)
Not applicable.

21st fiscal period (as of February 28, 2015)
Not applicable.

2. Derivatives to which hedge accounting is applied
20th fiscal period (as of August 31, 2014)
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing ofaccounts for each method of hedge accounting.
(thousands of yen)
Method of hedge accounting

Special accounting for interest rate swaps

Type of derivative transactions, etc. Main hedged item

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

Interest rate swap transaction
Payable fixed; Receivable floating

18,000,000

Long-term debt

18,000,000(50,958)(Note 2)

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

21st fiscal period (as of February 28, 2015)
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing ofaccounts for each method of hedge accounting.
(thousands of yen)
Method of hedge accounting

Special accounting for interest rate swaps

Type of derivative transactions, etc. Main hedged item

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

Calculation
Fair value method for thefair value

Interest rate swap transaction
Payable fixed; Receivable floating

20,500,000(109,250)

Long-term debt

18,500,000(Note 2)

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

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

20th fiscal period

21st fiscal period

as of August 31, 2014

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

as of February 28, 2015

27
27
27

9
9
9

2. Breakdown of significant components that caused difference between effective statutory income tax rate and effective income tax rate after application of tax effectaccounting.
(%)
20th fiscal period

21st fiscal period

as of August 31, 2014

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

FUKUOKA REIT CORPORATION

as of February 28, 2015

36.38
(36.36)
0.03
0.06

34

33.96
(33.95)0.03
0.04

VIII. Notes to Financial Statements

3. Modification to amounts of deferred tax assets and deferred tax liabilities due to changes in the corporate tax rate, etc.
With the Local Corporation Tax Act (Act No.11 of 2014) and the Act for Partial Revision to Local Tax Act, Etc. (Act No. 4 of 2014) promulgated on March 31, 2014, the local corporation tax has been
established and the tax rates of corporate inhabitant tax, corporate business tax and special local corporation tax have been modified, effective for the business year starting on October 1, 2014 andthereafter. Accordingly, with regard to the temporary differences that are anticipated to be reversed in the business year starting March 1, 2015 and thereafter, the statutory tax rate used to calculatedeferred tax assets and deferred tax liabilities will be changed from the previous 33.96% to 33.94%. The tax rate change will have only a minimum impact on FRC.
4. Modification to tax rate after closing of accounts.
The Act for Partial Revision of the Income Tax Act, etc. (Act No. 9 of 2015), promulgated on March 31, 2015, stipulates that the income tax rate will be lowered, effective for the business year starting on
April 1, 2015 and thereafter. Accordingly, with regard to the temporary differences that are anticipated to be reversed in the business year starting on September 1, 2015, the effective statutory income tax
rate used in the calculation of deferred tax assets and deferred tax liabilities will be changed from the previous 33.94% to 32.11%. The tax rate change will have only a minimum impact on FRC.

(Information on related parties)
1. Transactions with related parties(1) Parent company and major corporate unitholders
20th fiscal period (from March 1, 2014 to August 31, 2014)(thousands of yen)Classification

Other affiliates

Name

Location

Capital

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

Generalreal estatebusiness

FRC’s share of
voting rights,
etc.

Description of Transaction
Categorytransaction
amountBalanceat end ofperiodConsignment
Consignment
Operatingof real estate 1,320,399 accountsof real estate
management,(Note 3)management, etc. etc. (Note 1)
payable92,951

Description ofrelationship[or ownership ofsuch in FRC]

Ownership in
FRC
Direct[9.39%]

Indirect[1.27%](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.

21st fiscal period (from September 1, 2014 to February 28, 2015)
(thousands of yen)Classification

Name

Location

Capital

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

Generalreal estatebusiness

FRC’s share of
voting rights,
etc.

Description of Transaction
Categorytransaction
amountBalanceat end ofperiodConsignment
Consignment
Operatingof real estate 1,366,769 accountsof real estate
management,(Note 3)management, etc. etc. (Note 1)
payable123,905

Description ofrelationship[or ownership ofsuch in FRC]

Ownership in
FRC
Direct[9.39%]

Indirect(Note 3)

[1.27%](Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Canal City Hakata, Canal City Hakata B, Canal City Business Center and Taihaku
Street Business Center. The lease contract is a master lease type with pass-through rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s
revenues. For properties covered by the said type of agreements, the above table shows figures that regard end tenants as direct lessees.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

(2) Affiliated companies, etc.
20th fiscal period (March 1, 2014 to August 31, 2014)
Not applicable.

21st fiscal period (September 1, 2014 to February 28, 2015)
Not applicable.

FUKUOKA REIT CORPORATION

35

VIII. Notes to Financial Statements(3) Sister companies
20th fiscal period (from March 1, 2014 to August 31, 2014)(thousands of yen)Classification

Name

Location

CapitalBusiness
description

Subsidiaries
of otheraffiliates

Park Place
Oita Co., Ltd Oita City, Oita

400,000

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,
Ltd.

Asset
management
200,000of FRCand otherbusinesses(Note 2)

Hakata Ward,
Fukuoka City

Real estatebusiness

FRC’s share of
voting rights,
etc.

Description ofrelationship[or ownership ofsuch in FRC]

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

603,344–

Asset
management
Paymentof assetof FRC, etc.
and concurrent management
service of officer fees (Note 4)

456,040(Note 5)(Note 5)

Balanceat end ofperiodOperatingaccounts
payable141,905

Accruedexpenses

217,934(Note 5)(Note 5)(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 real estate lease and management consignment agreement with Park Place Oita Co., Ltd. for Park Place Oita. The lease contract is a master lease type with pass-through rent,
in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the property covered by the said type of agreement, the above table shows
figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a Director of Fukuoka Realty Co., Ltd.
(Note 4) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

21st fiscal period (from September 1, 2014 to February 28, 2015)
(thousands of yen)Classification

Name

Location

CapitalBusiness
description

Subsidiaries
of otheraffiliates

Park Place
Oita Co., Ltd Oita City, Oita

400,000

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,
Ltd.

Asset
management
200,000of FRCand otherbusinesses(Note 2)

Hakata Ward,
Fukuoka City

Real estatebusiness

FRC’s share of
voting rights,
etc.

Description ofrelationship[or ownership ofsuch in FRC]

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

565,844–

Asset
management
Paymentof assetof FRC, etc.
and concurrent management
service of officer fees (Note 4)454,652(Note 5)(Note 5)

Balanceat end ofperiodOperatingaccounts
payable121,109

Accruedexpenses

220,504(Note 5)(Note 5)(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 real estate lease and management consignment agreement with Park Place Oita Co., Ltd. for Park Place Oita. The lease contract is a master lease type with pass-through rent,
in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the property covered by the said type of agreement, the above table shows
figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a Director of Fukuoka Realty Co., Ltd.
(Note 4) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

(4) Directors and major individual unitholders
20th fiscal period (March 1, 2014 to August 31, 2014)
Not applicable.

21st fiscal period (September 1, 2014 to February 28, 2015)
Not applicable.

FUKUOKA REIT CORPORATION

36

VIII. Notes to Financial Statements

2. Parent company and major affiliated companies
20th fiscal period (March 1, 2014 to August 31, 2014)
Not applicable.

21st fiscal period (September 1, 2014 to February 28, 2015)
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 sheets, amount of change during the period and fair value ofthese properties for lease.
(thousands of yen)
20th fiscal period

Use

RetailOffice buildings

OthersTotal(March 1, 2014 toAugust 31, 2014)

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

21st fiscal period(September 1, 2014 to
February 28, 2015)

102,237,770(201,616)
102,036,154
106,006,000

102,036,154(591,236)
101,444,917
107,521,000

44,986,880(364,527)
44,622,353
50,590,000

44,622,353(361,302)
44,261,050
51,090,000

11,266,472
1,203,857
12,470,329
13,630,000

12,470,329
1,089,209
13,559,539
15,070,000

158,491,123
637,714
159,128,838
170,226,000

159,128,838
136,669
159,265,508
173,681,000(Note 1) Amount recorded on the balance sheets is the cost of acquisition less accumulated depreciation.
(Note 2) Of the amount of change during the 20th fiscal period, the amount of increase is primarily attributable to acquisition of Tosu Logistics Center (1,304 million yen) and capital expenditures (740 millionyen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,387 million yen). Of the amount of change during the 21st fiscal period, the amount of increaseis primarily attributable to the acquisition of Granfore Yakuin Minami (1,200 million yen) and capital expenditures (328 million yen), and the amount of decrease is primarily attributable to depreciation
and amortization expenses (1,390 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers.

FUKUOKA REIT CORPORATION

37

VIII. Notes to Financial Statements

The following table provides the income (loss) from properties for lease.
(thousands of yen)
20th fiscal period

Use

RetailOffice buildings

OthersTotal(March 1, 2014 toAugust 31, 2014)

Amount recorded on the statements 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 statements 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 statements 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 statements of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing business21st fiscal period(September 1, 2014 to
February 28, 2015)

5,149,379
2,971,880
2,177,499

5,111,310
2,925,195
2,186,114

2,143,997
1,170,923
973,074

2,161,457
1,197,381
964,075

486,604
223,986
262,617516,635
227,516
289,118

7,779,981
4,366,790
3,413,191

7,789,404
4,350,094
3,439,309(Note) Real estate leasing business revenues and expenses related to real estate leasing business are comprised of leasing business revenues and accompanying expenses (outsourcing fees, depreciation
and amortization expenses, taxes and other public charges, etc.), and are recorded as Leasing revenues - real estate, Other leasing revenues - real estate and Expenses related to leasing business,
respectively.

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

[Related information]

20th fiscal period (from March 1, 2014 to August 31, 2014)(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 statements of income.

(2) Information by region(a) Operating revenue
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating
revenues recorded in the statements 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 sheets.

(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 statements of income.

21st fiscal period (from September 1, 2014 to February 28, 2015)(1) Information by product and service
Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers
exceed 90% of operating revenues recorded in the statements of income.

(2) Information by region(a) Operating revenue
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating
revenues recorded in the statements of income.
FUKUOKA REIT CORPORATION

38

VIII. Notes to Financial Statements(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 sheets.

(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 statements of income.

(Notes to per unit information)
20th fiscal period(March 1, 2014 to August 31, 2014)

Net assets per unit (yen)Net income per unit (yen)21st fiscal period(September 1, 2014 to February 28, 2015)

118,410
3,278

118,567
3,434(Note 1) Net income per unit was calculated by dividing the net income by the daily weighted average number of investment units. Diluted net income per unit is not stated as there are no diluted investment
units.
(Note 2) Net income per unit was calculated based on the following data:

20th fiscal period(March 1, 2014 to August 31, 2014)

Net income (thousands of yen)Amounts not attributable to ordinary unitholders (thousands of yen)
Net income attributable to ordinary investment units (thousands of yen)
Average number of units during the fiscal period (units)

21st fiscal period(September 1, 2014 to February 28, 2015)

2,262,068–
2,262,068
690,000

2,369,872–
2,369,872
690,000(Notes to cash distributions)(thousands of yen)Account

21st fiscal period

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

I. Unappropriated surplus

2,262,134

2,370,187

II. Total dividend

2,261,820[3,278 yen]

2,370,150[3,435 yen]

314

37

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15
of the Act on Special Taxation Measures.
Following the above policy, FRC proposed to distribute2,261,820 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15
of the Act on Special Taxation Measures.
Following the above policy, FRC proposed to distribute
2,370,150 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

[Dividend per unit]

III. Surplus brought forward

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

(Notes to significant subsequent events)
No relevant items.

FUKUOKA REIT CORPORATION

39

VIII. Notes to Financial Statements(Schedule of property, plant and equipment, and intangible assets)(thousands of yen)Type of asset

Balance as of
September 1,
2014

Increase

Decrease

Buildings in trust

78,108,929

992,408

764

79,100,573

18,259,209

1,279,177

60,841,364(Note)

1,302,682

10,016735

1,311,964

484,118

35,445

827,846(Note)

584,075

1,751–

585,826

241,057

20,863344,768(Note)

747

–

–

747

151

47

596

1,211,618

44,996

8,543

1,248,071

877,740

51,779370,331(Note)

Land in trust
94,622,667
Construction in progress in–trust
Subtotal
175,830,720

461,599–

95,084,266––

95,084,266(Note)

18,696–

18,696––

18,696(Note)

Structures in trust
Machinery and equipmentin trust
Total property, Vehicles and transport
plant and equipment in trust
equipment Tools and fixtures in trust

Total
intangible
assetsLeasehold right in trust
Other intangible assets intrust
Subtotal
Total

Balance as of
Net property
Accumulated Depreciation
February 28,
andDescription
depreciation for the period
2015
equipment

1,529,469

10,042

177,350,147

19,862,276

1,765,318––

1,765,318–

1,387,313 157,487,870–

1,765,318

33,426––33,426

21,107

3,342

12,318

1,798,744––

1,798,744

21,1073,342

1,777,637

177,629,464

1,529,469

10,042

179,148,892

19,883,384

1,390,656 159,265,508(Note) The main increase occurred due to the acquisition of Granfore Yakuin Minami and construction work at properties.

(Notes to status of debt)
Category
LenderThe Bank of Fukuoka

Balance as Average
Balance as
Drawdown of September 1, Increase
Decrease of February 28, interest Repayment Repayment Use of Description(thousands of yen) (thousands of yen)datemethod
funds
date
2015
rate
2014
(thousands of yen)(thousands of yen) (%) (Note 1)

166,666–

166,666–

33,333–33,333–

The Nishi-Nippon City214,285–

214,285–

Short-term Resona Bank (Note 2)
The Bank of Nagasaki
debt

30,000–30,000–21,428–21,428–21,428–21,428–12,857–

12,857–500,000–

500,000–

300,000–

300,000–

1.325

4,000,000––

4,000,000

1.950

1,200,000––

1,200,000

1.100

1,000,000––

1,000,000

1.041

–

2,000,000–

2,000,000

0.650

–

2,000,000–

2,000,000

0.774

–

2,000,000–

2,000,000

0.795
1.117

(Note 2)

Resona Bank (Note 2)

August 25,
2014

Bank (Note 2)(Note 2)

August 25,
2014

Oita Bank (Note 2)
The Bank of Saga
(Note 2)

Subtotal
September 30,
2010
Development Bank ofAugust 31,
Japan
2009
Sumitomo MitsuiJune
30, 2010
Banking Corporation
Sumitomo Mitsui
July 29, 2011
Trust Bank
Resona Bank

Current
maturities
of
The Bank of Fukuoka March 1, 2011
long-term
The Nishi-Nippon City March 1, 2011
debt
Bank

Long-term
debt

Development Bank of March 1, 2011
Japan
February 29,
Mizuho Bank
2012
Subtotal
Development Bank of June 30, 2009
Japan
Development Bank ofAugust 31,
Japan
2009
30,
The Bank of Fukuoka December
2010

0.496

September 25, Lump-sum Refinance No collateral/
2014
upon maturity
fund
No guarantee

0.496

September 25, Lump-sum Refinance No collateral/
2014
upon maturity fundNo guarantee–

500,000–

500,000

6,500,000

6,500,000

300,000

12,700,000

2,250,000–

75,0002,175,000

2.200

4,000,000––

4,000,000

2.170

1,500,000––

1,500,000

0.650

The Bank of Fukuoka March 1, 2011

2,000,000–

2,000,000

–

0.650

The Nishi-Nippon City March 1, 2011
Bank

2,000,000–

2,000,000

–

0.774

FUKUOKA REIT CORPORATION

40

September 30, Lump-sum Refinance No collateral/
2014
upon maturity fundNo guarantee
August 31,
Lump-sum Refinance No collateral/
2015
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
June 30, 2015 uponmaturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2015 uponmaturity fundNo guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity
fund
No guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity
fund
No guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity
fund
No guarantee
February 29, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
Refinance No collateral/fund
No guarantee
August 31,
Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity fundNo guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity fundNo guarantee

June 30, 2017

(Note 3)

VIII. Notes to Financial Statements

Category
LenderBalance as Average
Balance as
Drawdown of September 1, Increase
Decrease of February 28, interest Repayment Repayment Use of Description(thousands of yen) (thousands of yen)datemethod
funds
date
2015
rate
2014
(thousands of yen)

2,000,000–

2,000,000

–

0.795

The Bank of Fukuoka

2,000,000––

2,000,000

1.305

2,000,000––

2,000,000

1.305

1,000,000––

1,000,000

1.800

1,000,000––

1,000,000

1.208

1,500,000––

1,500,000

0.800

500,000––

500,000

1.182

500,000––

500,000

1.182

500,000––

500,000

1.182

500,000––

500,000

1.182

500,000––

500,000

1.182

100,000––

100,000

1.168

400,000––

400,000

1.218

500,000––

500,000

1.338

500,000–

500,000–

1.117

2,000,000––

2,000,000

1.170

500,000––

500,000

1.203

600,000––

600,000

1.253

300,000––

300,000

1.203

July 29, 2011

The Nishi-Nippon City July 29, 2011Bank
The Dai-Ichi Life
July 29, 2011
Insurance Company
Shinsei Bank

Long-term
debt(thousands of yen) (%) (Note 1)

Development Bank of March 1, 2011
Japan

July 29, 201130,
The Bank of Fukuoka December
201130,
The Hiroshima Bank December
2011
December 30,
Oita Bank
201130,
The Eighteenth Bank December
2011
December 30,
The Shinwa Bank
201130,
The Kitakyushu Bank December
2011
31,
The Kagoshima Bank January
2012
January 31,
Resona Bank
2012
Sumitomo Mitsui
January 31,
Banking Corporation2012
February 29,
Mizuho Bank
2012
Mitsubishi UFJ
Trust and Banking
March 1, 2012
Corporation
Sumitomo Mitsui
March 30,
Banking Corporation
2012
March 30,
Resona Bank
2012
March 30,
The Higo Bank
2012
The Bank of Fukuoka
The Nishi-Nippon City
Bank
Oita Bank
The Miyazaki Bank
June 29, 2012
The Shinwa BankThe Iyo Bank
The Bank of Saga
The Eighteenth Bank
The Kitakyushu Bank
Sumitomo Mitsui
September 28,
Trust Bank
2012
September 28,
Resona Bank
2012
The Nishi-Nippon City February 1,
Bank
2013
The Nishi-Nippon City February 28,
Bank
2013
February 28,
Mizuho Bank
2013
Sumitomo Mitsui
February 28,
Trust Bank
2013
Mitsubishi UFJ
February 28,
Trust and Banking
2013
Corporation
February 28,
Aozora Bank
2013
Mitsubishi UFJ
March 29,
Trust and Banking
2013
Corporation

February 29, Lump-sum Acquisition No collateral/
2016
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2017 uponmaturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2017 uponmaturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2018 uponmaturity fundNo guarantee
Lump-sum
Refinance
No collateral/
July 29, 2016 upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
January 31,
Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee
January 31,
Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee
January 31,
Lump-sum Refinance No collateral/
2019
upon maturity fundNo guarantee
February 29, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
March 31,2017

Lump-sum Acquisition No collateral/
upon maturity fundNo guarantee

March 31,2017
March 31,2017
March 31,2017

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

1,000,000––

1,000,000

1,000,000––

1,000,000

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

–
–
–
–
–
–
–

–
–
–
–
–
–
–

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

600,000––

600,000

0.600

2,000,000––

2,000,000

1.033

2,500,000––

2,500,000

0.697

1,900,000––

1,900,000

0.695

1,700,000––

1,700,000

0.695

1,100,000––

1,100,000

0.745

1,500,000––

1,500,000

0.545

February 28, Lump-sum Refinance No collateral/
2018
upon maturity fundNo guarantee

600,000––

600,000

0.545

February 28, Lump-sum Refinance No collateral/
2018
upon maturity fundNo guarantee

600,000––

600,000

0.550

March 30,
2018

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

June 28, 2013

1,000,000––

1,000,000

0.600

June 30, 2020

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

Mizuho Bank
The Norinchukin Bank July 31, 2014
The Bank of Saga

200,000
3,000,000
500,000

–
–
–

–
–
–

200,000
3,000,000
500,000

0.538

July 31, 2019

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

Aozora BankFUKUOKA REIT CORPORATION

41

0.858

Lump-sum Refinance No collateral/
June 30, 2017 uponmaturity fundNo guarantee

September 30, Lump-sum Refinance No collateral/
2016
upon maturity
fund
No guarantee
September 29, Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee
February 29, Lump-sum Acquisition No collateral/
2020
upon maturity fundNo guarantee
February 28, Lump-sum Refinance No collateral/
2018
upon maturity fundNo guarantee
February 29, Lump-sum Refinance No collateral/
2020
upon maturity fundNo guarantee
February 28, Lump-sum Refinance No collateral/
2018
upon maturity fundNo guarantee

VIII. Notes to Financial Statements

Category
LenderLong-term
debt

Balance as Average
Balance as
Drawdown of September 1, Increase
Decrease of February 28, interest Repayment Repayment Use of Description(thousands of yen) (thousands of yen)datemethod
funds
date
2015
rate
2014
(thousands of yen)Mizuho Bank
The Norinchukin Bank
The Hiroshima Bank
July 31, 2014
The Kitakyushu BankThe Iyo Bank
The Higo Bank
Development Bank ofAugust 29,
Japan
2014
The Bank of Tokyo- September 25,
Mitsubishi UFJ
2014
Subtotal

Total(thousands of yen) (%) (Note 1)

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

–
–
–
–
–
–

–
–
–
–
–
–

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

0.835

4,000,000––

4,000,000

1.010

–

500,000–

500,000

0.520

62,150,000
69,150,000

500,000
7,000,000

6,575,000
7,375,000

56,075,000
68,775,000

July 30, 2021

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

August 31,
Lump-sum Refinance No collateral/2022
upon maturity fundNo guarantee
September 25, Lump-sum Refinance No collateral/
2019
upon maturity fundNo guarantee(Note 1) The average interest is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest 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 borrowings are made based on the commitment line agreements between FRC and respective banks.
(Note 3) The debt is subject to repayment of 75 million yen on the final day of every 6 months following the final day of December 2009 as the initial repayment date, with 1,875 million yen to be repaid on
the final repayment date. Furthermore, as the 150 million yen scheduled for repayment within a year is included in Long-term debt for the convenience of comparison, the balances do not match thefigures recorded on the balance sheets as Current maturities of long-term debt and Long-term debt payable.
(Note 4) Amount of repayment of long-term debt scheduled to be due within 5 years after closing of accounts.

(thousands of yen)
Long-term debt

1 to 2 years
10,250,000

2 to 3 years
23,875,000

3 to 4 years
2,100,000

4 to 5 years
8,400,000[Notes to status of investment corporation bonds]
As of February 28, 2015, FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Balance as
Balance as of
Decrease duringof September 1,
February 28,
the fiscal period
2014
2015
(thousands of yen)(thousands yen)First Series ofUnsecured
Bonds

December 30,
2013

2,000,000

CouponMaturity date

Maturity
methodUse

Description

1.32

December 29,
2023

Lump-sumupon maturity

Repaymentof debt

No collateral/
No guarantee(%)(thousands of yen)–

2,000,000(Note 1)

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

FUKUOKA REIT CORPORATION

42(Note 2)