Fukuoka REIT Corporation

Integrated Report 2022

Contents

Who We Are

Sustainability

01 Fukuoka REIT Corporation in Numbers

29 Sustainability

02 Overview of Fukuoka REIT Corporation

32 Environmental Issues

04 Relationship with Fukuoka Realty Co., Ltd.

36 Social Issues

06 Value-Creation Story

38 Organizational Issues

08 Value-Creation Activities
10 Materiality

Data Section

12 History of Asset Portfolio Expansion

40 External Environmental Data

14 Financial/Non-Financial Highlights (5-Year Graph)

42 Overview of Properties Owned

Growth Strategy

44 Financial/Non-Financial Highlights(11-Year/22-Period Summary)

16 CEOʼs Message
20 External Environment (Initiatives of Fukuoka City)
22 Risks and Opportunities
24 Investment Strategy
25 Management Strategy
26 Financial Strategy

Editorial Policy
We have issued our Integrated Report since fiscal
2019 with the aim of imparting knowledge concerning
the value creation process of the investment
corporation and the asset management company.
The Report has been positioned as an important toolfor engaging with our unitholders, investors, and otherstakeholders. The International Reporting Framework
recommended by the IFRS Foundation and theMinistry of Economy, Trade and Industryʼs Guidance for Collaborative Value
Creation have been referenced in the preparation of this Report to ensureease of understanding.
Through this Report, we aim to increase understanding of our efforts toenhance corporate value based on the basic philosophies of the investment
corporation and the asset management company as well as the value wecreate in working to realize a sustainable society. We will continue striving to
make the Report an effective tool for facilitating constructive dialogue.

Positioning of This Report

Financial
Information
・Earnings report
・Securities report・Asset management
report・Operating systems report

Non-Financial
Information

Integrated
Report・Financial briefing materials
・Online disclosure ofsustainability information
・Corporate profile
・PR information disclosure

International Initiatives We Focus On
Sustainable Development Goals (SDGs)

Principles for Responsible Investment (PRI)The SDGs refer to the international goals
set forth in the 2030 Agenda for Sustainable
Development adopted at the United Nations
Summit in September 2015 as the successor to theMillennium Development Goals (MDGs) establishedin 2001. Given the medium- to long-term expectations stakeholders havefor the resolution of these challenges, our priority issues (materiality) were
established in September 2019 with reference to the SDGs.

PRI comprises an international network offinancial institutions working to realize six
principles for the finance industry with the aim ofencouraging the incorporation of environmental,social, and governance (“ESG”) issues into investment decision-making
processes. Fukuoka Realty Co., Ltd., endorsed and became a signatory of
PRI in September 2018 to promote the consideration of ESG issues in realestate investment management operations and practices that conform tointernational standards.

Fukuoka REIT Corporation in Numbers

Properties owned

Occupancy rate

206,339
million yen

Dividend
per unit
Credit ratings★

OthersInvestment
14.0%
type

)

Office buildings

Retail

53.0%
)

22.9%

R&I:(stable)
A+
LTV

★

Dividend yield

4.1%

Unrealized
gain

41.7% 43,026

Fukuoka
metropolitan area*

million yen

Securities code

77.1%

8968

Accounting periods

February
AugustSustainability((stable)33.0%

Investment
Other
areas
Kyushu areas
based onacquisition price

JCR: AAyen

Growth Strategy(

based onacquisition price

3,523

Who We Are

33

99.4%

Asset size

* The Fukuoka metropolitan area includes Fukuoka City, Chikushino City, Kasuga City, Onojo City, Munakata City, Dazaifu City, Koga City, Fukutsu City, Itoshima City, Nakagawa City, Umi Town, Sasaguri Town, Shime Town,
Sue Town, Shingu Town, Hisayama Town, and Kasuya Town.

Glossary

LTV
An abbreviation for Loan to Value, and an indicator of a companyʼs borrowing
ratio as well as a measure of stability in borrowing. The lower the value, thegreater the degree of safety against redemption of debt.
[Calculation method] LTV (%): Interest-bearing debt / Total assets multiplied by 100

These materials might contain future performance projections, plans, managementtargets, and strategies. These forward-looking descriptions are based on present
assumptions on future events and trends in the business environment, butsuch assumptions might not necessarily be accurate. Actual results could differ
materially due to various factors. Neither Fukuoka REIT Corporation nor Fukuoka
Realty Co., Ltd., shall be liable for the accuracy, rationality, and completeness of

Data Section

Credit rating
A grade that reflects the safety and creditworthiness of a company and its
ability to pay the principal and interest of bonds issued by the company
based on an analysis of the companyʼs performance and financial condition.

information contained in these materials, whether they were prepared by Fukuoka
REIT Corporation or Fukuoka Realty Co., Ltd., or provided by a third party.

Task Force on Climate-related Financial Disclosures (TCFD)
Cognizant of the fact that climate change is amajor issue facing the international community,
in September 2022 we became a signatory of
the Task Force on Climate-related Financial Disclosures (TCFD) establishedby the Financial Stability Board (FSB), having endorsed the recommendationsof the TCFD that were announced in June 2017. We will strive to disclose
the impact of climate change and implement specific measures basedon the recommendations of the TCFD in addition to continuing to reduce
environmental impact and contribute to the local community.

Note that all information in this document is current at the time of preparationand is subject to change without prior notice.
These materials have not been prepared to entice investment.
When applying to purchase investment units issued by Fukuoka REIT
Corporation, do so based on your own judgment and responsibility.
Any unauthorized reprinting, use, reproduction, distribution, or modification of
all or part of the content contained in this Report is expressly prohibited.

Note: Regarding amount, percentage, and ratio rounding: Unless otherwise noted, in these materials,
monetary amounts are rounded down to the nearest whole unit, and percentages and ratios arerounded off to one decimal place.

Fukuoka REIT Corporation 202201

Overview of Fukuoka REIT Corporation

Name

Fukuoka REIT Corporation

Representative

Zenji Koike, Executive Director

Security code

8968

Listed dateJune 21, 2005
(Tokyo Stock Exchange, Fukuoka Stock Exchange)

Fiscal period

February and August

Asset manager

Fukuoka Realty Co., Ltd.

Sponsors(Shareholders of theasset managementcompany)

Fukuoka Jisho Co., Ltd.
Kyushu Electric Power Co., Inc.
THE BANK OF FUKUOKA, LTD.
THE NISHI-NIPPON CITY BANK, LTD.
Nishi-Nippon Railroad Co., Ltd.

History of Fukuoka REIT Corporation

SAIBU GAS HOLDINGS CO., LTD.
Kyudenko Corporation
Kyushu Railway Company
Development Bank of Japan Inc.

Fukuoka Kyushu Actions

2005● Listed on the Tokyo Stock Exchange and Fukuoka Stock Exchange● Property acquisitions: SunLive City Kokura, Sanix Hakata Building● Nanakuma subway line opens● Kyushu National Museum opens

2006●1st public offering (Offer price: 153,272 yen*)●10th anniversary of the opening of Canal City Hakata● Property acquisitions: Taihaku Street Business Center, Amex Akasakamon Tower, Square Mall
Kagoshima Usuki, Kumamoto Intercommunity SC● New Kitakyushu Airport opens

2007● Property acquisitions: Hanahata SC, City House Keyaki Dori● Tenjin LOFT opens

2008● Canal City Hakata South Building renovation (2nd floor)● Property acquisitions: Kurume Higashi Kushiwara SC, Kʼs Denki Kagoshima● Kurume City, Fukuoka Prefecture, becomes a core city

2009

● Property acquisition: Higashi Hie Business Center● Kyushu University Ropponmatsu Campus closes(redevelopment project zone)

2010● Canal City Hakata common space and Park Place Oita common space, tenant floor renovations● Fukuoka Parco opens

2011●2nd public offering (Offer price: 115,217 yen*)● IR Kyushu Workshop launch● Selected as a AAA website All Japanese Listed Companiesʼ Website Ranking for fiscal 2011
● Property acquisition: Canal City Hakata・B● Kyushu Shinkansen Kagoshima route fully opens

2012● Opened LAOX/XEBIO in the Canal City Hakata South Building● Selected as a AAA website All Japanese Listed Companiesʼ Website Ranking for fiscal 2012
● Property acquisition: Aqualia Chihaya● Fukuoka Urban Expressway fully opens and Kanjo Line opens

2013●3rd public offering (Offer price: 142,116 yen*)●1st investment corporation bond issuance● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2013
● Property acquisitions: Tenjin Nishi-Dori Business Center Building, D-Wing Tower, Hotel FORZA Oita, Tenjin North Front Building● Fukuoka City population tops 1.5 million● JR Kyushu Cruise Train “Seven Stars in Kyushu”
begins operations

2014●5:1 investment unit split implemented● Received the IR Excellent Company Encouragement Award (organized by Japan Investor Relations Association)● Property acquisitions: Tosu Logistics Center, Granfore Yakuin Minami● Fukuoka City designated a National Strategic Special Zone
● Number of cruise ship port calls: 115

2015●4th public offering (Offer price: 212,257 yen*)● Fukuoka REIT Corporation 10th anniversary● Property acquisitions: LOGICITY Minato Kashii, Marinoa City Fukuoka (Marina Side Building)● Tenjin Big Bang begins● Number of cruise ship port calls: 259 (shopping sprees)● JR Oita City opens

2016● Canal City Hakata 20th anniversary● Japanʼs largest 3D projection mapping and new Aqua Panorama fountain installed at Canal City Hakata● Higashi-Kyushu Expressway fully opens● Number of cruise ship port calls: 328● Vegefru stadium (new fresh produce market) begins at Island City2017

●2nd investment corporation bond issuance● Park Place Oita 15th anniversary renovation● Canal City Hakata inbound sets new visitor record (17.02 million in fiscal 2017)● Property acquisition: LOGICITY Hisayama(Asset management company)● Formulated Policies for Customer-Oriented Business Operations● Fukuoka City Science Museum opens● World Cultural Heritage registers heritage sites related toKami-yadoru shima Munakata and Okinoshima

2018●5th public offering (Offer price: 164,414 yen*/3rd investment corporation bond issuance)● Property acquisitions: Konoha Mall Hashimoto, Higashi Hie Business Center II, Tissage Hotel Naha
(Asset management company)● Formulated the Sustainability Policy/Endorsed the Principles for Responsible Investment (PRI) and the Principles for
Financial Action for the 21st Century (PFA21)/Certified as a “Fukuoka ʻWork Style Reformʼ Promotion Company”● Fukuoka Jisho Co., Ltd., becomes a premium partner ofAvispa Fukuoka

2019● Received the rating of “4 stars” and “Green Star” in the GRESB Real Estate Assessment● Became the first company in Kyushu to conduct borrowing via green loans● Private-sector outsourcing of Fukuoka Airport
operations begins

2020● Became the first J-REIT to publish an integrated report● Received the rating of “3 stars” and “Green Star” in the GRESB Real Estate Assessment● Property acquisitions: Higashi Hie Business Center III, LOGICITY Wakamiya● COVID-19 outbreak● TEAM FUKUOKA launched to attract international financial
functions to Fukuoka

2021● Canal City Hakata opening 25th anniversary/Nitori Canal City Hakata opens● Received the rating of “4 stars” and “Green Star” in the GRESB Real Estate Assessment● Selected as a AAA website All Japanese Listed Companiesʼ Website Ranking for fiscal 2021
● Property acquisition: Tenjin Nishi-Dori Business Center (Land with leasehold interest)● Tenjin Big Bang, Tenjin Business Center completed2022● Partial revision to management guidelines/Set targets for materiality KPIs/Conducted borrowing via asustainability-linked loan /Endorsed the TCFD recommendations● Received the rating of “4 stars” and “Green Star” in the GRESB Real Estate Assessment/Top “A” in
the GRESB Public Disclosure● Renewal opening of Park Place Oita's 3-floor, Shangri-la Zone
● Property acquisitions: Hakata Chikushi-Dori Center Building, Island City Minato Bay related site (landwith leasehold interest; conclusion of agreement; tentative name)(Asset management company)● Registration with Fukuoka City Well-Being & SDGs Registration System “Master”● Dontaku parade held for the first time in three years● Oiyama event of Hakata Gion Yamakasa Festival held forthe first time in three years* The investment corporation undertook a five-for-one investment unit split effective March 1, 2014. Accordingly, offer prices for the first to third public offerings have been divided by five.
Glossary

02

Sustainability-linked loan
Sustainability-linked loans are loans that encourage borrowers to meet
ambitious sustainability performance targets (SPTs).

Investment corporation bondBonds issued by investment corporations in accordance with the Act on Investment Trusts andInvestment Corporations and are equivalent to corporate bonds of stock companies. Bonds
are issued as a means of fund procurement, and are used mainly for acquisition of real estate,
repair, and maintenance of existing properties, and repayment and redemption of borrowings.

FRC’s Characteristics
FRC has the following ﬁve main strengths.

1 Japanʼs first
Asset management
leveraging our in-depth
knowledge of the realestate environmentof the Fukuoka andKyushu areas

2

Excellent portfolio
centered on the Fukuoka
metropolitan area

A portfolio of carefully
selected investments in thehigh growth area of Fukuoka
City, which is gaining attention
in Japan and abroad

3

Solid support from asponsor company involvedin property development

Asset portfolio expansion andhigh occupancy rates facilitatedthrough coordination with oursponsors

4

Establishmentof a stablefinancial baseConservative controlof the interest-bearing
debt ratio and longterm diversification of
repayment deadlines

5

Stable dividends
and steady NAV
growth since listing

Appropriate management ofreal estate investments

Who We Are

region-specific
REIT■ Before completion

Canal City Hakata〜 Redevelopment project that took approximately 20 years to complete 〜

Growth Strategy

Kanebo Factory in 1957. The Japan National
Railways tracks and a service line are visible
in the foreground.

■ Completion
Fulfilling new urban functions, enhances
circulation to Tenjin and Hakata whileconnecting the surrounding areas of
Kawabata and Sumiyoshi.

Five million people visited Canal City Hakata
in the first two months after its opening. The“urban theater” was born, creating a variety
of ripple effects in the surrounding area.

Data Section■ After Completion

Sustainability

Canal City Hakata is a multipurpose retail facility that opened in 1996 as anurban redevelopment project based on the concept of “urban theater.”
Canal City Hakata is located between the Tenjin district̶which forms thecommercial center of Fukuoka City̶and the business district centering on
JR Hakata Station, and is close to the famous entertainment area Nakasu andKushida Shrine, which once flourished as a community of Hakata merchants
and is famous throughout Japan for the Hakata Yamakasa Festival. Canal City
Hakata was designed by American architect Jon Jerde. The project site was
the former location of the Hakata Silk Cotton Spinning Company (later the
Hakata Factory of Kanegafuchi Spinning, hereafter the “Kanebo Factory”). It had
become a forgotten plot of land at the heart of Fukuoka City that had lost theurban functions that once helped develop modern society.
In 1977, Fukuoka Jisho acquired a portion of the former Kanebo Factory site,which is an area of approximately 3,000 tsubo. At the time, the area was being
planned as a redevelopment for condominiums, but the concept was reworked
many times in the hope of “reviving Hakata as a commercial city.” In 1982, abasic development concept was formulated and a master plan was announced
the following year, but the redevelopment was temporarily postponed due to thepoor earnings for key tenants. In 1988, a major step toward realization was finallytaken, and Canal City Hakata opened on April 20, 1996, as a catalyst to revitalize
the central part of the downtown area, which had become stagnant, and topromote the balanced development of the entire city center. Traffic congestion on
surrounding roads that had been a concern before the opening was addressed
through road maintenance in cooperation with the local government, and apedestrian bridge was constructed to connect to the Kamikawabata Shopping
Arcade. Accordingly, the opening of Canal City Hakata has led to the revitalizationof the Kamikawabata Shopping Arcade and surrounding areas.
Source: Prepared by Fukuoka Realty Co., Ltd., based on the Canal City Hakata Concept Book

Glossary

NAV
NAV is an abbreviation for Net Asset Value at an investment trust. Net assets are defined as total
investment trust balance sheet assets minus liabilities, with the base price based on the numberof units. For REITs, the term net assets refers to net assets plus unrealized gains or losses
reflecting the difference between the book value of the property owned and the appraised value.

[Calculation method] NAV: Net assets + Unrealized gains or losses – Dividends
Market net assets value per unit: NAV / Total number of units issued
Fukuoka REIT Corporation 2022

03

Relationship with Fukuoka Realty Co., Ltd.

Fukuoka REIT Corporation (“FRC”) comprises one Executive Director and two Supervisory Directors, and actual investment
management is contracted to our asset manager, Fukuoka Realty (“Fukuoka Realty”). As such, FRC and Fukuoka Realty aretreated as one entity in this document in reporting on the value created for stakeholders.

FRC’s Basic Policy【Our Mission】
Taking advantage of our strength in knowing the local
characteristics of real estate, which is a region-speciﬁc business,
we invest in real estate for rent in the Fukuoka and Kyushu areas.
By appropriately managing the invested real estate, we will achieve
stable earnings over the medium to long term while making efforts
to keep providing stable dividends for the future.
【Act Local】
We̶FRC and Fukuoka Realty̶are currently the only listed realestate investment corporation and asset management company
registered outside the Tokyo metropolitan and Kansai areas under
the provisions of the Act on Investment Trusts and Investment
Corporations as well as the Financial Instruments and ExchangeAct.
As a region-speciﬁc REIT, FRC seeks differentiation in theselection of investment target properties and the managementof owned assets through the enhancement of its information
gathering ability and ability to discern the proﬁtability of properties

by utilizing its speed and depth of information based on knowledgeof local land and a broad network centering on local governments
and the business world.
【Think Global】
We will proactively engage in IR activities to fulﬁll our accountability
to global capital markets. In conjunction, we will take heed of
Fukuoka Realtyʼs corporate governance and compliance.
Regarding real estate and ﬁnancial markets, FRC will keep
closely tracking movements occurring across the whole of Japanand the entire world, taking into consideration the logic of capital
markets with global ideas, and appropriately reﬂecting such in ourasset management.
We will also keep diligently pursuing dialogue with investors,
focusing on fulﬁlling our accountability, and utilizing Fukuoka
Realtyʼs fund management skills for investors under a strict
compliance policy.

Contribution to Regional Revitalization and Development of Attractive Communities
FRC and Fukuoka Realty believe that attracting domestic andforeign excellent investment funds to regional real estate ﬁnancial
markets will stimulate community development in the Fukuoka andKyushu areas. Although we are not directly involvedin community development or real estate development, we expect
our acquisition of properties to lead to new funds passing to sellers
and part of those funds being directed to new development, etc.
With funds injected into FRC from Japan and abroad, newinvestment funds will ﬂow to the Fukuoka and Kyushu areas

Act Local

Our Mission

Real estate is a local business

Region-Specific REIT

Distinctive capability for gathering
qualitative information on the real estatemarket (speed, in-depth information)
Specialization in local properties
Solid network among local
governments and the business world

Aim to achieve the bestinterests of unitholders byleveraging our expertisein the local real estatemarkets of Fukuoka
and Kyushu

as a whole. Based on this perspective, we believe that we cancontribute to regional revitalization and community development in
the Fukuoka and Kyushu areas.
Funds will be returned to unitholders by distributing the earnings
from owned assets.
Through the promotion of community development and therevitalization of regional economies in the Fukuoka and Kyushu
areas, we will aim for FRC earnings stability.

Investment Policy

Think Global
Capital market theory
Accountability and transparent
dialogue with investors
Decent policy to comply
Fund management skills

Investment target areas
Fukuoka
metropolitan area

60％–90％Investment type
Retail

40％–70％

Other Kyushu areas

Office buildings(including Okinawa andYamaguchi prefectures)

20％–50％10％–30％
OthersOthers0％–10％(Logistics, Residence,
Hotel, etc.)

0％–30％

04

Corporate Profile of Fukuoka Realty Co., Ltd.
Located in Fukuoka City and comprising 41 employees witha variety of experience in real estate, ﬁnance, and other ﬁelds,
Fukuoka Realty possesses a high level of expertise and makes
full use of information unique to the local area in managing FRCʼs
assets.

Real Estate Investment Trust

Real Estate

Who We Are

Listed on the real estate investment trust sections of the Tokyoand Fukuoka stock exchanges, Fukuoka Realty Co., Ltd., is FRCʼs
asset management company.
Based on an asset management agreement concluded with FRC,
Fukuoka Realty is entrusted with the key operations of “acquiringand selling assets,” “asset rental management,” and “ﬁnancing.”

Investors

Fukuoka REIT Corporation［ Securities code: 8968 ］

Rents

Growth Strategy

Holdings

Investments

Dividends

Company entrustedwith asset
management
Asset management company

Fukuoka Realty Co., Ltd.
Sustainability

5%

5%

5%

THE BANK OFFUKUOKA, LTD.

THE NISHI-NIPPONCITY BANK, LTD.

Development Bankof Japan Inc.

55%

Directors

Fukuoka Jisho
Co., Ltd.*

Fukuoka Realty
Co., Ltd.
(Asset manager)

Outsidedirectors

10%
Kyushu ElectricPower Co., Inc.

5%

5%

5%

5%

SAIBU GASHOLDINGS CO., LTD.

Kyudenko
Corporation

Nishi-Nippon
Railroad Co., Ltd.

Kyushu Railway
Company

Data Section

Leading companies in Fukuoka and the Kyushu areas that are
in agreement with FRCʼs concept participate as shareholders(sponsors) of Fukuoka Realty. FRC aims to achieve sustainablegrowth as a REIT through the expanded scale of its assets throughthe contribution of excellent properties from among our sponsors
and by actively leveraging their support, including the provision of
relevant information.
With regard to the properties owned and developed by thesponsor companies, Fukuoka Jisho Co., Ltd., FRC, and Fukuoka
Realty have concluded a pipeline support memorandum of
understanding (MOU) to seek stable and continuous acquisition
opportunities.

* Concluded MOU with FRC and Fukuoka Realty Co., Ltd., concerning pipeline support.

Glossary

Pipeline support agreement
Pipeline support agreements refer to contracts that provide the opportunity to acquire a property from a sponsor in advance of and in priority to a third party

Fukuoka REIT Corporation 202205

Value-Creation Story

Our
MissionAct Local, Think Global

Main management resources (Inputs)

Financial
capitalBusiness activities

Building of a solid financial base throughconservative control of LTV• LTV …………………………………… 41.7%• Fixed rate……………………………… 93.4%

Acquisition

ss strate
gy
sine
u
B

Manufacturing
capitalFinding excellent properties that can generate
stable cash flow over the long term

Research

Act Local,
Think Global*Fukuoka Realty Co., Ltd.

Intellectual
capitalSocialrelationshipcapitalNaturalcapitalMa• A varied skill set formed through humanresource training• Experience and knowledge of IR
activities based on long years of practicalimplementation• Gathering of information deeply rooted in local
communities• Co-creative and trusting relationships withtenants• Cooperative framework with property
management (PM) companies• Coordination with local society, local communities• Maintenance of good relationships of trustwith sponsors

na g

M a t e a lit y
ri

nd
eme
nt, valuation, as al es / R e pl a c e m e nt

External Environment

See p.20

Response to ESG issues
Sustainability

See p.29

Environmental Issues See p.32

Social Issues

See p.36

Organizational Issues See p.38

• Energy, water, air, and other natural resources
used in the operation of properties owned• Natural environment and biodiversity in theareas around properties owned

Risks and Opportunities See p.22

Related Stakeholders
Clients/Tenants
Total tenants in all properties: 1,021• Customer satisfaction surveys at retail facilities• Tenant satisfaction surveys

06

Management

Human
capital• Excellent human resources with specialized skills• Support framework for flexible working styles• Support system for career development• Number of full-time officers
and employees*: ………………………… 41• Number of qualification holders*:
Real estate appraisers 1 / Attorney 1 /First-class registered architects 1 / MBA 2

Region and Society

Population of the 6 prefectures
we have properties in: Approx. 11,774,000• Organizing community and other events utilizing facility common areas• Active participation in the Hakata Town Planning Promotion Councilʼsactivities• Announcement of financial results by the Fukuoka Stock Exchange

Employees

Number of full-time officers
and employees: 41• Various employee education systems• Employee satisfaction surveys• Career interviews with employees

VisionPromote Attractive Urban Development in the
Fukuoka and Kyushu Areas

OutcomeValue creation with stakeholders

Who We Are

Total 33 properties
See p.42• TSR for past 10 years Annual rate 8.1%
• Dividend per unit /3,523 yen
Average interest rate paid 4.1%
• Credit ratings JCR: AA- (stable), R&I: A+ (stable)
Retail 11 properties

Manufacturing capital
5.2％
43,026 million yen
178,348 yen• Number of qualification holders:
Real estate brokers 56.1%
out of 41 full-time officers and employees /ARES Certified Masters 43.9%
out of 41 full-time officers and employees• Human resource exchanges with sponsors(e.g., 3 people accepted from sponsors, 8
people dispatched to sponsors)• Improvement of office environments(introduction of meeting booths, plants
and other greenery)• Implementation of COVID-19 tenant support
measures (assistance with vaccinations asrequested and other support)

Natural capital

Employee Initiatives See p.36

・Improve experiences through human resource exchanges and rotation
・Increase motivation through participation in urban development, etc.
・Enhance personal connections and capabilities based on various experiences
through connection with society
・Boost employeesʼ job and personal satisfaction through a focused humanresource strategy
・Enhance systems that enrich peopleʼs lives and encourage them to remain inservice for longer

Unitholders/
Financial Institutions

Investment Strategy See p.24
Redevelopment Project inFukuoka City See p.21
・Create investment opportunities in realestate in the Fukuoka and Kyushu areas
・Convey the appeal of the Fukuoka and Kyushu areas by enhancing information disclosure
・Ensure the stable return of profits and secure opportunities for growth throughappropriate investment and management in response to unitholder feedback
・Maintain good relationships with financial institutions and ensure theappropriate return of profits

Sponsors

Investment Strategy See p.24
Redevelopment Project inFukuoka City See p.21

・Provide funding for new property development
・Support developments over the medium to long term that lead to local advancement
・Engage in collaborative projects to enable efficient and productive property
management
・Strengthen development and operational capabilities through ongoing
information exchange
・Bolster human capital through human resource exchanges

Environment/
NatureEnvironmental Initiatives See p.32

・Promote environmental conservation through investment in properties withhigh environmental performance・Contribute to sustainability in the Fukuoka and Kyushu areas over the medium
to long term through active participation
・Co-create in harmony with nature through proactive environmental initiatives in
the real estate market
・Engage in real estate development that takes advantage of the nature found in Kyushu

Data Section

Hotels 2 properties• Green building certification rate (total floor
space basis) 77.8％• Reduction of electricity usage andwater consumption at properties owned
Electricity usage reduced by 8.84%
compared with 2019
Water consumption reduced by 31.14%
compared with 2019

Sustainability See p.29

Employees

Sustainability• Number of IR interviews during the year
In Japan 184, Abroad 22 (including
telephone conferences)• Track record of winning awards
IR Excellent Company Encouragement Award(2014) / Nikko Excellent IR Website Award (2021)

Social relationship capital

Logistics 4 properties

Community-Based
Initiatives See p.37

＜Commercial and Hotel＞
・Provide new discoveries for users and enhance satisfaction (e.g., first store in Kyushu)
・Revitalize interaction with surrounding regions through community-based initiatives
・Make it fun to go out and invigorate regional interaction＜Logistics＞
・Increase convenience for the general public by upgrading local distribution networks

Intellectual capital

Residences 5 properties

Management Strategy See p.25

Region and Society

Human capital

Office buildings 11 properties

Initiatives at Facilities See p.34

＜Office Buildings＞
・Create business opportunities, attract companies from other countries andother regions in Japan, and establish a place for start-ups to flourish＜Commercial＞
・Increase users, create employment, and generate synergies between tenants(differentiate from shopping centers)

Growth Strategy• NOI yield• Unrealized gain
• NAV per unit

Management Strategy See p.25

Clients/Tenants

Financial capital

As of August 31, 2022

Unitholders/Financial Institutions
No. of unitholders: 13,554
No. of financial institutions we deal with: 22• General Meeting of Unitholders• Results briefings for investors• 1-on-1 meetings (Japan and overseas)

Sponsors
Sponsors: 9• Contribution of excellent
properties• Ongoing information exchange• Human resource exchanges

Environment/Nature
Property location/Six prefectures(Fukuoka/Saga/Kumamoto/
Oita/Kagoshima/Okinawa)• Environmental preservation (Electricity
and water conservation)• Green Building certification

Glossary

TSR
An abbreviation for Total Shareholder Return.
This can also be called total shareholder(investor) yield and reflects combined capitalgains and dividends, reflecting the overall
investment yield for investors.
[Calculation method] TSR (%): (Dividend perunit + Increase in investment unit price) / Initialinvestment unit price multiplied by 100
Fukuoka REIT Corporation 2022

07

Value-Creation Activities
Acquisition

ss strate
gy
sine
Bu
Management

Research

Act Local,
Think Global

Ma

na g

Investment Strategy See p.24
Financial Strategy

See p.26

Fund procurement (financing)M a t e a lit y
ri

nd
eme
nt, valuation, as al es / R e pl a c e m e nt

External Environment
Response to ESG issues
Sustainability

Environmental Issues

Social Issues

Organizational Issues

Strengths andcharacteristics of thevalue creation process

Risks and Opportunities

Research

Acquisition

Human resources who are familiar
with the area and have built trusting
relationships collect high-quality
information on properties fromsponsors and the community

Acquisition of excellent real estatein the Fukuoka and Kyushu areas
through sponsor companies andlocal communities• Property appraisal skills unique to a
local person• Robust network• Improvement of property value• Market research and analysis

Related capital• Intellectual capital

Challenges and initiatives
to further strengthen
value creation• Discovery and acquisition ofproperties that can generate stable
cash flow• Financial capital(information-gathering
ability)(financing ability)• Human capital• Manufacturing capital(know-how)(excellent properties)• Social relationship capital• Human capital(relationships of trust,cooperation and collaboration)(discerning eye, expertise)• Employment of exceptional humanresources required for suitablebusiness execution• Asset portfolio expansion andrealization of high occupancy rates• Diversification in fund procurement• Discovery of excellent properties
using networks we created

See p.24

See p.24

Related Stakeholders
Clients/Tenants
Total tenants in all properties: 1,021• Customer satisfaction surveys at retail facilities• Tenant satisfaction surveys

08

Region and Society

Population of the 6 prefectures
we have properties in: Approx. 11,774,000• Organizing community and other events utilizing facility common areas• Active participation in the Hakata Town Planning Promotion Councilʼsactivities• Announcement of financial results by the Fukuoka Stock Exchange

Employees

Number of full-time officers
and employees: 41• Various employee education systems• Employee satisfaction surveys• Career interviews with employees

Management Strategy See p.25
Who We Are

Information communication (IR/SR)Management,
Valuation, and Sales/
Replacement

Management
Constant forward-looking
management with an attention
to detail unique to a regionspecific REIT

• Stable cash flow

• Sound financial position• Derive maximum value from our realestate portfolio over the long term

• Realization of stable distributions
and dividends(management know-how/performance)(know-how)• Social relationship capital• Human capital(relationships of trust, cooperationand collaboration)(know-how)• Social relationship capital• Natural capital(relationships of trust, cooperationand collaboration)(natural environment)• Management that emphasizes thebest interests of unitholders• Essential environmental initiatives
See p.25• General Meeting of Unitholders• Results briefings for investors• 1-on-1 meetings (Japan and overseas)

Data Section• Management focused on longterm fixed interest rate entities andfinancial stability• Maintenance of NOI in existing
properties

No. of unitholders: 13,554
No. of financial institutions we deal with: 22

Sustainability• Financial capital• Human capital

Unitholders/Financial Institutions

Growth Strategy

Portfolio management from a medium- to long-term
perspective and appropriate financial strategies

Sponsors
Sponsors: 9• Contribution of excellent
properties• Ongoing information exchange• Human resource exchanges

See p.26

Environment/Nature
Property location/Six prefectures(Fukuoka/Saga/Kumamoto/
Oita/Kagoshima/Okinawa)• Environmental preservation (Electricity
and water conservation)• Green Building certification

Fukuoka REIT Corporation 2022

09

Materiality

Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd., consider it essential to take into account environmental, social,and governance (ESG) factors in addition to pursuing proﬁtability to achieve the best interests of unitholders over the
medium to long term. Accordingly, we strive to respond to various ESG-related issues within our real estate investment andmanagement processes.
Identifying Materiality
Fukuoka Realty, the asset management company, has identified materiality (important issues to address) in its sustainability initiatives basedon the demands and expectations of stakeholders and the expected impact on and importance to FRCʼs business.
Mapping of Issues

Environment

High

Importance to society and stakeholders● Reduction of environmental load
● Maintenance and enhancement of environmental andImportant
items

construction performance

Society● Creation of pleasant workplaces (asset managementcompany)● Creation of pleasant workplaces (tenants)● Contributions toward boosting the attractiveness andrevitalization of Fukuoka and Kyushu● Co-creation with the local community

Governance● Information disclosure and dialogue with stakeholders

High

Importance to business continuity● Compliance/Risk management

We have identified eight material issues through the process below from environmental, social, and governance perspectives that are of highimportance to society and stakeholders and to business continuity.

Historical Background to Identification of Materiality
January 2018

June 2018

August 2018

September 2018

September 2019

August 2022

Formulated sustainability
policyAcquired DBJ Green
Building Certification for
2 properties (9 in total)

Certified as a “Fukuoka
ʻWork-Style ReformʼPromotion Company”

Announced results of GRESBReal Estate evaluations(participation for first time)

Identified
materiality

Created “Climate Change
and Resilience Policy”

FY2017–Began initiatives regarding
participation in GRESB
2018

September 2017
Established Policies That
Include Those Regarding
Customer-Oriented
Business Conduct

July 2018
Acquired BELS
Certification for 4
properties (reissued)

September 2018

September 2018

Became a signatoryof the Principles for
Responsible Investment(PRI)

Became a signatoryof the Principles for
Financial Action for the
21st Century (PFA21)

April 2022
Set key performanceindicators (KPIs) for
materiality

September 2022
Endorsed the TCFD (Task Forceon Climate-related Financial
Disclosures) and participated in
the TCFD Consortium

Process for Identifying Materiality
STEP 1

10

STEP 2

Identify social issues

Narrow and prioritize issues

Based on the needs of society andthe expectations of stakeholders
within and outside of the Company,
prepare a list of social issues taking into
account conditions at other companies
in the same industry, items used atassessment agencies, ESG disclosure
standards, and SDGs.

Narrow and prioritize identified
issues based on their importanceto stakeholders and the importanceto and degree of impact on FRCʼsbusiness based on potential risks andopportunities. Prepare draft proposals
regarding materiality.

STEP 3

Deliberate at the management level, confirm
appropriateness
Ensure that the Sustainability Promotion Committee, establishedby the asset management company, deliberates on all draft
proposals regarding materiality. Materiality is identified afterinvestigating appropriateness based on the opinions and adviceof experts acting on behalf of stakeholders. Reports are ultimately
delivered to the Board of Directors of the asset managementcompany and the Board of Directors of FRC.

Materiality

Society

KPIs and targets

Related SDGs

・(by 2030) 35% reduction in CO2emissions (compared with 2019,
basic unit), 75% waste recycling
rate

Maintenance andenhancement ofenvironmental
and construction
performance

・Carry out performance and function evaluation of properties
on a regular basis and ameliorate any deterioration in
performance
・Maintain and improve competitiveness by acquiring
green building certifications and through visual
representation of building performanceSee p.35

・(by 2030) 85% Green Building
Certification rate or higher

Creation of pleasant
workplaces (asset
managementcompany)・Improve quality of operations by enhancing and expanding
employee education systems and promoting acquisition ofqualifications
・Continue to improve office environments and work on
providing pleasant working environments
・Give consideration to a work-life balance and boost employee
satisfaction

・Training per employee (numberof times)
・Improve office environment(number of cases)

Creation of pleasant
workplaces (tenants)

・Promote improvement of employee
satisfaction and work toward increasing job
satisfaction of tenant employees

・Conduct regular tenantsatisfaction surveys (allproperties)

Contributions
toward boosting
the attractivenessand revitalization of
Fukuoka and Kyushu

・Enhance dissemination of information regarding strengths andcharms of Fukuoka and Kyushu
・Support research and studies on the local economy and industries
and promote attractive urban development in
See p.37
collaboration with local business circles

・Join and participate in local
economic organizations
・Host local community events(number of times)

Co-creation with thelocal community

・Deepen dialogue and collaboration with local communities
through participation in community activities and various
initiatives using properties under our management to grow anddevelop together with the local community

・Join and participate in area
management organizations
・Continued participation in
activities that contribute to thecommunity (number of times)

Information disclosureand dialogue withstakeholders

・Disclose financial and non-financial information to stakeholders
in an appropriate and timely manner
・Build relationships of trust through proactive dialogue
with stakeholders and reflect stakeholder feedback in the
management strategy

・Dialogue with investors (numberof times)
・Sustainability training for
employees
See p.38(number of times)

Compliance/Riskmanagement

・Ensure thorough compliance including compliance with laws
and ordinances and elimination of conflicts of interest withinterested parties, and develop and operate an appropriate
internal risk management system to maintain and improve
corporate value・Compliance training(number of times)

See p.36

See p.39

Data Section

・Coordinate with Property Management and Building
Management on promotion of management and reductionof energy consumption, greenhouse gas emissions, water
consumption, and waste output
See p.30

Sustainability

Reduction ofenvironmental load

Growth Strategy

Governance

Policies and targets

Who We Are

Environment

Materiality

Process for Revising Materiality
STEP 1

STEP 2

STEP 3

Identify items to be revised

Exchange opinions with third parties

Identify items in materiality to be revised
based on an examination of changes
in the social environment and anassessment of the current situation.

Create proposed revisions to materiality
based on dialogue with stakeholders andan assessment from FRCʼs perspective,
and request third parties to provide theiropinions on the proposed revisions.

Deliberate at the management level, seek resolution
by the Board of Directors
Ensure that the Sustainability Promotion Committee,
established by the asset management company, deliberates
on all proposed revisions in consideration of the opinions
provided by the third parties before any changes are maderegarding materiality. Ultimately, reports are to be delivered
to the directors of the asset management company and theBoard of Directors of FRC.

Fukuoka REIT Corporation 2022

11

History of Asset Portfolio Expansion

Based on our intention to draw funds to the region by introducing excellent properties in Fukuoka and Kyushu to investors
locally and around the world, FRC carefully selects and invests in properties that can generate stable cash ﬂow over many
years, and we are working to continuously expand the scale of our assets. In addition to retail and ofﬁce buildings, we arediversifying our portfolio by expanding the scope of investment into such properties as logistics facilities, residences, and hotels.

■ Retail ■ Office buildings ■ Logistics ■ Residences ■ Hotels

Number of properties
Tosu Logistics Center 1,250(Acquired properties)
Canal City Hakata
Canal City Business Center Building
Park Place Oita
Gofukumachi Business Center

32,00014,60015,700
11,200

D-Wing Tower
2,800
Hotel FORZA Oita
1,530
Tenjin North Front Building 2,800
Tenjin Nishi-Dori Center Building 2,600

SunLive City Kokura 6,633
Sanix Hakata Building
4,400
Kominedai Community Mall 740
Acquisition Price(Millions of yen)

Aqualia Kego 2,800
Aqualia Chihaya 1,280

Taihaku Street Business Center 7,000

200,000

Amex Akasakamon Tower
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC

Canal City Hakata・B 28,700

2,060
5,300
2,400

Aeon Hara Shopping Center
5,410
Kominedai Community Mall (Sold) （740）Hanahata SC
1,130City House Keyaki Dori
1,111
Kurume Higashi Kushiwara SC 2,500

150,000

Kʼs Denki Kagoshima 3,550
Higashi Hie Business Center 5,900
23
20

100,000

19
17

17
16
15

14

16

16

16

15

11

11

50,00087540Listed

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

Jun.2005

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* Amounts indicate acquisition price.
Note: FRC has co-ownership interest in the amount of 88.28%, and the amount indicates the appraisal value at the time of transfer.

12

Who We Are

Konoha Mall Hashimoto
10,000Higashi Hie Business Center II 4,230
Park Place Oita (adjacent land) 860

Hakata Chikushi-Dori 4,320
Center Building

Granfore Yakuin Minami 1,100

Tenjin Nishi-Dori Business Center 7,700(land with leasehold interest）
Canal City Hakata・B(7,640)(Note)
Grand Building (sold)

LOGICITY Minato Kashii
8,150
Marinoa City Fukuoka
5,250(Marina Side Building)Park Place Oita (adjacent land) 590

1,470(5,410)(2,800)（Number ofproperties）

Tissage Hotel Naha 2,835

LOGICITY 5,050
Hisayama

Growth Strategy

Park Place Oita (Sports Club NAS)
Aeon Hara Shopping Center (sold)
Aqualia Kego (sold)

Higashi Hie
3,290
Business Center III
LOGICITY Wakamiya 1,700
Park Place Oita
990
(Home Plaza Nafco)

40

33
32
31

32

31

30

27

27

27

29

Sustainability

29

29

28

25

26

26

25

24
23

20

19th

20th

21st

22nd

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb.2014

Aug.2014

Feb.2015

Aug.2015

Feb.2016

Aug.2016

Feb.2017

Aug.2017

Feb.2018

Aug.2018

Feb.2019

Aug.2019

Feb.2020

Aug.2020

Feb.2021

Aug.2021

Feb.2022

Aug.2022

Data Section

10

0

Fukuoka REIT Corporation 2022

13

Financial/Non-Financial Highlights (5-Year Graph)

Financial Highlights
Total Operating Revenues

Profit(Millions of yen)

(Millions of yen)

10,000

9,178

9,242

9,231

9,162
8,518

8,194

8,904

8,867

8,830

8,658

2,860

3,000

2,934

2,939

2,899

2,623

2,586

2,675

2,816

2,814

2,804

8,000
2,000
6,000

4,000
1,000
2,000

0

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

0

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

3,539

3,536

3,523

NOI

Dividend per Unit

(Millions of yen)

(Yen)

6,000

5,493

5,591

5,633

5,596
5,307

5,079

5,347

5,336

5,334

5,370

4,000

3,593

3,687

3,693

3,000

3,000

2,000

1,500

1,000

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

0

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

29,46731,804

41.4

41.3

41.2

41.5

41.7

LTV

Unrealized gains =（latest appraisal value –book value at the end of the period*1）

Book value at theend of the period*1

250,000
34,08736,92337,64837,92740,76142,812

187,891

186,972

186,088

185,177

25,541

43,026

182,352

184,715

183,532

182,336

（%）
60

50

0000

200,000

3,361

Feb. 2018

Historical Appraisal Values (Unrealized Gains)(Millions of yen)

3,642
3,250

4,500

0

3,512

190,163

38.9

39.1

39.7

39.7

39.8

40

168,138

150,000
30
100,000
20
50,000

0

10

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

Glossary

14

0

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

NOI
An abbreviation for Net Operating Income. This reflects net income stemming from the real estate leasing and
REIT business, deducting expenses such as administrative costs and property taxes from rents in a given
fiscal period. Costs not related to cash expenditures, including depreciation, interest paid on borrowings, ortaxes are not deducted.
This is used to assess real estate and REIT asset value and is similar to EBITDA, which focuses on operating
cash flow in assessing corporate value.
When determining the theoretical real estate property price, it is a common practice to divide NOI by thecapitalization yield (cap rate).

LTV
An abbreviation for Loan to Value, and an indicator of
a companyʼs borrowing ratio as well as a measure ofstability in borrowing. The lower the value, the greater
the degree of safety against redemption of debt.
[Calculation method] LTV (%):
Interest-bearing Debt / Total assets multiplied by 100

Non-Financial Highlights
Asset Management Company:
Number of full-time officers and employees*2

Asset Management Company Full-Time Officers and Employees:
Percentage of male and female employees*3
（%）

５0

100

38

４０

39

41

41

42

44
41

41

40

Male

20

40

10

20

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

0

46.3

47.6

55.3

53.8

53.7

53.7

52.4

51.2

51.2

50.0

48.8

48.8

50.0

56.1

52.3

47.7

43.9

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

Growth Strategy

Asset Management Company:
Average number of years of full-time employment*4

Number of IR Meetings in Japan and Abroad*5(Years/Months)(Meetings)

10
8.6

8

46.3

8０

60

7か月
7.7

46.2

41

30

0

Female44.7

Who We Are（People）

8.10

9.1

8.10

9.6

9.6

200

9.4

169

10か月
7.11
7.10
10か月

149

148

160

133

129

6

114

120

105

101

90

80

4

54

Sustainability

40

2

0

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

0

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

Power Consumption*6

Water Consumption*6（Data coverage）
70.1％

（MWh）
90,000 81,339

70.1％（Data coverage）
70.2％

70.2％

79,474
71,192

184（MWh/m²）
190

70.1％

70.1％

607,352

596,007

70.2％

70.2％

（MWhｚ/m²）
2.00

74,150

175

175

1.37

1.35

405,366

418,232

0.91

0.94

1.00

400,000
160

30,000160

167

Data Section

1.50

600,000

180

60,000（m3）
800,000

160
200,000

0.50

145
0

28th・29th

March 2018–
February 2019

30th・31st

March 2019–
February 2020

32nd・33rd

March 2020–
February 2021

34th・35th

March 2021–
February 2022

145

028th・29th

March 2018–
February 2019

30th・31st

March 2019–
February 2020

32nd・33rd

March 2020–
February 2021

34th・35th

0.00

March 2021–
February 2022

*1. Book value at the end of period does not include construction in progress.
*2. The number of full-time officers and employees indicates the total number of directors and auditors, permanent employees, contract employees, temporary employees, secondees, etc., who are employed on a full-timebasis at Fukuoka Realty Co., Ltd.
*3. The gender ratio is calculated as the ratio of males and females to the number of full-time personnel.
*4. Average number of years of employment is calculated as the average service years of permanent and contract employees of Fukuoka Realty Co., Ltd.
*5. The number of IR meetings in Japan and abroad shows the total number of IR meetings, based on the dates on which they were held, with institutional investors and analysts through interviews and telephone conferences
generally regarding the results for the previous period. There were fewer face-to-face interviews in the 32nd fiscal period due to the impact of the COVID-19 pandemic.
*6. Total value for 11 properties, including four retail facilities and seven office buildings. Per unit is calculated by adjusting the total floor area (m2) by the occupancy rate. Data coverage is the area ratio of properties subject todata aggregation as compared to all properties, and is calculated at the end of the fiscal period. The figure for Canal City Hakata, Canal City Hakata・B, and Canal City Business Center Building reflects total electricity andwater consumption for all buildings, including electricity and water consumption by some theater areas not owned by the investment corporation. The figure for Park Place Oita covers only the main building section andexcludes the section for independently run stores. Data covers a period of four years.

Fukuoka REIT Corporation 2022

15

CEO’s Message

President and CEO
Fukuoka Realty Co., Ltd.

Zenji Koike

Looking back over the past year of ongoing dialogue
with our investors, I felt the importance of taking a
different perspective from developers.
Now in my second year as president of Fukuoka Realty Co.,

perspective alone. This past year was one in which I began
to see this gap.
We will work to address sustainability in unison with
our sponsors.

Ltd. (the Company), the asset management company for
Fukuoka REIT Corporation (FRC), I have had the privilege ofAmid the growing emphasis on sustainability as part ofexperiencing something different from my past involvement

investment and management, I have recently felt theas a developer, which was very informative. In many cases,

importance of sincerely engaging in the question of how

those of us who are involved in the REIT industry report

we should address sustainability as a REIT. Which is why

our earnings twice a year, at which point we meet with ourI also intend to expand the scope of sustainability-related

investors. And with each meeting, I experience ﬁrsthanddisclosures going forward. On the other hand, I havethe importance of dialogue with investors.

also recognized a fair amount of difference in the level ofDevelopers engage in urban and community
development under their own set of values, and undertake

regarding sustainability. I myself see sustainability initiatives

risk themselves as they develop and proﬁt from properties.

in a positive light.

On the other hand, companies that employ the REIT

16

enthusiasm in terms of our investorsʼ interest and questions

As one of the Companyʼs sponsors, Fukuoka Jisho

scheme own real estate using equity capital solicited fromCo., Ltd., is an unlisted company, which means it is us thatinvestors and loans borrowed from ﬁnancial institutions,engages with investors and the market. And this is why

so absolutely must achieve stable proﬁts. Which is also

it is important for us to hold dialogues with our investors,

why we must not act solely upon our own set of values,

capture the interest of the market, and involve our sponsors

but must ensure investors accept the value of our actions.

in our efforts. Over the past year, I have also felt that the

Although I feel the perspective of investors is primarily

awareness of sustainability among our sponsors, as wellfocused on ﬁnancial results in the form of dividends, it

as their sustainability initiatives, have made progress.

can be difﬁcult to achieve such results from our own

Fukuoka Jishoʼs Corporate Planning Department has also

started to set down sustainability targets in terms of what
they engage in as part of real estate development. The

We aim to expand business with a focus ondevelopment targeting future stable growth.

Companyʼs Sustainability Promotion Ofﬁce and Fukuoka
I myself have absolutely no intention of allowing thecollaborate in facing issues such as determining the degree

assessment of FRC to deteriorate among the J-REIT

to which speciﬁc targets must be achieved in regard to thebrands, which is why I naturally believe in the importance ofassets of the Group. This year, we set speciﬁc KPIs andfollowing our Basic Policy as we actively engage in property

targets for materiality. And we intend to actively discloseacquisition or efforts to increase our market capitalizationthese targets along with our results.

and our total asset value, all while prioritizing stable

The Company’s vision and FRC’s strategy

our uncompromising stance of remaining a region-speciﬁc

Who We Are

Jishoʼs Corporate Planning Department must continue todividend distribution and the steady growth of NAV . Given
REIT, however, we intend to contribute to the development
The Companyʼs Basic Policy is to soundly manageof cities in the Kyushu region and Okinawa, centered oninvestment properties with a specialization in the Kyushu

Fukuoka, as our business ﬁeld.
I believe that large developers in the Tokyo metropolitan

dividends over the medium to long term. And contributing

area are similarly involved in contributing to urban

to regional revitalization and to the development ofdevelopment and local communities with their own

attractive communities based on the policy of Act Local

respective intentions. As one of our sponsors, Fukuoka

and Think Global is both our vision and a direction that we

Jisho Co., Ltd., also aims to increase the value of real estate

have no intention of changing into the future.

by making cities more interesting and by helping themIn other words, our position as a region-speciﬁc REIT–ourprimary deﬁning characteristic–is a unique quality with which
I can relate very well from the standpoint of someone who

grow. And as real estate liquidity increases, developers will
shift to considering real estate exit strategies.
In this sense, I see investment corporations andwas previously involved in urban development. On the otherdevelopers as inseparable. After all, REITs acquire

hand, I am concerned over the degree to which our investors

properties developed by developers and manage theseappropriately. Yet I believe that it is necessary to maintain astructure in which the Company and FRC act independently

assessment of growth potential (growth expectation). So, iffrom each other. With the most recent revisions to thewe see valuation as the growth potential for scale, then a slow

Asset Management Guidelines, we now have greater

real estate acquisition pace by FRC as a region-speciﬁc REIT

ﬂexibility when investing in development properties. We

will result in a negative market assessment when comparedmade these revisions because we felt that engaging in

to a REIT that invests in the Tokyo metropolitan area.

development projects together with our sponsor companies

Given our desire to contribute to a speciﬁc regionand other developers will contribute to the growth potentialof dividends. In other words, the portion equivalent to theconsidering growth in terms of asset scale alone would

capital gains for developers will help reduce the acquisition

not match with our vision. Although we could increase

book value, which we expect to enable us to acquire

investment opportunities by expanding our investment

properties with relatively high NOI.

target to the Tokyo metropolitan and Kansai areas asinvestors, this would conﬂict with our direction. Which is

Data Section

through the assets that we own, however, simply

Sustainability

acknowledge the value of this unique quality. The price of
REIT investment units (valuation) varies depending on thea means of raising the growth potential demanded of

Growth Strategy

region, while our mission as a REIT is to distribute stable

Human resources for appropriate asset management
and growth of owned real estate

why we instead intend to invest in high-quality real estate in
the region of Kyushu and Okinawa, centered on Fukuoka,

The value of owned real estate varies depending on asset

and manage the REIT with a ﬁrm idea as to how we canmanagement after acquisition. Moreover, asset management

revitalize the region and contribute in other ways throughrequires a greater degree of manpower as the number ofreal estate asset management.

properties increases with an expanding asset scale. The

Glossary

NAV
NAV is an abbreviation for Net Asset Value at an investment trust. Net assets are defined as total investment trust balance sheet assets minus liabilities, with the baseprice based on the number of units. For REITs, the term net assets refers to net assets plus unrealized gains or losses reflecting the difference between the book value ofthe property owned and the appraised value.
[Calculation method] NAV: Net assets + Unrealized gains or losses – Dividends Market net assets value per unit: NAV / Total number of units issued
Fukuoka REIT Corporation 2022

17

CEO’s Message

Company believes we can effectively address this issue

In terms of creating value for our stakeholders, thethrough human resources growth based on previously

tenants that occupy our properties, for example, eachaccumulated experience, human resources development

have their own set of values regarding the ESGs. And

through training, and optimized personnel assignments.

it is necessary for us to do what we can to address

The Company is now approaching the 20th anniversary

those values. Moreover, if a property does not meetof our founding. We therefore intend to enhance loyalty by

the prerequisites of the tenants, they will no longer

providing continuous service awards to those employees

choose that property in some cases, so we must have a

who have reached their 15th year of employment. In terms

strong awareness of the demand for sustainability. Thisof training, we have conducted overseas training to put

awareness, in other words, will necessarily have an impact

Think Global into practice, including overseas training inon the earnings of our properties.

North America and observation with training in Shenzhen

As the basis for accepting all our clients, we must also

depending on the demands of each employeeʼs duties.

meet the required standards. The challenges differ in each

We also offer an extensive lineup as part of our certiﬁcationcase, however, where we must question the degree toacquisition support system, through which many of ourwhich we have addressed sustainability in properties under

employees have acquired certiﬁcations related to real estatedevelopment, or the degree to which we can address

and ﬁnance, including becoming ARES Certiﬁed Masters

sustainability after the fact in properties that we have alreadyand real estate brokers.

acquired. At the very least, we must indicate the value thatAs a result of our past initiatives and track record, wewere certiﬁed as a “Fukuoka ʻWork Style Reformʼ Promotion

our properties create from the perspective of environmental
action to our stakeholders, and primarily our tenants.

Company” in 2018, and were registered as a Fukuoka City
Well-Being & SDGs Registration System “Master” this year.

In conclusion:“Together with Local Communities and Cities”

We are currently advancing a range of work-style reforms,
including eliminating all overtime, ensuring employees take

One thing I often say to our employees during morning

annual paid leave, and supporting a balance between childassemblies is that I want them to value our “focus on theraising and work. Developing human resources and making
various considerations will continue to be important. And
because we hope to expand the areas in which we dobusiness going forward, we will strive to capture business
opportunities for growth by strengthening our humanresources and assigning personnel appropriately.
Setting sustainability targets and managing owned properties
Making sustainability-related disclosures is an urgent
challenge. Looking back over the past year, we haveestablished a data platform as the prerequisite for achieving
the materiality related numerical targets for the properties
we currently manage. Going forward, we will work together
with our sponsors, and cooperate with each company in
the Fukuoka Jisho Group as we shift in a direction that willallow us to store and manage data. In April 2021, we raised
the targets of reducing CO2 emissions by 35%, recycling
75% of waste, and achieving a Green Building Certification
rate of 85% or higher, all by 2030. Moreover, in September
2022 we both publicly endorsed the Task Force on Climaterelated Financial Disclosures (TCFD) recommendations andjoined the TCFD Consortium, an association of companies
in Japan that has endorsed the recommendations.

18

Riding on top of a ﬂoat (President Zenji Koike at far right) in the Oiyama ﬂoat eventof the Hakata Gion Yamakasa Festival on July 15, 2022

with thinking about what needs to be done in terms ofof practicing Act Local, one of our missions. Although it

asset management afterward to realize that value, andis fairly difficult to connect these to economic value, I feelultimately how to enhance that value. And I feel that beingthat one of our strengths is our ability to help plan andloved by the community and the city residents as a result

participate in various local activities and events. In 2022,of this approach will have a major impact on real estate

the Hakata Gion Yamakasa Kakiyama was held for the firstdevelopment and post-development management.

time in three years. I was also allowed to play a part in the

FRC and the Company constantly think about thisfestival, and rode the Hachiban-yamakasa as part of thevalue and focus our energies on managing real estateOiyama float race on the final day of the event.

that is loved by the region. I therefore humbly ask for yourDevelopers in large cities likely struggle when trying to

Who We Are

region” and our “close ties with the region” as a means

continued support.

delve deeply into a region from the stance of management
once a property is developed. As the entity that manages

Zenji Koike President and CEO Fukuoka Realty Co., Ltd.

properties after development, FRC and the Company

Place of birth: Fukuoka City

consider our contributions to the local community together

Hobbies: Running, golf

Proﬁle1988 Joined Fukuoka SOGO Bank (currently THE NISHI-NIPPON CITY
BANK, LTD.)
1991 Joined Fukuoka Jisho Co., Ltd.
2013 Appointed as Chairman of Canal Entertainment Works Co., Ltd.
(currently FJ. Entertainment Works Ltd.)2017 Appointed as Senior Executive Ofﬁcer of Fukuoka Jisho Co., Ltd.
Appointed as Chairman of Sunlife Co., Ltd.
2021 Joined Fukuoka Realty Co., Ltd.
Appointed as President and CEO of Fukuoka Realty Co., Ltd.
(current position)
2022 Appointed as Executive Director of FRC in May (current position)

Fukuoka and Kyushu, which means we serve as landlordswith deep roots in the community. This, I believe, is astrength of region-specific REITs. And I feel that this aspect
is particularly important. In essence, real estate should beconsidered as a series of stages, beginning with thinking
about why land needs to be developed and what kind of

Growth Strategy

with those developers who work with real estate here invalue can be offered through development, and ending

Ichiban-yama, and is the only yamakasa granted the privilege

Hakata Gion Yamakasa began when Shoichikokushi rode asegakidana and sprinkled perfumed holy water (honeydew

of singing the Hakata Iwaiuta (Iwaimedeta) during Kushidairi, so each year the order changes. The Hakata Iwaimedeta

water) to remove a pestilence from the city in 1241, which led to
the Gion Faith for warding off calamities and ultimately developed
into a yamakasa ritual. With its roots dating back to 1241,
Hakata Gion Yamakasa was registered as a UNESCO Intangible

overpowers as it reverberates throughout Kushida Shrine.
The race starts with the dedication of Ichiban-yamakasa upon
beginning Kushida-iri at 4:59 in the morning, from which time all
eight yamakasa perform Kushida-iri in succession before racing
off into the city of Hakata in the dim morning light.

Cultural Heritage in 2016, thereby bringing the festival worldwide
recognition. This year, the festival was held for the 782nd time.
There are two types of yamakasa portable shrines, kazariyama
ornamental floats and Kakiyama floats. Kazariyama ornamental
floats are not carried, but are instead
displayed at specific locations inFukuoka city every year during the
HakataElementary
Schoolfestival from July 1 to July 15. The
different Kakiyama float events
begin on July 9 and culminate in the
Oiyama float race as the climax of* Kushida-iri refers to the act of carrying a yamakasa onto the grounds of Kushida Shrine, circling
a flag on the grounds, and leaving the grounds again.

Gofukumachi
Subway Station

Ky

uh

iga

sh

i-m

nu

e

ac

aA
ve

ow

Sh

Shofukuji Temple

his

Ky

uji

un

Turning
point

Data Section

the Hakata Gion Yamakasa.
The Kakiyama float race washeld for the first time in three years
during 2022 due to COVID-19.
Some of the yamakasa are called
the seven “Nagare,” each of whichis carried and compete for time
during Kushida-iri* and over the
Oiyama float race course. The firstyama to start the race is called

Sustainability

Column “What is Hakata Gion Yamakasa ?”Myorakuji Temple

ish

i-m

ac

Nakasu-Kawabata
Subway Station

Ka

wa

ba

Ha

ta

ka

ta

his

Shotenji Temple

Tochoji
Templeuji

Shotenji Temple

Start
Sh

op

pin

Riv

er

KushidaShrinerca
deGion
SubwayStation

gA

Ha

ka

Canal City
HakataOiyama Float Race Course Mapta

Ek

Mangyoji
TempleHakataSennennomon
Gate

Ta
ih

ak

u-

do

ri

Av
e

nu

e

im

ae

St

ree

t

A Kazariyama ornamental ﬂoat is dedicated to Canal
City Hakata every year.

Fukuoka REIT Corporation 2022

19

External Environment (Initiatives of Fukuoka City)

Fukuoka City’s Standing: From Regional City to an Asian Economic Metropolis

Beijing

Blessed with a history and culture nurtured by the sea, an abundant natural environment, extensive
urban functions, diverse human resources, and various other assets, Fukuoka City is recognizedaround the world as a livable city.
Under the “Fukuoka City Comprehensive Plan,” the basic strategy for city management focuseson creating a virtuous cycle of “urban growth” and “greater quality of life.” In aiming to become a“leading Asian city in which people, the environment, and urban vitality are harmonized,” Fukuoka
City is advancing urban planning that recognizes its presence within Asia as a compact, sustainable
city that balances economic growth with a safe, secure, high quality of life.

Seoul
Busan Osaka Tokyo

ShanghaiFukuoka

Initiatives Aimed at Attracting Companies■ Attracting International Financial Functions, TEAM FUKUOKA

Photo provided by Fukuoka City

Photo provided by Fukuoka City

With the aim of attracting international ﬁnancial functions toFukuoka, TEAM FUKUOKA was launched to conduct promotional
activities and create an environment that will generate momentum
for the city as a whole by leveraging the characteristics of industrial,academic, and government partners (in September 2020).

M-DAQ, a globally expanding and Unicorn-class Singapore FinTech
company offering ﬁnancial services using foreign exchange, andE.SUN Bank, a leading ﬁnancial institution in Taiwan that holds thelargest share in ﬁnancing for SMEs, have decided to open ofﬁces
in Fukuoka City (in September 2022).

Change in the Number of Companies with Headquarters Functions/in Growth Area Established in Fukuoka City

Fukuoka City Tops List of Business Opening
Rate in Japan for Three Consecutive Years■ Strong Demand for Creative-Related Industries and Call Centers(People)(Number of companies)

4,000

No. of companies
established
No. of employees

3,500

58

57

57

64
53

3,000

2,500

60

50

2,600

1,334

1,058

1,000

20

665

10

500

)

0

FY2016FY2017FY2018FY2019FY2020

FY2021

Source: Prepared by Fukuoka Realty based on data from “The generalcondition of the Fukuoka City Economy, March 2022” by the Fukuoka
City Economy, Tourism & Culture Bureau.

Fukuoka City Special Zone for Global Start-Ups &Job Creation (National Strategic Special Zone)
Initiatives to support start-ups

Creative-related industries

28

40

38

38

30

41

• Tax Reduction for start-ups(municipal tax, national tax)

Foreign/foreign-affiliated

18

13

14

15

12

15

• Startup Visa

Call center

12

9

7

2

8

8

Headquarters functions, etc.

3

1

7

6

0

7

International finance

-

-

-

-

-

6

Source: Prepared by Fukuoka Realty based on data from “Headquarters functions/in growth area” by the Fukuoka City Economy,
Tourism & Culture Bureau.

20

7.2％

30

1,041

1,500

of which,main fields and functions

50(FY2020)

1st
21 majorurban areas

40

2,989

2,000

(

70

Business
Opening Rate

• Startup Café
• Fukuoka Growth Next
• Global Startup Center
Source: Prepared by Fukuoka Realty based on the section of Fukuoka Cityʼs
official site featuring “National Strategic Special Zone for Global Start-Ups& Job Creation.”

Redevelopment Project

⑧

①⑦

④
②
③
⑤

Kushida Shrine
Station⑬
JR Hakata Station⑩ ⑪

Canal City Hakata⑥⑨

Nishitetsu Fukuoka(Tenjin) Station

Who We Are

Nanakuma Subway
Line Extension(scheduled to start
operation on March 27, 2023)⑫

Note: Focus areas

Hakata Connected■ Redevelopment Projects■ Redevelopment Projects

Name①

Completion month

Sumitomo Life Fukuoka Building/Nishi-dori BusinessCenter Reconstruction Project (provisional name)May 2025(scheduled)② Tenjin Business Center

September 2021

Fukuoka City Hallʼs Former North Annex Utilization③
Project

November 2025
(scheduled)

Tenjin 1-chome North 14th Block Building(provisional name)March 2025
(scheduled)⑤ New Fukuoka Building (provisional name)

December 2024
(scheduled)⑥ Tenjin1-7 plan (provisional name)March 2026
(scheduled)⑦

Hulic Fukuoka Building Rebuilding Project(provisional name)

December 2024
(scheduled)
December 2022
(scheduled)⑧ Fukuoka Daimyo Garden City

Name

Completion month

The Nishi-Nippon City Bank Head Office Main⑨
Building Construction site⑩

Fukuoka Higashi General Prefectural
Office Building Site Utilization ProjectFebruary 2025
(scheduled)
March 2024
(scheduled)⑪ Hakata East Terrace

August 2022

⑫ Hakata Fukami Park Building

February 2021⑬

The Nishi-Nippon City Bank Administrative
Head Office Building

September 2028
(scheduled)

Source: Created by Fukuoka Realty based on each companyʼs press release.

■ Main Deregulation in the Tenjin Big Bang Area
(National Strategic Special Zone)■ Hakata Connected Bonus① Special permission to relax Civil Aeronautics Act–relatedbuilding height regulations

Expand the system to relax the floor area ratio requirement(measure to facilitate renewal of city center functions)● AroundIncrease the ﬂoor area ratio (up to 50%) for buildings contributing
to expand the bustle, such as creation of open spaces thatgenerate connections and expanse.

● Tenjin Meiji-dori district(west of the center of Watanabe-dori)
approx. 115m (26 floors)

Data Section

Source: Created by Fukuoka Realty based on each companyʼs press release.

Fukuoka
City Hall
approx. 67m(15 floors)

Sustainability④

Growth Strategy

Tenjin Big Bang

● Tenjin Meiji-dori district(east of the center of Watanabe-dori)
approx. 76m (17 floors) 〜 approx. 100m (22 floors)● Tenjin 1-chome district

approx. 80m (18 floors) 〜 approx. 96m (21 floors)

Existing system torelax floor area ratio

New incentive
Floor area
ratio of up to50％② Deregulation of floor space ratios (Fukuoka City original)● Tenjin 1-chome south block

800％→1,400％ (maximum)● High-quality, high-value-added buildings● Tenjin 2-chome south block (along Meiji-dori Ave.) 700％→1,300％ (maximum)● Provide floors for tenant relocation● Tenjin 1-chome north block (14th Block)

600％→1,250％ (maximum)● Tenjin 1-chome district north area

Note: The projects are designed to solve problems specific to the area around Hakata Station (limited tothe period of Hakata Connected)

800％→1,400％ (maximum)

Fukuoka REIT Corporation 2022

21

Risks and Opportunities

To achieve sustainable growth, FRC keeps close track of highly signiﬁcant risks and opportunities while extracting signiﬁcantrisks and assessing their impact on the investment corporation and its stakeholders.
● Measures to Address Risks ● Opportunities

Significant risks

Risks from Natural
Disasters• Response to climate change
Related Materiality• Reduction of environmental load

Impact on stakeholders• Buildings might be lost, suffer deterioration
or damage due to the occurrence of
natural disasters, such as earthquakes,
storms, and floods, or severe weather due
to climate change, and their value could be
affected, with a decrease in rent due to thenon-operation of properties

Respond to risks and opportunities● Consider that it is possible to purchase insurance at a
relatively low cost compared to other areas; arrange
earthquake insurance coverage for all properties● Improve resilience (e.g., ability to respond to disasters) byengaging in a variety of activities; this includes conducting
disaster drills at each property, stockpiling emergency
food supplies, strengthening flood countermeasures, andformulating a business continuity plan (BCP)
See p.34

EnvironmentRelated Risks• Reduction of environmental load
• Soil pollution and toxic substances
Related Materiality• Reduction of environmental load
• Maintenance and enhancementof environmental and construction
performance

Human Resource
Related Risks• Deterioration in the caliber of humanresources• Dependence on human resources
Related Materiality• Creation of pleasant workplaces(asset management company)

Infectious Disease, Epidemic,
and Other Related Risks• Pandemic
Related Materiality• Maintenance and enhancementof environmental and construction
performance• Creation of pleasant workplaces(asset management company)• Creation of pleasant workplaces (tenants)

Property Concentration
Risks• Region (Fukuoka/Kyushu)• Retail facilities
Related Materiality• Co-creation with the local community• Contributions to boosting theattractiveness and revitalization of
Fukuoka and Kyushu

22• Increase in property management costs
due to more stringent environmental laws
and regulations, such as the strengtheningof the Building Energy Conservation Law• Risk of damage to the health of building
users due to the presence of toxic
substances in the soil or in building
materials, and other items, of properties
owned; risk of bearing the cost ofcompensation for damage to health orfor removal of toxic substances• Risk of deterioration in the organizational
strength of Fukuoka Realty Co., Ltd. (asset
management company), due to a failure
to maintain the human resources base, interms of such factors as ability, experience,and know-how of the asset managementcompany for smooth business operations• Heavy reliance on FRCʼs directors andauditors as well as on the human resourcesof the asset management company;
the risk that the outflow of these humanresources could have an adverse effect on
operations• Risk that such external factors as infectious
diseases and epidemics in Japan andoverseas could interfere with the normal
operation and management of FRCʼs
properties• Decrease in rental income from real estate
due to such factors as a downturn invisitors, which might have an adverse effecton, for example, earnings• As FRCʼs properties owned areconcentrated in Fukuoka and Kyushu,
the vacancy rate might increase due toa worsening economic situation in that
region, and profitability could deteriorate
due to a decrease in rent
• Possibility of adverse effects on profits due
to overall consumer consumption as wellas other overall trends in the retail industry
that reflect the nature of retail facilities as amain investment target● Work to maintain and improve environmental performancethrough renovation opportunities for properties owned;
acquire Green Building and other certifications to obtain
the results of environmental/social initiatives in visual form
and improve property competitivenessSee p.35● Aim to reduce vacancy rates by pursuing healthfuland comfortable conditions in properties owned andby increasing leasing demand for properties with highenvironmental performance● Conduct thorough physical investigations at the time ofproperty acquisition; acquire properties after confirming
the presence or absence of toxic substances and taking
appropriate measures● Improve organizational strength and increase employee
loyalty by hiring and fostering excellent human resources● Improve employee motivation by realizing a work-lifebalance and the stabilization of work through healthmanagement
See p.36● In addition to physical infectious disease
countermeasures, expand the COVID-19 workplacevaccination program scope to cover retail facility tenant
employees as a means of promoting a safe and secure
facility environment for asset management company
employees, tenants, and consumers
See p.36● Set up satellite offices at the asset managementcompany and introduce a telework system with a view toensuring business continuity● Invest in various types of properties to reduce the risk of
portfolio fluctuation by diversifying rental market cycles
and tenant industries
See pp.12–13

See pp.42–43● In retail facilities, such as Canal City Hakata/Canal
City Hakata・B, operate bustling facilities by replacing
tenants and providing new experiences and othervalue, thereby reducing the risk of profit fluctuation bydispersing tenants● Revitalize the entire region and connect this growth to thegrowth of properties owned

Significant risks• Increase in vacancy rates• Decrease in rent
Related Materiality• Creation of pleasant workplaces(tenants)• Increase in interest rates• Fluctuations in the investment unit
price
Related Materiality• Information disclosure and dialogue
with stakeholders

Risks from Property
Degradation, Deterioration

Related Materiality• Maintenance and enhancementof environmental and construction
performance

Regulatory Risks• New laws and regulations• Changes in the tax system
Related Materiality• Compliance/Risk management• Vacancy rate increases associated withworsening real estate market conditions;decrease in dividends due to rent
decreases• Rent reduction, rent nonpayment, andvacating risks due to deterioration of alesseeʼs financial situation• Risk of increase in interest payment due toincrease in interest rates caused by market
trends at the time of borrowing• Risk that FRCʼs investment unit pricemight fluctuate due to factors that include
unitholder supply and demand, interest rate
conditions, economic conditions, and realestate market conditions• Risk of not being able to acquire planned
assets because additional units cannot be
issued at the desired time and under desiredconditions due to fluctuations in unit price• Increase in expenses required for suchitems as large-scale repairs, due to thedeterioration of properties, and large capital
expenditures could reduce cash flows• Possibility of tenants vacating and areduction in rent due to a loss of property
competitiveness resulting from changes inthe surrounding environment• Possibility of a limitation on rights withrespect to properties owned and anincrease in property management expenses
and other items, due to newly established,revised, or abolished laws and regulations• Possibility of an increased burden fromtaxes and fees due to tax reform• Information leaks
Related Materiality• Risk of leakage of personal and confidential
information due to delays in strengthening
cybersecurity• Compliance/Risk management

Compliance Risks• Violations of organizational laws andregulations• Conflicts of interest
Related Materiality• Compliance/Risk management

Glossary• If Fukuoka Realty Co., Ltd. (asset
management company), violates its duty ofcare as a good manager (duty of care) and
its duty to faithfully perform tasks for FRC(duty of fidelity) under the law or specified
contracts, the possibility exists that this could
adversely affect FRCʼs survival and profitability• Potential conflict of interest issues withsponsorCommitment lines
This refers to the upper loan limit a borrower can receive at any time without
going through a defined review, within a range agreed upon in advance withthe bank. Commitment in this case indicates a contracted promise. The
borrower can secure stable working capital regardless of business conditions.

● Deposits and security deposits against items including
rent delinquency; collateral by such means as guarantor
companies● Treat deterioration in the real estate market as anopportunity to acquire excellent properties and executestrategic investments through appropriate financial
management utilizing information-gathering capabilities● Long-term fixing of interest-bearing debt and repayment
period limit diversification● Conservative interest-bearing debt management andcommitment lines to ensure flexibility and agility infunding● Conduct proactive IR activities
See p.27● Maintain/improve property competitiveness throughappropriate maintenance and repair work, value-up
investment, and extending the number of service life
years
● Based on an understanding of conditions including realestate market trends and the capital market environment,
if the strategic holding of a property becomes lesssignificant from the perspective of property performance,competitiveness, and future profitability, consider
replacement of that property if it is determined that selling
it is in the interest of unitholders● In addition to receiving information from such sources as
Fukuoka Realtyʼs affiliated organizations, tax accountants,
and law firms, participate in external training, obtain
information, and take measures to reduce any impact
from an early stage● Strengthen confidential information management systems
by introducing two-factor authentication for software
as well as applications and by conducting training on
cybersecurity and information management● Enable property differentiation by introducing advanced
technologies into properties owned

Data Section

IT-Related Risks● Appropriate occupancy screening when tenants move inas well as monitoring of operating status and thoroughcredit management during the lease period

Sustainability• Increase in repair and maintenanceexpenses• Decline in property competitiveness● Consider extending lease agreement terms, fixing of suchitems as rent, according to property characteristics

Growth Strategy

Market-Related Risks

Respond to risks and opportunities
Who We Are

Risks from Changes in
Business Conditions

Impact on stakeholders● Prevent violations including those of laws and regulations
as well as transactions involving conflicts of interest,
through deliberations and audits by the Compliance
Assessment Committee● Improve employee awareness of compliance byconducting regular compliance trainings
See p.39

Conflicts of interest
In general, this refers to when an act is in oneʼs own interest, while at the same time
disadvantageous to the interests of another. For a J-REIT, this often refers to a conflict between
a unitholder and the interests of the investment corporation or asset management company.
Fukuoka REIT Corporation 2022

23

Investment Strategy

Investment
Department

Executive Director andGeneral Manager of theInvestment Department

Hideya Kanno

The Investment Department leverages its capabilities
in information gathering, relationship building with local
communities, and property observation that are unique toa region-speciﬁc REIT to acquire excellent properties thatgenerate stable cash ﬂow over the medium to long term, agoal that cannot be realized with investment from outside
the region.
The real estate market in the Kyushu area remains briskon the back of rising land prices and construction costs,
solid rental demand, and robust investment demand. In
Fukuoka City, real estate values continue to rise amid
positive macroeconomic indicators. Against this backdrop,
it is becoming increasingly difﬁcult each year to acquire
investment properties with an emphasis on yield. We are
therefore striving to secure investment opportunities forpremium real estate by swiftly attaining useful information
through community-based management and ourcommunity ties so we can make informed decisions on
investment potential.
Recently, FRC signed an agreement with Fukuoka
City to acquire a site on Island City, an artiﬁcial islandin Hakata Bay, Fukuoka City, that has beneﬁts from alogistics perspective, jointly with Fukuoka Jisho Co.,
Ltd., one of our sponsors. The project will enable us
to avoid excessive competition and secure investment
opportunities in the Fukuoka market, where we forecast
ongoing competition in the investment property sector. Thisis expected to contribute to the stable external growth of
FRC. It is also anticipated that the project will help improvelogistics operations in the Fukuoka metropolitan area andfacilitate the distribution of goods while also providing new
employment opportunities and thus revitalizing the region.

24

FRC revised the methods for acquiring investments
within our management guidelines in 2022 to ensure
adequate diversiﬁcation. As a result, even as a REIT, FRC
can now consider certain other development projects inaddition to the acquisition of buildings that have been
completed, premised on deﬁned risk management andcollaboration with business partners. Diversifying property
acquisition methods in this way is expected to lead tofurther investment opportunities. FRC plans to increase
the proportion of projects that allow involvement fromthe development stage to around 10% of all acquired
properties.
We are also targeting other regions in Kyushu to invest
in based on a careful analysis of conditions and changes
in the business environment in each region. The local
government is currently implementing policies to attract
companies to the Kyushu area, and there has been amarked uptick in activity by companies that have entered aswell as by businesses associated with them. FRC intends
to take advantage of this trend to enhance our portfolio,
diversify risk, and drive continued internal growth, pursuant
to our investment criteria. We also recognize sustainability
as a key factor that needs to be considered when acquiringproperty. Although recently constructed properties havefew issues in this regard, it can be relatively difﬁcult toobtain environmental certiﬁcation for older properties, andthis might not be sufﬁciently reﬂected in the CAP rate.
Even though the real estate market is mildly overheatedat present, we remain committed to realizing stable growthfor our unitholders over the medium to long term andcontributing to the revitalization of regional economies
through our investments and operations.

Management Strategy

Real EstateManagement
Department

Who We Are

Kuniaki Mishima

Data Section

Efforts included upgrading the food court, introducing a large
new store (GU), and replacing certain drinking and eating
establishments with Komedaʼs Coffee and other stores.
In terms of ofﬁce building tenants, we are making steadyprogress in planned backﬁlling in line with the closure ofcertain large-scale tenants. We are also striving to maintainand improve environmental and construction performance, notonly in commercial facilities but also in hotels, ofﬁce buildings,
and other assets to maintain their competitiveness. We areupgrading critical facilities such as water supply, drainage, andair conditioning as well as gradually shifting to LED lighting.
Other efforts are focused on ensuring a safe and hygienic
environment and pursuing energy conservation.
We will strive to effectively identify greenhouse gas andwaste emissions and implement measures to reduce theseto further emphasize our stance toward sustainability andpromote environmental preservation in the real estate sector.
We also intend to take steps to enhance the work andbusiness environments for tenants and employees.

Sustainability

The Real Estate Management Department draws up plans
for asset management with the aim of ensuring long-termand stable expansion in proﬁts from the assets held by FRC.
The Fukuoka metropolitan area, our primary destination
for investing, manifests potential for growth due to a rising
population and an increasing number of companies locating
operations there. Accordingly, as a comprehensive REIT, we areinvesting in the region in a diverse range of asset types. REITs
consist of two types of growth: external growth in which we aim
to increase dividends through investment, and internal growthin which we strive to enhance the proﬁtability of the assets in
our portfolio. The Real Estate Management Department seeks
to maximize the value of our property portfolio over the longterm through renovations and other innovative operational
initiatives that enhance the appeal of our assets.
Although the business environment remained extremely
difﬁcult for a portion of our portfolio in 2022 due to the lingering
effects of the COVID-19 pandemic, we implemented various
measures to maintain and improve the long-term value of all
the properties we own.
At Park Place Oita, we overhauled the outdoor environment
with Shangri-la, a playground for children that stimulates
their curiosity for play and introduced large new stores toenhance our ability to attract customers. At Canal City Hakata,we signed an agreement with a major new retail tenant andembarked on a plan to systematically overhaul the premises
based on a medium- to long-term business strategy draftedwith a view to co-creation with the local community. At Konoha
Mall Hashimoto, we endeavored to ensure that tenants andvisitors can utilize our facilities with peace of mind by continuing
to take measures to prevent the spread of COVID-19 infections
and providing a safe and hygienic environment throughout.

Growth Strategy

General Manager of the Real EstateManagement Department

Ceremony to mark therenewal of Park Place Oita

April 2022
Fukuoka REIT Corporation 2022

25

Financial Strategy

Finance
Department

Executive Director and General Managerof the Finance Department

Hiroyuki Ayabe

In addition to drawing up and executing ﬁnancial and capital
strategies that are in the best interests of our unitholders,the Finance Department is responsible for investor relations(IR; including shareholder relations (SR) and public relations)activities to convey FRCʼs situation in a timely, fair, andaccurate manner.
Although the Tokyo Stock Exchange (TSE) REIT Index
temporarily saw a precipitous decline at the start of 2021
and again in June of that year, it has since returned toa level exceeding 2,000 points, the pre-COVID level, as
of September 2022, amid signs of a gradual recovery

following the impact of the pandemic. While the low interest
rate environment is forecast to continue due to the ongoingmonetary easing policy of the Bank of Japan, the markets
are pricing in future interest rate hikes. As such, I believethat it will be necessary to practice ﬁnancial managementwith an even greater awareness of the risks posed by risinginterest rates.
Under such circumstances, the financial strategy, capital
strategy, and IR activities that we have conceived are as
follows.

Financial Strategy/Capital Strategy
Regarding our ﬁnancial strategy, we will ﬁrst and foremost
maintain a conservative interest-bearing debt ratio from theperspective of building a solid ﬁnancial base. The interestbearing debt ratio at the end of August 2022 was 41.7%.
Next, from the perspective of ensuring ﬂexibility andagility in ﬁnancing, we have set a commitment line with amaximum amount of 13 billion yen. We have also decided
on a three-year commitment period, enabling us to address
unexpected deterioration in the ﬁnancing environment.
In addition, from the perspective of reducing the risks
from interest rate rises and refinancing, we seek to fix
interest-bearing debt over the long term and to diversify
repayment dates while keeping a close eye on interest ratelevels. While maintaining good relationships with financial
institutions with which we have existing relationships̶
starting with our three sponsor banks and including

26

regional banks that operate primarily in Kyushu and themegabanks̶we will strive to diversify our procurement
sources.
We will also actively incorporate consideration for theUnited Nations Sustainable Development Goals (SDGs) andenvironmental, social, and governance (ESG) issues from aﬁnancial perspective and look to contribute to the resolutionof all related challenges.
The ratio of sustainable ﬁnance to total borrowings was
11.6%.
Regarding our capital strategy, we will look for thebest timing relative to market conditions to raise capitalalongside external growth, which is one of the driversof growth for FRC. We will also adequately consider
the balance between increasing dividends after capitalprocurement and LTV control as well as other factors.

July 2019

Procured funds through green finance, a first for FRC
Procured funds via a mechanism for financial institutions to donate a part of the profits obtained through borrowing as funds for

March 2021

research into the development of a new COVID vaccine at national universities→Newly borrowed 2 billion yen from The Juhachi-Shinwa Bank that was donated to Nagasaki University

August 2022

Procured funds through green finance (1.6 billion yen in refinancing from Sumitomo Mitsui Banking Corporation)

See p.33

Procured funds through a syndicated sustainability-linked loan from the three sponsor banks of our asset management company, afirst for a J-REIT (4.9 billion yen from the Development Bank of Japan, The Nishi-Nippon City Bank, and The Bank of Fukuoka)*1

Who We Are

June 2022*1. A 35% reduction in CO2 emissions (basic unit) compared with 2019 has been set as a sustainability performance target (SPT) to be attained by 2030, and the achievement of the target will be linked to the conditions of theloan. When the SPT is achieved, the contract will offer a preferential interest rate from the interest rate determined at the time of borrowing from August 2031 until the repayment date, as an incentive.

Investor Relations (IR) Activities

Sustainability

Specifically, we are incorporating innovative ideas, such as
making full use of a range of Internet tools to hold efficientmeetings. In-person meetings are gradually becoming
possible again, and I would like us to consider actively
holding briefing sessions for individual investors as well. In
addition, we are very particular about the stories and visuals
we use in our financial briefing documents for unitholders
so that they can fully grasp the appeal of a region-specific
REIT. FRC has been highly praised for our efforts over theyears, winning the IR Excellent Company Encouragement
Award in 2014*2 and the IR Good Visual Award in 2017and 2019*3. Our website was recognized as outstanding in
general and industry rankings in fiscal 2021.
In closing, I believe that taking a long-term view inproactively working to raise the level of sustainability will be
indispensable to ensure the best interests of unitholders.
We will convey our efforts in an easy-to-understand manner
through, for example, integrated reports, our website andfinancial briefing documents, and other materials.

Growth Strategy

Coupled with compiling the various types of informationnecessary for investment decisions, our primaryconsideration is to offer a steady stream of timely, fair,accurate, and easy-to-understand information, which isthe basic policy of IR activities. As one measure, while
proactively disclosing (increasing the amount of) nonﬁnancial information that does not appear in the income
statement or balance sheet, such as publicizing ourstrengths as a REIT specializing in regional properties andthe real estate situation in Kyushu and Fukuoka, we will
work to improve the content. I believe that doing so will leadto a deepening of mutual understanding with all unitholders,the building of relationships of trust, and ensuring positive
steps toward attracting outstanding investment funds fromother parts of Japan and overseas to Kyushu and Fukuoka.
Before the COVID pandemic, we held meetings inperson with more than 200 institutional investors each year.
Due to restrictions placed on face-to-face IR activities,
we are continuing our IR activities with the highest priority
placed on preventing the spread of COVID-19 infections.

*2. Hosted by the Japan Investor Relations Association*3. All Japanese Listed Companiesʼ Website Ranking by Nikko Investor Relations Co., Ltd.

September 2019–
August 2020

September 2020–
August 2021

September 2021–
August 2022

Results briefings

2

2

2

IR in Japan*4

147

166

184

IR overseas*4

40

38

22

IR for individual
investors*5

6

7

5

Data Section■ FRCʼs IR Activities*4. Includes telephone conferences*5. Includes results briefings for individual investors

Fukuoka REIT Corporation 2022

27

Financial Strategy

Dividends and TSR
Figure 1 shows FRCʼs past dividends and dividend yields.
Among listed REITs, our dividends are extremely stable.
In contrast, the dividend yield has ﬂuctuated between
3.8% and 4.7% over the past eight years, indicating thatinvestment unit prices have shifted due to changes inthe stock market, interest rate trends, and ﬂuctuations inmarket supply and demand.

Table 1 and Figure 2 show the total shareholder return(TSR), taking into account FRCʼs dividends and capitalgains. TSR performance has been 8.1% annually over the
past 10 years. In contrast, returns have remained flat overthe past year as the TSE REIT Index weakened.

■ Figure 1. Past Dividends and Dividend Yields■ Table 1. TSR Over the Past 10 Years

Dividend per investment unit (Yen)Dividend yield (as of the end of the fiscal period) (%)

4,000

3,574

3,479

3,398 3,422

3,512

3,593

3,687 3,693 3,642

3,539 3,536 3,523
3,250

Past 1 year

（％）

(Yen)

8

3,361

Past 3 years

Past 5 years

Past 10 years

Cumulative
total

Annualrate

Cumulative
total

Annualrate

Cumulative
total

Annualrate

FRC(0.9)%

7.2%

2.3%

25.2%

4.6%

118.6%

8.1%

TOPIX Real
Estate Index

6.9%

14.0%

4.5%

25.0%

4.6%

126.5%

8.5%

TSE REIT
Index(1.5)%

19.3%

6.1%

60.0%

9.9%

232.3%

12.8%

ery

v
Reco

3,000

3.7

3.7

3.9

4.1

4.1

4.2

4.4

4.7
4.1

4.3

6
4.5

4.0

4.1

4.0

2,000

4

Note: Annual rate conversion is the geometric mean of cumulative returns.

1,000

2

0

0

23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th 35th 36th

Feb. 2016 Aug. 2016 Feb. 2017 Aug. 2017 Feb. 2018 Aug. 2018 Feb. 2019 Aug. 2019 Feb. 2020 Aug. 2020 Feb. 2021 Aug. 2021 Feb. 2022 Aug. 2022

Note: Dividend yield = (Dividend per investment unit / Operating days x 365) / Investment unit price asof the end of the fiscal period

Investment Unit Price Performance for
the Most Recent Fiscal Year
FRC

TOPIX Real Estate Index

TSE REIT Index(Index)120
110■ Figure 2. Investment Unit Price Performance (10 years, including dividends)
FRC

TOPIX Real Estate Index

100
90

TSE REIT Index

80(Index)

August 2021

400

February 2022

August 2022

300

200

100

0

Aug.
2012

Dec.
2012

Apr.
2013

Aug.
2013

Dec.
2013

Apr.
2014

Aug.
2014

Dec.
2014

Apr.
2015

Aug.
2015

Dec.
2015

Apr.
2016

Aug.
2016

Dec.
2016

Apr.
2017

Aug.
2017

Dec.
2017

Apr.
2018

Aug.
2018

Dec.
2018

Apr.
2019

Aug.
2019

Dec.
2019

Apr.
2020

Aug.
2020

Dec.
2020

Apr.
2021

Aug.
2021

Dec.
2021

Apr.
2022

Aug.
2022

Note: FRCʼs investment unit price performance is expressed as an index, using the investment unit price as of August 31, 2012, as 100. TSR over the past 10 years considers dividends and investment unit prices in indicating
the profitability of investments made on August 31, 2012, as of August 31, 2022. The TOPIX Real Estate Index and the TSE REIT Index are indexed in the same way, using dividend-included data. Similarly, the graph forthe most recent fiscal year is indexed with the investment unit price as of August 31, 2021, as 100.

28

Sustainability

Planning
Department

Who We Are
Growth Strategy

General Manager of the Planning Department andGeneral Manager of Sustainability Promotion Office

Keishi Tamura

The Role of the Planning Department

Sustainability

The Planning Department is in charge of matters relating to management policy,
general affairs, personnel affairs, accounting, and sustainability. We believe in
the importance of creating an environment in which all employees can fulfill theirpotential in order to contribute to regional revitalization and the development of
attractive communities, based on an understanding of the activities of our asset
management company and under the basic policy of Act Local, Think Global.

Framework for Sustainable Initiatives
with outside parties, examines speciﬁc goals and measuresrelating to information disclosure policy and other matters,
and identiﬁes the progress made in measures being
implemented. Sustainability ofﬁcers are responsible forpractical matters relating to achieving the goals set by
the committee with the General Manager of the Planning
Department providing general oversight.

Data Section

In 2018, FRC established the Sustainability Policy andRegulations Concerning Sustainability Management topromote sustainability in consideration of environmental,social, and governance (ESG) issues and set up the
Sustainability Promotion Committee comprised of full-time
directors, executive directors, and general managers. The
committee establishes internal organizations, collaborates

Sustainability Initiatives and GRESBFRC has been conducting sustainability initiatives since
our listing that include obtaining DBJ Green Building
Certiﬁcation. ESG-related inquiries from investors started
to increase in 2017 at investor relations activities overseas.

We believe it is necessary to make efforts in line with
global standards, and in 2017 we decided to take part in
the Global Real Estate Sustainability Benchmark (GRESB)
system to further promote our sustainability initiatives.

Fukuoka REIT Corporation 2022

29

Sustainability

We worked to increase an understanding of ESG issues
and sustainability with related parties to effectively set goals
for our sustainability activities. This included endorsing
the Principles for Responsible Investment (PRI) and
the Principles for Financial Action for the 21st Century(PFA21) and inviting investors, analysts, and REIT issuers
engaged in advanced sustainability activities to a workshop
concerning disclosure of non-ﬁnancial information at the

IR Kyushu Workshop run jointly by FRC and the Japan
Investor Relations Association.
We attained a 4-star rating in our ﬁrst GRESB Real
Estate Assessment in 2018 and have received ratings
every year since. In 2022, we received another 4-star ratingin this category as was the case in 2021 and obtained an
A-level rating in the GRESB Real Estate Public Disclosure
evaluation.

Materiality and ESG Initiatives
As part of our sustainability initiatives, we identiﬁed material issues (materiality) for the ﬁrst time in 2019 when we published
our inaugural Integrated Report. In April 2022, we set targets and key performance indicators (KPIs) for each issue. The
status of initiatives being undertaken for each of these issues is outlined below.

Environment
In terms of environmental efforts, we are switching
to LED lighting in the properties we own. We plan tocontinue installing e.g. LED lighting in our commercial
facilities this ﬁscal year as well. In addition, we are in talks
with property management companies regarding ways
we can reduce energy consumption when it comes timefor facilities to be upgraded and have targeted a 35%

reduction in CO2 emissions by 2030 relative to 2019. We
are also looking to acquire Green Building Certiﬁcationand have done so for 77.8% of our properties to date.
We aim to increase this number to 85% or higher by
2030 by maintaining and improving the environmental
performance of existing properties and by adopting a
careful selection process for new properties.

Society
As one social initiative, we aim to create an appealing
workplace for employees. In 2018, FRC was recognizedby Fukuoka City as a company that actively seeks topromote work-style reform. We were highly praisedfor our efforts to enhance productivity by supporting
personal development and for our campaign
encouraging no overtime.

In 2022, Fukuoka City launched a registration
system for businesses committed to achieving the wellbeing of their workers and the SDGs with the aims ofenhancing the satisfaction of peopleʼs lives and realizing
a sustainable environment, society, and economy. This is
the ﬁrst such initiative in Japan. FRC registered and has
been certiﬁed as a “master” under the system.
We are also actively communicating with the local
community, including through Twitter since 2010.

GovernanceIn terms of governance-related efforts, we adopted allseven principles set forth in the Principles for CustomerOriented Business Conduct established by the Financial
Services Agency in 2017 and formulated our own
Policies for Customer-Oriented Business Operations.

30

Since then, we have been disclosing information on thestatus of this initiative. With regard to risk management,
we update our risk matrix in a timely manner andregularly conduct drills as part of our business continuity
plan (BCP) to conﬁrm its effectiveness.

Sustainability Financesyndicate was formed in which the Development Bank of Japan,
one of our sponsor banks, serves as the coordinator withcollaboration from The Nishi-Nippon City Bank and The Bank ofFukuoka. Through this loan, the sponsor banks and FRC team
up to set Sustainability Performance Targets in consideration of
the environment and strive to reduce CO2 emissions.

Who We Are

In July 2019, FRC was the ﬁrst company headquartered in the
Kyushu region to be issued a green loan and the ﬁrst J-REIT totake out a syndicate-based green loan. Following this, we haveprocured funds that included a donation to a COVID-19 vaccine
development research fund at Nagasaki University and procured
funds through a sustainability-linked loan. With the latter, aTask Force on Climate-related Financial Disclosures (TCFD)
Consortium, an organization of Japanese companies
expressing their support of the TCFD.
The TCFD requests companies to evaluate the climaterelated risks and opportunities to their business and to assessand disclose the ﬁnancial impact. FRC has started analyzing
different climate scenarios to identify the risks, opportunities,
and ﬁnancial impact in order to formulate a viable strategy.

Growth Strategy

One current focus concerns the Task Force on Climaterelated Financial Disclosures (TCFD). In September 2022,
we established a Policy on Climate Change and Resiliencethat states measures regarding the risks and opportunities
associated with climate change as well as the resilience(strength and buoyancy) of operations and strategies relative toclimate-related issues. We also announced our endorsementof the recommendations of the TCFD and joined the TCFD

We will continue to conduct asset management in consideration of sustainability as Japanʼs ﬁrst region-speciﬁc REIT that
promotes community development and economic revitalization in the Fukuoka and Kyushu areas.
■ Climate Change Scenario Analysis

4℃ scenario
Risk/Opportunity factors

15℃ scenario

Short
term

Medium
term

Long
term

Short
term

Medium
term

Long
term

Increased taxation on CO2 emissions for owned properties

S

S

S

S

M

M

Stricter energy-saving standards for existing real estate andintroduction of carbon emission-related restrictions

Increased renovation costs for purpose of compliance
Increased environmental certification acquisition costs

S

S

S

S

M

L

Stricter mandatory emissions reporting requirements in the
Energy Efficiency Act

Increased payments to external companies for purpose of handling reporting

S

S

S

S

S

S

Evolution/Spread of renewable energy and energy-saving
technology

Increased costs of introducing new technology to prevent facilities in owned properties
from becoming technologically obsolete

S

S

S

S

M

L

Changing social values relating to environmental performance

Increased financing costs for properties with poor environmental performance

S

S

S

S

S

S

Decrease in asset value due to delayed environmental
compliance at owned properties

Relative decrease in institutional investors’ investment appetite due to delayed
environmental compliance

S

S

S

S

S

S

Increased importance of transition risks

Increased financing costs due to properties being assessed as having high transition risks

S

S

S

S

S

S

Increased value related to environmental performance

Reduced property value and average rents due to environmental certifications such as
DBJ Green Building Certification not being acquired

S

S

S

S

M

L

Tenant needs relating to environmental performance

Decreased revenue due to owned properties’ environmental performance becoming
relatively low, creating stranded assets

S

S

S

S

M

L

Acute

Damage to owned properties due to typhoons/heavy rain

Increased repair costs and insurance premiums: loss of sales opportunities due toflooding, decreased asset value of owned properties with high flooding risks, increased
countermeasure costs

S

S

M

S

S

S

Chronic

Flooding at owned properties in low-elevation areas due to sea
level rise

Increased flooding countermeasure costs

S

S

M

S

S

S

Increased need for A/C due to rising temperatures

Increased A/C operation, maintenance, and repair costs

S

S

M

S

S

S

Introduction of renewable energy at sites

Reduction in externally procured utility costs

S

S

S

S

S

S

Attracting tenants, occupants, and users by offering lowemission facilities and services

Increased revenue by attracting tenants and occupants

S

S

S

S

M

L

Expanding the client base by continuing to provide rental
properties aligned with changing tenant and occupant tastes

Increased revenue from higher rents and improved tenant acquisition and retention

S

S

S

S

M

L

Expanding the investor baseUse of green bonds: increased financing by adapting/appealing to investors who
prioritize environmental issues, decreased financing costs

S

S

S

S

S

S

Technology
Transition
risks

Markets

Physicalrisks

Energysources
Products andservices

Markets

Fukuoka REIT Corporation 2022

Data Section

Taxation of CO2 emissions due to introduction of carbon tax

Policy andlaw

Opportunities

Financial impacts

Sustainability

We conducted an analysis to be used for the purpose of assessing the validity of current climate change measures anddeveloping future strategies. Risks, opportunities, and ﬁnancial impacts as shown in the table are assessed below.

31

Environmental Issues
Related Materiality
・Reduction of environmental load

Environmental Initiatives
RetailIC

Natural Environment Conservation and Creation

At Canal City Hakata and Park Place Oita, we are making efforts tocoexist with various natural environments by providing green spacein communal areas, installing aquatic spaces, and creating shaded
spaces. We are creating habitats for wild fauna and flora that
contribute to the preservation of biodiversity, as well as providing
places where employees and visitors can relax and interact withnature.

RetailGreywater Plant (kitchen drainage reuse system)

RetailCanal Water Filtration System (rainwater reuse system)

Canal City Hakataʼs symbolic canal has both a recreational
function and is a source of water to fight fires in the case of an
emergency. At all times, this canal holds roughly 1,200 tons ofwater, and rainwater is used to conserve resources.

RetailIntroducing Renewable Energy Equipment

At Canal City Hakata and Konoha Mall Hashimoto, kitchen
wastewater discharged by restaurants is collected and processed
as reclaimed water. It is then used as tap water in on-site
restrooms.

At Konoha Mall Hashimoto, we have installed solar panels on
the rooftops to generate renewable energy and contribute to theformation of a recycling-based society.

Office Buildings Energy-Saving Initiatives Based on the Promotion of LED Lighting

Others (logistics facilities) Introducing Renewable Energy Equipment

We are focusing on converting each property to LED-based
lighting to reduce energy consumption.
〈Office buildings already converted to LED〉
• Gofukumachi Business Center (e.g., interior shared spaces,
some external areas, exterior wall lighting)• Sanix Hakata Building (interior recessed lighting)• Taihaku Street Business Center (e.g., entrance, interior shared spaces)

At LOGICITY Hisayama and LOGICITY Minato Kashii, we haveinstalled solar panels on the rooftops to generate renewable energy
and contribute to the formation of a recycling-based society.

• Tenjin North Front Building (common spaces)

Solar panels

LED lighting being used at the Sanix Hakata Building

32

LOGICITY Hisayama

IC

Environmental Performance Data

Investment Corporation (FRC)

AMC Asset Management Company

IC

Although values increased for the fiscal period ended February 2022 compared to the interval in which we closed facilities due to the spreadof the COVID-19 pandemic, we still recorded a reduction of 8.84% in electricity usage and 31.14% in water consumption compared with theperiod ended February 2019.
■ Water Consumption(Data coverage)

(MWh)

70.1％
70.1%
81,33990,000

70.1％

70.2%

70.2%

79,474
71,192

00.0％
70.2%

184

60,000

70.1％
70.1%

70.1％

607,352

596,007

1.37

30,00070.2％ (Basic unit)

405,366

418,232

2.00
1.50

1.35

1.00

400,000

0.94

0.91

160

160

0.50

200,000

28th・29th

30th・31st

32nd・33rd

34th・35th

March 2018–February 2019

March 2019–February 2020

March 2020–February 2021

March 2021–February 2022

0

70.2%

600,000

175

167

70.2%

800,000

74,150180(Data coverage)（m3）(Basic unit)
190

145

28th・29th

30th・31st

32nd・33rd

34th・35th

March 2018–February 2019

March 2019–February 2020

March 2020–February 2021

March 2021–February 2022

0

0.00

(Data coverage)

70.1％
Green
Finance81,33990,000IC 70.1%

70.2%

79,474（Mwh/m²）
190（m3）

71,192184

33 properties

63.9%(acquisition price)607,352

596,007

70.2%

1.37
405,366
investment
corporation bonds 1.35
issued and outstanding.
1.00
Eligible Green Projects are specified assets held by
0.91FRC thathave received or are scheduled to receive one of the following0.50
200,000
certifications from third-party certification organizations at the time
0.00
30th・31st
32nd・33rd
28th・29thof0 procurement
date.
March 2019-February
2020
March 2020-February 2021
March 2018-February 2019 or the reporting

400,000(1) DBJ Green Building Certification of 4 or 5 stars or a 3-star evaluation(2) CASBEE certification of S, A, or B+ rank
(3) BELS evaluation of 3, 4, or 5 stars★★★★★
（5-star）★★★
（3-star）（m³/m²）
2.00

Eligible Green
Projects
131.8 billion yen
10 properties

Total assets LTV
41.7%

Sustainability

Eligible Green
Projects

70.1%

1.50
600,000
in the acquisition of eligible green assets, or the redemption ofWith the goal of further promoting
180 ESG activities and expanding175
60,000financing options through an enhanced investor base, FRC
established the Green Finance Framework in 2019 in line with the160
30,000160
Green Loan Principles, the Green Bond Guidelines 2017
fromthe Ministry of the Environment, and the Green Bond Principles
30th・31st
32nd・33rd
145
28th・29th0
2018
to 2018-February
ensureimplementationof green
financing,
March 2019-February
2020
Marchincluding
2020-February 2021
March
2019
sustainability-linked loans and green loans . The funds procured
through green finance will be allocated toward the acquisition ofeligible Green Projects, the repayment of borrowings required

Total properties
owned
206.3 billion yen

70.1％

800,000

Growth Strategy

Note: Total value for 11 properties, including four retail facilities and seven office buildings. Per unit is calculated by adjusting the total floor area（m2）by the occupancy rate. Data coverage is the area ratio of properties subject todata aggregation as compared to all properties and is calculated at the end of the fiscal period. The figure for Canal City Hakata, Canal City Hakata・B, and Canal City Business Center Building reflects total electricity and water
usage for all buildings, including electricity and water usage by some theater areas not owned by FRC. The figure for Park Place Oita covers only the main building section and excludes the section for independently run stores.

（Mwh）

Who We Are■ Electricity Usage

Maximum green financeprocurement amount
Eligible Green Project liability
54.9 billion yen★★★★
（4-star）■ Sustainable Finance（Actual）
Category

NEW

LenderBalance (Millions of yen)

Average interest rate

Date

Term

Long-term debt
（green loan）

Mizuho Bank/The Bank of Saga/
The Higo Bank

2,200

0.52100%*1

July 31, 201910 yearsLong-term debt
（donation-type loan）

The Juhachi-Shinwa Bank

1,000

0.59000%

March 31, 2021 10 years

Donate part of the interest as funds for research into thedevelopment of a new COVID vaccine at Nagasaki University

Long-term debt
（green loan）

Sumitomo Mitsui Banking
Corporation

1,600

0.72625%

June 30, 2022

Green loan assessment: Green 1*2

4,900

0.91875%*3

August 31, 2022 10 years

Long-term debt
Development Bank of Japan/The Nishi（sustainability-linked loan） Nippon City Bank/The Bank of Fukuoka

NEW

7 years

Description

Data Section

After procuring green finance, FRC will announce the total amount of eligible Green Projects, the amount of liabilities related to eligible Green
Projects, and the amount of funds from green finance as of the end of each fiscal period (February and August each year). The investment
corporation will also announce the following indicators related to eligible Green Projects as of the end of February each year.
• The number of properties classified as eligible Green Projects, and the number and type of obtained environmental certifications.

Green loan assessment: Green 1*2

Third-party opinion on sustainability-linked loan*4*1 FRC has concluded a swap agreement to practically fix the interest rate on debt. The indicated interest rate reflects the effect of the swap agreement.
*2 FRC was assigned the comprehensive assessment of Green 1, the highest rank, regarding compatibility with the Green Loan Principles from Japan Credit Rating Agency, Ltd.（JCR）.
*3 If the CO2 reduction target is achieved, a preferential interest rate is applied from August 2031 until the repayment date from the interest rate of the initial loan.
*4 A third-party opinion has been obtained from Japan Credit Rating Agency, Ltd.（JCR）.
Glossary

Green bonds
These are bonds issued by companies and local governments to raise the funds
necessary for Green Projects in Japan and overseas.

Sustainability-linked loan
A sustainability-linked loan is a loan that encourages borrowers to achieve ambitious
sustainability performance targets (SPTs).

Green loan
A loan in which the use of funds is limited to environmentally friendly businesses.
Fukuoka REIT Corporation 2022

33

Environmental Issues
Related Materiality
・Maintenance and enhancement of environmental and construction performance

Initiatives for Facility and Building Management

IC

Individual Facility Initiatives
RetailRenovation of Food Court

NEW

The food court at Konoha Mall Hashimoto was renovated toaddress the lack of adequate seating at busy times on Saturdays
and Sundays and to enhance the overall environment. In addition
to increasing the number of seats, we provided seating that meetsdiverse needs such as for families with young children to make thearea easier to use and more comfortable.
Office Buildings Renovation of Common Areas

Baby food seats

Garden court seatsNEW

At the Sanix Hakata Building, we overhauled the common space tomaintain the aesthetic appeal of the building and enhance tenantsatisfaction.

Initiatives for Disaster Risk

Kids box seats

BeforeAfter

IC

Countermeasures to Flooding Risks
Severe damage from flooding in Fukuoka City on June 29, 1999,
contributed to the formulation of the Storm Water Management Action Plan
and the upgrading of rainwater drainage facilities in the areas where theflooding was particularly harsh. Ongoing efforts to implement antiflooding
measures have greatly improved flood safety within the city limits.

■ Capacity of Storm Water Storage Facilities of Fukuoka City

■ Replacing and Installing New Water Stops (July 2020)■ Instances of Building Inundation in Fukuoka City

We reviewed the specifications and installation locations of existing water
stops throughout the Canal City Hakata premises and either repaired or
installed equipment as part of our countermeasures to river flooding asa result of typhoons and locally heavy rains, which appear likely to comemore frequently and increase in severity due to global warming.

(Number of buildings)

FY1999No storm water storage facilities

FY2022 128,300 m3

Storm water management capacity increased from 59.1 mm/h
to 79.5 mm/h (city center)

4,000

Instances of inundation
have steadily declined

3,173

3,000

1,721

2,000

From FY2000
and FY2022

Storm water drainage
capacity has increased
significantly

1,122

Since the launch of the
project in FY2000

1,000

3
June 29, 1999

Maximum hourly
precipitation (mm/h)

79.5

July 19, 2003

July 24, 2009 August 30, 2013

104

116

72.5

Instances ofinundation havesteadily declined

Source: Prepared by Fukuoka Realty Co., Ltd. based on data from the “Storm Water Management Action
Plan 2026” pamphlet about the Fukuoka City Stormwater Emergency Control Plan.

Canal City Hakata (north side of the building)

Canal City Business Center Building

Earthquake Risk Countermeasures
Fukuoka Prefecture is an area in which there are relatively few earthquakes.
According to the probabilistic earthquake prediction map from the Officeof the Headquarters for Earthquake Research Promotion, Earthquake
and Disaster-Reduction Research Division, Research and Development
Bureau, Ministry of Education, Culture, Sports, Science and Technology, theprobability of an earthquake with an intensity of six or greater over the next 30
years is lower in Fukuoka Prefecture than in the Kanto, Chubu, and Kansai
areas. FRC establishes the insurance value of each property based on its
replacement value, earthquake PML value, and other factors, and maintains
earthquake insurance for all its properties (buildings). In addition, FRC
continues to conduct annual property surveys through external organizations
to estimate earthquake damage to properties based on various scenarios.

34

Other Disaster Prevention Measures■ Emergency Drills

We have conductedcomprehensive disaster drills at
Canal City Hakata since 2017,with all tenants participating(not held in 2020 or 2021 due
to COVID-19). The drills wereconducted in November 2022.
Glossary

Earthquake PML
Refers to the probable maximum loss as a percentage of the expected
maximum damage (Probable Maximum Loss) caused by an earthquake.
The higher the PML value, the higher the buildingʼs seismic risk.
[Calculation method] PML: Expected maximum damage /Replacement cost

IC

Initiatives We Support and External Certifications

IC

Investment Corporation (FRC)

AMC Asset Management Company

AMC

FRC makes continuous improvements through feedback on the results it receives from acquiring external certifications.
■ Participation in GRESB
Assessment 2022

In September 2018, Fukuoka Realty Co.,
Ltd., endorsed the basic philosophiesof the Principles for Responsible
Investment (PRI) and the Principles for
Financial Action for the 21st Century(PFA21) and became a signatory to these
initiatives. Through ESG-conscious asset
management, the company is contributing
still further to the achievement of asustainable society.

The Global Real Estate Sustainability
Benchmark (GRESB) was establishedby a group of European pension
funds and is the benchmark formeasuring sustainability in realestate companies and managing
organizations in 2009. FRC was given“Green Stars,”“4 stars (on a 5-starscale)” and disclosure assessment,“A Level” for the GRESB Real Estate
Assessment conducted in 2022.

Growth Strategy

In September 2022, we announced ourendorsement of the recommendations of
the Task Force on Climate-related Financial
Disclosures (TCFD), which was establishedby the Financial Stability Board (FSB) to
examine climate-related disclosures andhow financial institutions should respond.
At the same time, we became a member of
the TCFD Consortium, a group of companies
in Japan that supports the TCFD.

■ Other Initiatives
We Support

Who We Are■ Endorsement of the Recommendationsof the Task Force on Climate-related
Financial Disclosures (TCFD)■ Ratio of Properties Certified as Green Buildings

In addition, the Building Energy-Efficiency Labeling System(BELS) is a system in which third parties evaluate, indicate, andcertify the energy conservation performance of non-residentialbuildings, based on the Evaluation Guidelines for the Building
Energy-Efficiency Labeling System for Non-Residential Buildings(2013). FRC has acquired certification for four of its owned
properties.

Sustainability

As of the end of August 2022, the ratio of properties within theentire portfolio certified as green buildings was 77.8%.
The DBJ Green Building Certification is a third-party certification
system established by the Development Bank of Japan for realestate properties that feature excellent environmental and social
considerations. FRC has acquired certification for 12 of its owned
properties that exhibit environmental and social awareness(including six properties that were recertified in March 2022).

Canal City Hakata (2022)★★★★★ Canal City Hakata・B (2022)
Properties with
Green Building
Certification

77.8%
on total( basedfloor space )Park Place Oita (2022)
Konoha Mall Hashimoto (2020)★★★

Canal City Business Center Building (2022)
Gofukumachi Business Center (2022)
Higashi Hie Business Center (2022)
LOGICITY Minato Kashii (2020)
LOGICITY Hisayama (2020)
Higashi Hie Business Center II (2020)★

SunLive City Kokura (2019)
Marinoa City Fukuoka (Marina Side Building) (2019)

Higashi Hie Business Center(acquired in March 2016)

Higashi Hie Business Center II(acquired in September 2015)

LOGICITY Minato Kashii(acquired in May 2015)

Data Section★★★★

LOGICITY Hisayama(acquired in March 2016)

Fukuoka REIT Corporation 2022

35

Social Issues
Related Materiality
・Creation of pleasant workplaces

Initiatives for Employees and TenantsInitiatives for Employees AMC
Fukuoka Realty: Numbers of credentialed personnel
As of August 31, 2022

The average number of years of continuous serviceof permanent employees
9 years and 4 months
Full-time personnel
41［Male: 18 Female: 23］

Gender ratio Male: 43.9％ Female: 56.1％

・Employees seconded from sponsors:
・Employees seconded to a sponsor:

38

Number of credentialed personnel
・Real estate brokers:
23
・ARES Certified Masters:
18
・Certified Building Administrators:
3
・MBA:
2
・CMA:
2
・First-class registered architect:1・Real estate appraiser:
1・Attorney:
1・Administrative Scrivener:
1・SME management consultant:
1・Licensed Representative of Condominium Management Company: 1

Support for Flexible Work Styles
・Child-rearing support (maternity leave, childcare leave system, and nursery
support system)
・Nursing care leave
・Leave for voluntary work
・Employee welfare (401K, cumulative investment system, etc.)
・Encouraging use of paid holidays,etc.

Training for Employees
・Regular lectures by Kyushu Economic Research Center・Compliance training
・Sustainability training
・Nursing care training
・In-house recreation,etc.

Career Development Support
・Employee satisfaction survey
・Self-assessment system
・Career interview
・Secondment system (dispatching of employees to e.g. sponsor companies)
・Promotion from contract employee to permanent employee status
・Offering of training programs tailored to each management level
・System for supporting acquisition of qualifications (Real Estate Transaction
Agent, ARES Certified Masters, etc.)
・Support for language learning,etc.

Health Management/Improvement of Office Environment
・Initiatives to prevent infectious diseases such as influenza (implementation of influenza vaccination and full coverageof vaccination costs)
・Initiatives for preventing the spread of COVID-19 (such as the installation of thermographic monitors to measuretemperature at office entrances; installation of anti-splash panels and ozone sterilization equipment; distribution ofmasks, thermometers and antiseptic solution; periodical disinfection of tables, chairs, and door knobs, etc.)
・Mandatory health checkups and comprehensive medical examinations

Installing thermographic monitors

・Health counseling by public health nurses

NEW・Application system to restrict excessive overtime work
・Assistance for use of sports clubs
・COVID-19 vaccination at workplaces
Special leave for illness after COVID-19 vaccination
・Installation of personal booths, meeting booths, plants, etc.
・Installation of personal lockers

Meeting booths

Creating a Comfortable Working Environment AMC
NEW

Tenant Initiatives IC
With a focus on the health and comfort of tenant employees, weare improving the employee lounge environments within retailfacilities and renovating office building common areas. Moreover,
FRC is engaging in a variety of initiatives for tenants as a part ofefforts to promote sustainability.
・Improvement of employee lounge・Implementation of tenant satisfaction surveys
・Distribution of sustainability guidebooks
・Sustainability training,

Certified as a “Fukuoka ʻWorkStyle Reformʼ Promotion
Company” (August 2018)36

Registration with Fukuoka City
Well-Being & SDGs Registration
System (July 2022)

etc.

IC

Related Materiality

Investment Corporation (FRC)

AMC Asset Management Company

・Contributions toward boosting the attractiveness and revitalization of Fukuoka and Kyushu
・Co-creation with the local community

Initiatives for Local Communities
Initiatives for Local Communities

IC

AMC

Cleanup Days

At Canal City Hakata, employees of the asset managementcompany participate in events that involve sprinkling wateron sidewalks to cool them down and promote well-being
as part of efforts to enhance the environment.

Asset management company executives andemployees actively participate in cleanup activities, ofwhich there had been 300 as of September 15, 2022.

Safety Town Council

Various Events Held

Participation in Community Events

Who We Are

Annual Events

Growth Strategy

At Park Place Oita, we established a “Safety Town
Council” that partners with related institutions andgroups to conduct crime-prevention patrols andproactively strive to prevent youth misconduct.

At Canal City Hakata, we implemented an eco-friendly
water station campaign as part of the Blue Earth Project, anenvironmental awareness-raising activity with a local high school.
With the participation of restaurants in the facility, customers
who brought their own bottles were offered free drinking water.
(Period: September 17 to 25, 2022)

Every year, employees of the asset managementcompany participate in the Hakata Gion Yamakasa
Festival. President Zenji Koike rode on one of the
Yamakasa floats.

The Kyushu Economic Research Center AMC

We have held gatherings annually since 2008 with thecooperation of the Japan Real Estate Institute (not held in 2020
due to concerns over COVID-19).
Local real estate companies, financial institutions, andgovernment agencies participate in the conference, which
contributes to networking and further
stimulation of the local economy.
It has been designated as acontinuing education course for
The Association for Real Estate
Securitization (ARES) masters.

Fukuoka Realty Co., Ltd., and the Kyushu Economic ResearchCenter have concluded a memorandum of understanding in a bid
to promote increased cooperation in the macroeconomic analysis
and the Kyushu economy. Through this initiative, both signatories tothe memorandum will share information on the current state of the
Fukuoka-Kyushu economy as well as
issues to be faced, thereby revitalizing
economic activity throughout the region.
In addition, study groups on seasonal
topics that are specific to Fukuoka andKyushu are held on a regular basis.

Sustainability

Gatherings for Real Estate, Finance, and the Economy AMC

Data Section

Other Activities AMC
・IR Kyushu Workshop
The Workshop, which entered its 12th year in 2022, was established in cooperation with the Japan Investor Relations Association. The
Workshop assists in learning about the latest IR trends with IR employees of companies located in Fukuoka and Kyushu and fosters theforming of networks between participating companies. Impacted by COVID-19, the study groups were held in a hybrid style that combined
online tools with face-to-face interaction.
■ Details of the Study GroupDate

1st workshop
July 2022

Theme and lecturer“The Future of Information Disclosure and Investor Dialogue: Focus on ESG, Post-COVID, and Human Capital”
Professor Shoichi Tsumuraya, Graduate School of Business Administration, Hitotsubashi University(Visiting researcher, Japan Investor Relations Association)
Note: Information on the lecturers is that for the workshops held by the IR Kyushu Workshop.

Fukuoka REIT Corporation 2022

37

Organizational Issues
Related Materiality
・Information disclosure and dialogue with stakeholders
・Compliance/Risk management

Stakeholder Engagement

IC

AMC

FRC engages in proactive dialogue with its various stakeholders aimed at sustainable growth and higher corporate value. At
the same time, FRC recognizes that fulﬁlling its required social responsibilities leads to sustainable business activities. Valuing
our relationships of trust with stakeholders, we will leverage this concept in our ESG initiatives.

Environment
・Customer satisfaction surveys
at retail facilities
・Implementation of tenantsatisfaction surveys

・Organizing community and other events
utilizing the common areas of facilities
・Participation in Hakata Town Planning
Promotion Council

Property
Clients
Tenants

Region andSociety・Offering real estate, finance, and economic
education
・Disclosure of financial and non-financial
information in an appropriate and timely manner

・Collaboration in environmental
and social initiatives

・Announcing results at the Fukuoka Stock
Exchange

・Steps to share issues throughregular meetings
・Management firm evaluationand feedback

Property
Management
Firms

Unitholders
andInvestors

・Hosting the General Meeting of Unitholders
・Providing results briefings for investors(institutional and individual investors)
・Holding 1-on-1 meetings (Japan and overseas)

・ESG training

・Disclose financial and non-financial informationin an appropriate and timely manner

Employees

・Various employee education programs
・Employee satisfaction survey
・Career interview

Dialogue with Unitholders and Investors

Dialogue with Employees

FRC works to disclose information in a timely manner to reflect
the importance of dialogue with its unitholders and investors. To
prevent the spread of COVID-19, FRC undertakes various investor
relation activities mainly in an online format for domestic/overseas
institutional investors and individual investors.

FRC and Fukuoka Realty Co., Ltd., recognize that human resources
are our greatest asset. As part of our efforts to create comfortable
and healthy workplaces, we are endeavoring to improve theefficiency of our operations by enhancing the office environment andour systems. In addition, we provide IR information internally anddisseminate details of results announcements online as part of ourefforts to facilitate internal communication.

・General Meeting of Unitholders (once every two years)
・Results briefings for analysts and institutional investors
・IR for overseas institutional investors
・IR for individual investors
・Enhanced IR tools, information disclosure,

Policies for Customer-Oriented Business Operations

38

etc.

・Employee satisfaction survey
・President interviews, career interviews
・Internal IR・Counseling with public health nurses,

etc.

https://www.fukuoka-realty.jp/english/idea/operation_policy.html#fiduciaryduty

IC

Corporate GovernanceIC

AMC Asset Management Company

Investment Corporation (FRC)

AMC

Fukuoka Realty Co., Ltd.
Compliance Department
General Manager

Daisuke Yokoyama

Who We Are

As an asset management company for a listed REIT, we strive to enhance compliance and governanceby building appropriate systems and conducting appropriate business operations in pursuit ofunitholdersʼ best interests.
In particular, we recognize that managing transactions between unitholders and a stakeholder suchas a sponsor of FRC that might involve conflicts of interest in an appropriate manner and preventing
such conflicts of interest are important issues to be addressed in governance.
We have established strict rules for transactions with stakeholders to prevent conflicts of interest
and make decisions based on these rules. In addition, we verify the appropriateness of the decisionmaking process through internal audits and other means.
We also ensure objectivity by receiving advice and evaluations from outside specialists to avoid
taking a self-righteous approach in our decisions.

Risk Management and Compliance Initiatives■ Decision-Making Process■ Managing Conflicts of Interest

Proposals by the responsible
department

Third-party assessment byexternal experts［Real estate appraisals］● Japan Real Estate InstituteInspection by the ComplianceDepartment General Manager● The Tanizawa Sogo Appraisal

Co., Ltd.

● Daiwa Real Estate Appraisal

Deliberations by the Investment
Management CommitteeCo., Ltd.

［Market reports］● Analysis on trade areas andDeliberations/Resolution by theCompliance Assessment Committee

competition situation● Adequate rent levels,

Resolution/Decision-making reportby the Board of Directors

Management Fee 1*

based on total assets

Management Fee 2

based on operating revenues

Management Fee 3*

based on distributable profit

Management Fee 4

Acquisition fee

Management Fee 5

Transfer fee● Law abidance and earthquake

resistance● Check of soil contamination,

toxic substance and use status● Replacement market price,

expenses for long-term
maintenance and repairs, etc.

Note: The prior consent of the investment corporationʼs Board of Directors is obtained in cases falling under
the provisions of Article 201-2 (1) of the Act on Investment Trusts and Investment Corporations.

Sustainability

Asset management fees linked to unitholder interests:

etc.

［Engineering reports］

Fukuoka REIT Corporation Board of
Executive Officers■ The Asset Management Fee Structure

Growth Strategy

When a transaction such as the purchase and sale of a property
between FRC and a stakeholder, including a sponsor, takes place,the asset management company must address any possibilityof prioritizing the interests of interested parties over investors.
Fukuoka Realty Co., Ltd., has accordingly established a Basic
Policy on Compliance, as well as compliance regulations and otherinternal rules to prevent any conflict of interest. Based on theserules, we obtain a preliminary assessment from the ComplianceDepartment General Manager and ensure deliberations by theCompliance Assessment Committee, consisting of the ComplianceDepartment General Manager and three outside experts in order toengage in the management of any conflict of interest pertaining toour dealings with stakeholders in an appropriate manner.

■ Training Records
Oct. 2019–
Sept. 2020

Oct. 2020–
Sept. 2021

Oct. 2021–
Sept. 2022

Compliance training(including e-learning)

6 times

6 times

6 times

Sustainability training

1 time2 times

3 times* We reduced the ratio of Management Fee 1 and increased the ratio of Management Fee 3 as of the fiscal
period ended February 2021

Data Section■ Fukuoka REIT Corporation■ Fukuoka Realty Co., Ltd. Directors

The term of office for all executive directors and supervisory directors
was set as two years from May 29, 2022.

Supervisory Director

Executive Director

Zenji Koike

Takashi Tanabe

Investment unit holdings: None

Investment unit holdings: Five

Investment unit holdings: None

Yasuo Kawasho
Glossary

Supervisory Director

Vice President Boardof Directors(Non-Executive)

Vice President Boardof Directors(Non-Executive)

President and CEO

Vice President Boardof Directors(Non-Executive)

Corporate Auditor(Non-Executive)

Yukitaka Ohara

Hiroshi Shimuta

Zenji Koike

Noboru Hashimoto

Masanori Tasaka

Engineering reports
Reports outlining the results of a physical survey of a property. These often include surveys on building
conditions, soil contamination, long-term repair and refurbishing costs, and earthquake risk.

Fukuoka REIT Corporation 2022

39

External Environmental Data

Fukuoka as a Compact City
As a compact city, the air, sea, and land transportation accesspoints of Hakata Station, the Port of Hakata/Chuo Wharf, andFukuoka Airport are located within a three-kilometer radius ofTenjin, Fukuoka Cityʼs central business district. Traveling by the
Fukuoka City Subway from Fukuoka Airport to the city center, ittakes about five minutes to Hakata and about 10 minutes to Tenjin.

About 60% of commuting times are less than 30 minutes, which
is about half that of Tokyo. The Nanakuma Subway Line extension
project connecting Tenjin and Hakata Station will be completed in
March 2023, which is expected to further enhance convenience.

Fukuoka City

Nanakuma Subway Line Extension Project
Kushida Shrine Station, an intermediate station on
the Nanakuma Line extension project that will connect
Tenjin and Hakata Station, will be adjacent to Canal
City Hakata, FRCʼs ﬂagship property.

a（rTenjin-minami Stationr）

Legendu-doriCanal City Hakata

o
dor

Hak

utai-

Kok

ak

Kushida Shrine Station

ive

r）

rive

Tenjin Station

aw

Ta
ih

ata-

ekimae-dori

Extension section
Tenjin-minami ~Hakata station
Operating sections
Nanakuma Line
Airport Line

Sumiyoshi-dori

kag

wa（

Hakata Station

Fukuoka Airportinka

Tenjin Station-Sh

Port of Hakata/
Chuo Wharf

Na

Gion Station

Nakasu Kawabata Station
Hak
ata
Riv
er

uin
Yak

LegendJR
Shinkansen
Nishi-Nippon Railroad
Fukuoka Municipal Subway
Fukuoka Urban Expressway
Nishi Kyushu Expressway

Subway Lines (City Center）

Island City

Hakata Station

Source: C reated by Fukuoka Realty Co., Ltd., based on data from Fukuoka
City Transportation Bureau’s Nanakuma Subway Line Extension
Project Leaflet (April 2019).

Population Continues to Grow in Fukuoka City
The total population of Fukuoka City has increased consistently
since 1985, and as of May 1, 2020, the estimated population
exceeded 1.60 million. This total population makes the city the fifth
most populous among government-designated cities, following
Yokohama, Osaka, Nagoya, and Sapporo. According to estimatesfrom the National Institute of Population and Social Security
Research, the population of Fukuoka City is expected to continue
growing until 2035.
■ Total Population and Population Growth Ratio of Fukuoka City
Total population of Fukuoka City

1,613
1.12

1,600

0.99 1.02

1,500
1,454

1,466

0.99 1,556 1,570
0.89

0.89 0.82
0.78

1,430

(Average case / Previous earthquakes) (Reference date: January 1, 2020)
Probability
26% or more
6%〜26％
3%〜6％
Moderately high
0.1%〜3％
Less than 0.1%

North American PlateHigh

Sapporo2.2％
Sendai
7.6％

Eurasian Plate

（%）

1,650

1,450

Probability of an earthquake with an intensity of six or greater over the next 30 years

Population growth ratio（Thousands）

1,550 0.89

■ Probabilistic Earthquake Prediction Map

1,482

1,497

1,541

1,512 1,526

0.95

1,582

1,619

1,595

1,631

1.4
1.2

1.11
0.84

Fukuoka
6.2％

Tokyo
47.2％

1.0

0.90 0.77

Nagoya
45.8％

0.8
0.6

1,441

1,400

0.41

Pacific Plate

Osaka
30.1％

0.4
Philippine Sea Plate

0.2

1,350

0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 0

Note: Total population figures from 2007 to 2021 are based on figures as of December 1 each year. The
total population figure for 2022 is based on the figure as of October 1, 2022.
Source: Prepared by Fukuoka Realty Co., Ltd., based on data from Fukuoka City Estimated Population
and Fukuoka City Registered Population, published by Fukuoka City.

40

（%）
17.0

・若者率

16.8%
（1位）

（4位）
・生産年齢人口比率 61.4%
︵

16.5

福岡市

川崎市

Note: The mesh for zero probability based on the model calculation conditions is shown in white.
Source: Prepared by Fukuoka Realty Co., Ltd., based on data from the Office of the Headquarters for
Earthquake Research Promotion (Earthquake and Disaster-Reduction Research Division, Researchand Development Bureau, Ministry of Education, Culture, Sports, Science and Technology);
Japan Seismic Hazard Information Station (J-SHIS), National Research Institute for Earth Scienceand Disaster Resilience; and the website of the Japan Meteorological Agency, Ministry of Land,
Infrastructure, Transport and Tourism.

Fukuoka Office and Logistics Facility Market Conditions
The office building market in Fukuoka remains solid, and demand for logistics facilities is robust.

Completed floor space (total floor space)

Net absorption (absorption demand)

Vacancy rate

Vacancy rate (Office buildings owned by FRC)（%）
20

（Tsubo）
50,000

As of October 2022

15.38

40,000Central Tokyo (5 wards)

6.44%

Nagoya

5.59%

Osaka
14.72
13.23
8
11.98

30,000

10.86
10.99

5.12%

Fukuoka

4.69%

Existing buildings
New buildings

3.97%
32.46%

Sendai

4.72%

Sapporo2.14%

16

Hakata East
Terrace

12

8
6.30

4.53

4.26

10,000

4.69

3.79

4

3.07

3.78

2.04

0

Growth Strategy

7.70

20,000Who We Are■ Fukuoka Business District/Vacancy Rates and Supply and Demand of Office Buildings

2.09

0

0.00

Building Overview*
Office/Hotel building（25 aboveground floors）

Fukuoka Daimyo
Garden City

Offices 5th to 16th floors
Rentable area: Approx. 30,000 m2-10,000

Sustainability

Community building (11 aboveground floors)
Event hall (One aboveground floor)-20,000

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

(Planned)

Completed floor area (total floor area) includes the floor area for common spaces, etc., and therefore differs from the leasable floor area.
Notes: 1. Vacancy rates from 2008 to 2021 are based on figures as of December 31. The vacancy rate in 2022 is based on the figure as of October 31.
2. Office building–related data for each city are the data for areas and buildings included in surveys conducted by Miki Shoji Co., Ltd.
3. Net absorption (absorption demand) shows the change in the occupied floor space during a specific period. It is calculated by subtracting the occupied floor space on December 31 of the previous year from theoccupied floor space on December 31 of the applicable year. Completed floor space (total floor space) figures for 2022 have not been finalized, and the floor space and expected completion dates are subject to change.
Source: Prepared by Fukuoka Realty Co., Ltd., based on data from Miki Shoji Co., Ltd., Office Market Data.
* Prepared by Fukuoka Realty Co., Ltd., based on press releases from Fukuoka City and the operating entity.

■ Fukuoka Business District/Average Asking Rents (2005 = 100)

Fukuoka

（%）
130
120
110

New supply

New demand

Vacancy rate（％）
12

（Tsubo）
120,000

Central Tokyo (5 wards)

As of October 2022
Fukuoka

11,403 yen

Central Tokyo
22,104 yen(5 wards)

Forecast
10

100,000

8

80,000(Yen/Tsubo)

660,000100

440,00090

Data Section

The average asking rent of the Fukuoka business district rose 7.0%
from January 2020 to October 2022

■ Northern Kyushu Logistics Facility Supply/Demand and Vacancy Rates

2

20,0002005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Note: The figures from 2005 to 2021 are based on the figures as of December.
Source: Prepared by Fukuoka Realty Co., Ltd., based on data from Miki Shoji Co., Ltd., Office Market Data.

0

2016

2017

2018

2019

2020

2021

2022

2023

0

Note: The figures are covered total floor spaces (more than 5000 m2) that are owned by the real estate
investment company and real estate development company in Fukuoka and Saga.
Source: Prepared by Fukuoka Realty Co., Ltd., based on data of CBRE K.K.

Fukuoka REIT Corporation 2022

41

Overview of Properties Owned

FRC carefully selects and invests in properties with the potential to generate stable cash ﬂow over the long term. It owns
properties with widely divergent uses, mainly retail and ofﬁce buildings, to diversify risks within the region.

Asset Ratio (As of August 31, 2022)■ Investment Areas (based on acquisition price)■ Investment Type (based on acquisition price)

Retail53.0%

Office buildings
33.0%

Number ofproperties owned:

33

Others14.0%

Other
Kyushu areas
22.9%

Fukuoka metropolitan area
77.1%

Total acquisition price:

206,339million yen

Note: Acquisition price data is rounded
down to the nearest million yen.

Property name / acquisition date / acquisition price (millions of yen)

■ Retail: 11
1

2

3

4

5

6

Canal City Hakata
November 9, 2004/32,000

Canal City Hakata・B
March 2, 2011/21,060

Park Place Oita
November 9, 2004/19,610

SunLive City Kokura
July 1, 2005/6,633

Konoha Mall Hashimoto
March 1, 2018/10,000

Square Mall Kagoshima Usuki
September 28, 2006/5,300

7

8

9

10

11

Kumamoto Intercommunity SC
November 30, 2006/2,400

Hanahata SC
September 3, 2007/1,130

Kurume Higashi Kushiwara SC
February 1, 2008/2,500

Kʼs Denki Kagoshima
March 27, 2008/3,550

Marinoa City Fukuoka (Marina Side Building)
May 1, 2015/5,250■ Office Buildings: 11

42

12

13

14

15

16

17

Canal City Business Center Building
November 9, 2004/14,600

Gofukumachi Business Center
November 9, 2004/11,200

Sanix Hakata Building
September 30, 2005/4,400

Taihaku Street Business Center
March 16, 2006/7,000

Higashi Hie Business Center
March 13, 2009/5,900

Tenjin Nishi-Dori Center Building
February 1, 2013/2,600

18

19

20

21

22

Tenjin North Front Building
March 28, 2013/2,800

Higashi Hie Business Center II
March 1, 2018/4,230

Higashi Hie Business Center III
May 29, 2020/3,290

Tenjin Nishi-Dori Business Center (landwith leasehold interest) June 1, 2021/7,700

Hakata Chikushi-Dori Center Building
March 1, 2022/4,320

NEW■ Other Properties (Logistics, Residence, Others): 11
24

25

26

27

28

Tosu Logistics Center（Logistics）
March 28, 2014/1,250

LOGICITY Minato Kashii (Logistics)
March 27, 2015/8,150

LOGICITY Hisayama（Logistics）
June 1, 2017/5,050

LOGICITY Wakamiya（Logistics）
June 30, 2020/1,700

Amex Akasakamon Tower (Residence)
September 1, 2006/2,060

City House Keyaki Dori (Residence)
December 20, 2017/1,111

29

30

31

32

33

A

Aqualia Chihaya (Residence)
March 1, 2012/1,280

D-Wing Tower (Residence)
March 1, 2013/2,800

Granfore Yakuin Minami（Residence）
November 4, 2014/1,100

Hotel FORZA Oita (Hotel)
March 1, 2013/1,530

Tissage Hotel Naha (Hotel)
December 7, 2018/2,835

Island City Minato Bay related site（land withleasehold interest）（tentative）March 31, 2029/8,082

Who We Are

23

Scheduled to beacquired

Growth Strategy

26
23

32

Gannosu Sta.

Nata Sta. Wajiro
Sta.
Tonoharu Sta.

25

24

A

Sustainability

29

Sta.

Sta.

33

Across Kyushu
Sta.

Nokonoshima

FUKUOKA
PayPay DOME

Sta.
Sta.

Sta.

Sta.

21

Sta.

28

Sta.

Sta.

Sta.

22

Sta.

BEST DENKI
Stadium

Sta.
Sta.

Sta.

Sta.

31

Data Section

Sta.

27 30

Sta.

Fukuoka City

Fukuoka REIT Corporation 2022

43

Financial/Non-Financial Highlights（11-Year/22-Period Summary）

15th

16th

17th

18th

19th

20th

21st

22nd

23rd

24th

Feb. 2012

Aug. 2012

Feb. 2013

Aug. 2013

Feb. 2014

Aug. 2014

Feb. 2015

Aug. 2015

Feb. 2016

Aug. 2016

Operating revenue

6,931

7,094

7,200

7,565

7,574

7,779

7,789

8,423

8,343

8,234

Operating income

2,637

2,595

2,622

2,848

2,801

2,824

2,860

3,167

3,141

3,069

Ordinary income

2,046

2,005

2,005

2,272

2,239

2,263

2,370

2,663

2,670

2,616

Profit

2,045

1,992

2,004

2,271

2,238

2,262

2,369

2,661

2,669

938

NOI

4,351

4,372

4,444

4,751

4,732

4,800

4,829

5,229

5,237

5,164

Total assets

155,792

159,601

160,574

167,857

167,492

167,824

167,369

181,597

181,445

179,513

Net assets

71,222

71,17071,182

81,712

81,67981,70381,81193,804

93,812

92,081

Interest-bearing debt

69,42573,35074,675

71,10071,025

71,15070,77572,40072,32571,950Interest-bearing debt ratio（%）

44.6

46.0

46.5

42.4

42.4

42.4

42.3

39.9

39.9

40.1

Depreciation and amortization expenses

1,177

1,242

1,268

1,343

1,354

1,387

1,390

1,458

1,471

1,470

Capital expenditures

1,031

1,285

431

612

848

740

328

445

630

665

Cash flow provided by (used in) operating activities

3,677

3,617

3,120

3,609

3,699

3,890

3,735

4,167

4,174

4,336

Cash flow provided by (used in) investing activities(566)(6,016)(3,067)(7,897)(916)(2,312)(1,452)(14,488)

(606)

(772)

Cash flow provided by (used in) financing activities(2,153)

1,881

(666)

4,651

(2,359)(2,115)(2,635)

10,934(2,747)(3,043)

Cash and cash equivalents at year-end

8,154

7,637

7,024

7,387

7,810

7,273

6,920

7,533

8,353

8,873

Financial Information
Earnings (Millions of yen)

Financial conditions (Millions of yen)

Cash flow (Millions of yen)

Per-unit indicators (Yen)Dividend per unit

3,324

3,238

3,257

3,291

3,243

3,278

3,435

3,563

3,574

3,479

EPS

per unit

3,324

3,238

3,257

3,291

3,243

3,278

3,434

3,563

3,573

1,256

BPS

per unit

115,762

115,676

115,696

118,423

118,376

118,410

118,567

125,574

125,585

123,267

121,447

122,299

123,041

127,080

128,375

131,215

136,051

144,472

148,558

152,259

5,237

5,258

5,319

5,238

5,207

5,288

5,450

5,515

5,543

5,448

Investment unit price (Yen)107,200

109,600

153,600

145,000

171,400

199,000

227,000

188,700

194,200

186,100

Total number of investment units issued

615,250

615,250

615,250

690,000

690,000

690,000

690,000

747,000

747,000

747,000

Number of full-time officers and employees(Note1)

38

35

36

40

40

34

35

38

41

39

Average number ofyears of employment（Years/Months）(Note1)

5.2

5.8

5.7

6.1

6.2

7.1

7.5

6.0

6.2

6.5

Number of IR meetings (Japan and overseas）(Note 2)

ー

ー

ー

ー

ー

ー

122

154

147

106

NAV per unit
FFO

per unit

Investment unit information

Non-Financial Information＊ Gains and losses on the sale of the Aeon Hara Shopping Center and Aqualia Kego, which were transferred in the 25th ﬁscal period, were handled in the following manner due to differing tax and accounting standards.
1）An amount equivalent to impairment losses on the Aeon Hara Shopping Center booked in the proﬁt and loss statement in the 24th ﬁscal period was booked as an allowance for a temporary difference adjustment on the statement
concerning the allotment of funds for the 25th ﬁscal period.
2）Gains on the sale of Aqualia Kego were recorded on the proﬁt and loss statement for the 25th ﬁscal period.
3）The return of allowances for a temporary difference adjustment was booked on the statement concerning the allotment of funds for the 25th ﬁscal period.
＊ Dividend per unit is calculated as follows.
24th ﬁscal period: [Net proﬁt] + [Reserve for temporary difference adjustment] – [Earnings carried forward to the next period]
25th ﬁscal period: [Net proﬁt] – [Return of reserve for temporary difference adjustment] – [Earnings carried forward to the next period]＊ The investment corporation undertook a ﬁve-for-one split effective March 1, 2014. Dividend and NAV per unit up to the 19th ﬁscal period have been retroactively adjusted to reﬂect this split.
＊ The number of IR meetings in Japan and abroad shows the total number of IR meetings, based on the dates on which they were held, with institutional investors and analysts through interviews and telephone conferences generally
regarding the results for the previous period.
Note 1: Data are for the asset management company.
Note 2: The number of IR meetings convened in Japan and abroad from the 15th to 20th ﬁscal periods is not recorded, as records do not exist for these periods.

44

25th

26th

27th

28th

29th

30th

31st

32nd

33rd

34th

35th

36th

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020Feb. 2021

Aug. 2021

Feb. 2022

Aug. 2022

9,242

9,231

9,162

8,518

8,904

8,867

8,658

8,830

4,585

2,920

2,965

3,238

3,306

3,318

3,273

2,966

3,061

3,204

3,185

3,181

4,199

2,562

2,624

2,861

2,935

2,939

2,900

2,587

2,677

2,817

2,816

2,805

4,198

2,556

2,623

2,860

2,934

2,939

2,899

2,586

2,675

2,816

2,814

2,804

5,010

4,998

5,079

5,493

5,591

5,633

5,596

5,307

5,347

5,336

5,334

5,370

175,063

178,063

177,283

193,112

195,433

195,106

194,795

199,004

199,559

199,804

198,745

201,223

93,681

93,69993,766

101,799

101,874

101,878

101,837

101,525

101,614

101,755

101,753

101,743

66,67569,90068,90075,50077,50077,50072,50082,40082,40082,40082,40083,900

38.1

39.3

38.9

39.1

39.7

39.7

39.8

41.4

41.3

41.2

41.5

41.7

1,455

1,474

1,500

1,602

1,622

1,651

1,660

1,686

1,623

1,552

1,486

1,514

1,789

741

600

657

947

476

465

790

687

445

600

1,946

3,685

3,590

4,292

4,149

4,832

4,863

3,985

3,450

5,374

4,724

3,146

4,712

4,220

(6,029)(478)(15,326)(3,604)(1,043)(220)(7,136)(842)(1,425)(658)(5,498)(7,872)667(3,555)

11,734(859)(2,933)(2,938)2,000(2,586)(2,674)(2,816)(1,314)

8,905

7,134

7,392

7,950

8,319

9,205

10,032

8,348

10,293

10,917

10,588

8,488

3,398

3,422

3,512

3,593

3,687

3,693

3,642

3,250

3,361

3,539

3,536

3,523

5,621

3,422

3,512

3,593

3,687

3,692

3,642

3,249

3,361

3,538

3,536

3,523

125,410

125,434

125,524

127,888

127,982

127,987

127,936

127,544

127,656

127,833

127,831

127,818

150,328

152,639

156,204

161,315

164,250

167,118

170,680

171,592

171,943

171,502

178,079

178,348

5,351

5,395

5,520

5,606

5,725

5,767

5,728

5,368

5,401

5,358

5,403

5,425

177,100

164,300

173,100

170,400

169,300

178,300

167,900

136,500

168,500

175,500

156,800

170,300

747,000

747,000

747,000

796,000

796,000

796,000

796,000

796,000

796,000

796,000

796,000

796,000

40

38

38

39

41

41

42

41

41

40

44

41

6.9

6.11

7.7

7.10

7.11

8.6

8.10

8.10

9.1

9.6

9.6

9.4

126

116

169

129

148

149

133

54

114

90

105

101

Glossary

BPS
An abbreviation of Book Value per Share. This shows net assets per unit
and is viewed as an indicator for stability.
[Calculation method] BPS: Net assets / Total number of units issued
EPS
An abbreviation of Earnings per Share. This shows net profit per unit andis viewed as an indicator of a companyʼs ability to generate earnings.
[Calculation method] EPS: Net profit / Total number of units issued

Data Section

9,178

Sustainability

8,194

Growth Strategy

8,122

Who We Are

9,730

FFO
An abbreviation of Funds from Operations. This shows how much cash flow
is generated from rental income. The larger the FFO per unit, the greater thecompanyʼs profitability.
[Calculation method] FFO: Net profit + Depreciation and amortization expenses +Impairment loss - Gains/losses from the sale of real estate
FFO per unit: FFO / Total number of units issued

Fukuoka REIT Corporation 2022

45

Fukuoka REIT Corporation
1-2-25 Sumiyoshi, Hakata, Fukuoka City, Fukuoka, Japan

https://www.fukuoka-reit.jp/en/@fukuokareit8968

facebook.com/fukuokarealty

fukuoka_realty

To help stakeholders better understand FRC and its operations, FRC is focusing efforts on its IR activities. FRC uses its website to post press releases
and various disclosure materials and provide information on its portfolio of investment properties and other items. In addition, FRC uses social media
such as Twitter, Facebook, and Instagram to disseminate a wide range of information on the Fukuoka and Kyushu areas, including information on theseregionsʼ economies, real estate markets, retail facilities, tourist attractions, and much more. We invite you to make use of these information resources.