Provisional translation only
October 10, 2012EARNINGS BRIEFING
FOR THE PERIOD ENDED AUGUST 2012
URL: http://www.fukuoka-reit.jp/eng/
Stock listings: Tokyo Stock Exchange andFukuoka Stock Exchange
CEO & Representative Director

Real estate investment trust: Fukuoka REIT Corporation (FRC)
Code number: 8968
Representative: Masayasu Saki

Asset manager: Fukuoka Realty Co., Ltd.
Representative: Etsuo Matsuyuki CEO & Representative Director
Contact: Yoichi Nishio
Managing Director and Head of Planning Dept.
Phone: +81-92-272-3900
Expected date for submitting securities report:
November 28, 2012
Expected commencement date of dividend payments: November 16, 2012
Supplementary documents for earnings briefing
Yes
Analyst meeting (for institutional investors)
Yes(Figures rounded down to nearest mm yen.)

1. PERFORMANCE AND SITUATION OF ASSETS FOR THE PERIOD ENDED AUGUST 2012
(March 1, 2012 to August 31, 2012)(1) Performance
Operating revenues
mm of yen%
Period ended
August 2012
Period ended
February 2012

Operating income
mm of yen
%

7,094

2.3

2,595

(1.6)

2,005

(2.0)

1,992

(2.6)

6,931

(1.6)

2,637

(3.4)

2,046

(1.8)

2,045

(1.8)

Net income
per unit
Period ended
August 2012
Period ended
February 2012(% shows percentage change from previous period)
Ordinary income
Net income
mm of yen%
mm of yen%

Ratio ofordinary income tototal assets

Return on
net assets

Ratio ofordinary income tooperating revenues

16,193 yen

2.8%

1.3%

28.3%

16,621 yen

2.9%

1.3%

29.5%

(2) Dividends
Dividend
per unit(excl. dividendin excess ofearnings)
Period ended
August 2012
Period ended
February 2012

Dividendin excess ofearnings
per unit

Total
dividend

Total
dividendin excess ofearnings

Payoutratio

Ratio ofdividend to
net assets

16,193 yen

1,992 mm yen

0 yen

0 mm yen

100.0%

2.8%

16,621 yen

2,045 mm yen

0 yen

0 mm yen

100.0%

2.9%(3) Financial condition
Period ended
August 2012
Period ended
February 2012

Ratio ofnet assets to total assets

Total assets

Net assets

159,601 mm yen

71,170 mm yen

44.6%

578,384 yen

155,792 mm yen

71,222 mm yen

45.7%

578,812 yen

Net assets per unit

(4) Cash flows condition
Cash flows fromoperating activities
Period ended
August 2012
Period ended
February 2012

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of cash andcash equivalents at endof period

3,617 mm yen(6,016) mm yen

1,881 mm yen

7,637 mm yen

3,677 mm yen(566) mm yen(2,153) mm yen

8,154 mm yen

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

2.

FORECAST OF PERFORMANCE FOR THE PERIOD ENDING FEBERUARY 2013
(September 1, 2012 to February 28, 2013) AND THE PERIOD ENDING AUGUST 2013
(March 1, 2013 to August 31, 2013)(% shows percentage change from previous period)
Dividend
Net
Dividend
Operating revenues Operating income Ordinary income
per unit
incomein excess of(excl. dividend
earnings
mm of yen
% mm of yen% mm of yen% mm of yen% in excess of
per unit
earnings)

Periodending
7,208
1.6
2,622
1.0
1,994
(0.5)
1,993
February
2013
Periodending
7,191
(0.2)
2,628
0.2
1,994
0.0
1,993
August2013(Reference) Forecast net income per unit: Period ending February 2013 16,200 yen
Period ending August 201316,200 yen

0.0

16,200 yen

0 yen

0.0

16,200 yen

0 yen

3. Other(1) Changes in accounting policies, changes in accounting estimates and restatement of accounting errors(i) Changes in accounting policies accompanying amendments to accounting standards, etc.:
No(ii) Changes in accounting policies other than above (i):No
(iii) Changes in accounting estimates:No(iv) Restatement of accounting errors:No(2) Number of investment units outstanding(i) Number of investment units outstanding at end of period (including treasury investment units):
123,050 units at end of August 2012
123,050 units at end of February 2012(ii) Treasury investment units at end of period:—
units at end of August 2012—
units at end of February 2012
Note: Regarding the number of investment units, a basis for calculating net income per unit, please refer to “Perunit information,” on page 13.

* Statement on Implementation Status of Audit Procedure
This Earnings Briefing (“Kessan Tanshin” in Japanese) report is outside the scope of the auditing
procedure under the Financial Instruments and Exchange Act. As of the publication of this report, noauditing procedure under the Financial Instruments and Exchange Act has been completed for thefinancial statements.
* On the adequate use of performance forecasts and other items warranting special mention
Forecast figures are calculated based on information available on the date of release of the forecast andcontain uncertain factors to a large extent. Actual operating revenues, operating income, ordinary
income, net income, and dividend per unit may differ due to changes in the business environment. The
forecast should not be construed as a guarantee of actual dividend. Concerning details of thepreconditions for the above forecast figures please refer to “2. Portfolio Management Policy andManagement Situation, (2) Management situation – Preconditions for the performance forecast for theperiod ending February 2013 (September 1, 2012 to February 28, 2013) and the period ending August
2013 (March 1, 2013 to August 31, 2013),” on page 6.

2

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

Concerning the contents hereinafter, items that FRC judges that “can be omitted from the disclosure from the standpointof importance” are not shown in conformity with the “Format and Guidance for Preparation of Earnings Briefing for
REITs” (April 2012).

1. Investment Corporation-Related Organizations
The disclosure is omitted, since there are no significant changes from the “Structure of the investment corporation”
disclosed by the latest securities report (submitted on May 29, 2012).

2. Portfolio Management Policy and Management Situation(1) Portfolio management policy
The disclosure is omitted, since there are no significant changes from “Investment policy,” “Investment target” and“Dividend policy” disclosed by the latest securities report (submitted on May 29, 2012).
(2) Management situation(i) Summary of the current fiscal period(a) Brief history of the investment corporation
Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Investment
Trust and Investment Corporation Law of Japan” (Law No. 198 in 1951 including later revisions,
hereinafter the “Investment Trust Law”) and listed on the Tokyo Stock Exchange Group Inc. and the
Fukuoka Stock Exchange on June 21, 2005 as the nation’s first real estate investment trust specializing inregional properties (code number: 8968). FRC invests in real estate throughout all of Kyushu (including
Okinawa Prefecture), with a central focus on Fukuoka City, and Yamaguchi Prefecture (hereinafter the“Fukuoka/Kyushu area) by turning rationality, characteristics in the real estate industry, into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as
Retail in Canal City Hakata (excluding some areas of specialty shops, hotels, theaters, offices andcommon space), a commercial complex where specialty shops, cinema complex, theaters, amusement
facilities, hotels and offices are integrally developed (hereinafter “Canal City Hakata”). On top of the 17
properties it owned as of the end of the previous fiscal period (February 29, 2012), FRC acquired two
Others in the fiscal period under review. As a result, FRC now manages a total of 19 properties comprising
ten Retail, five office buildings and four Others as of the end of the current fiscal period (August 31, 2012).
(b) Investment environment and portfolio performance
During the sixteenth fiscal period, the Japanese economy started to pick up moderately with domestic
demand remaining strong, especially due to demand related to reconstruction from the earthquake. Goingforward, the country is expected to stay on track to recovery despite impacts from the slowdown inoverseas economies. In Kyushu, the prime investment area for FRC, the upward momentum also
continued and consumer spending as a whole was strong, although difficulties lingered on the employment
and income situations.
As for the land price trend, a nationwide decline continued for another year since July 2011 but the rate ofdecrease shrunk and there was an increase in the number of survey sites where the prices rose or remained
flat, according to the Prefectural Land Price Survey 2012. In Fukuoka City, a core investment target area
for FRC, commercial land prices decreased by 0.7% and residential land prices decreased by 0.3%
compared to the previous year, marking the fourth straight year of decrease for both. Nevertheless, the rateof decrease shrunk and the number of surveyed sites where the price rose increased from the previous
survey, reflecting strong housing demand and continued positive impact of Kyushu Shinkansen (bullet
train) starting full operations.
Under such circumstances, FRC focused on stringently selective investment in accordance with its
investment policy. This led to the acquisition of Aqualia Kego (acquisition price: 2,800 mm yen) and
Aqualia Chihaya (acquisition price: 1,280 mm yen) on March 1, 2012. For existing properties, we
continuously worked to enhance competitiveness and customer drawing power at major Retail such as
Canal City Hakata, as well as maintain and improve the occupancy rate of the portfolio. As a result, theaverage occupancy rate marked 97.0% for all properties FRC owns as of the end of the sixteenth fiscal
period.
When analyzing FRC’s portfolio (on an acquisition price basis) by investment target area, the investment
ratio in the Fukuoka urban area accounted for 76.5% of its portfolio; when analyzing by property type,
Retail, office buildings, and Others account for 67.2%, 28.0% and 4.7%, respectively.
(c) Summary of fundraising3

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

In the current fiscal period, FRC borrowed 4,000 mm yen in total on March 1, 2012 in order to fund theacquisition of the above mentioned Aqualia Kego and Aqualia Chihaya. Moreover, of the 2,500 mm yen
in its short-term debt under committed line of credit, FRC refinanced 1,400 mm yen into long-term debt
from the viewpoint of diversification of debt maturities and prolonged residual maturity of borrowings.
For the 6,000 mm yen in long-term debt that matured in June 2012, FRC conducted refinance of the entire
amount with a loan period of 5 years. As a result, the balance of debt outstanding at the end of the current
fiscal period totaled 73,350 mm yen, with the loan-to-value ratio at end of period at 46.0%. To reducerefinancing risks, FRC will continue to disperse the debt repayment dates and increase the average lengthof time until debt maturity.
Furthermore, the credit ratings assigned to FRC as of the end of the current fiscal period are as follows.
Credit Rating Agency
Standard & Poor's Ratings
Japan K.K. (S&P)
Rating and Investment
Information, Inc. (R&I)
Japan Credit Rating Agency,
Ltd. (JCR)

Rating Type
Long-term Corporate Credit Rating

Rating Outlook
StableShort-term Corporate Credit Rating
Issuer Rating

RatingA−
A−2
A+

Long-term Senior Debts Rating

A A−

StableStable(d) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 7,094 mm yen and operating income
after excluding operating expenses such as expenses related to rent business and asset management fees
totaled 2,595 mm yen. Ordinary income was 2,005 mm yen and net income was 1,992 mm yen.
Management decided to make a dividend of 16,193 yen per investment unit to meet the requirements ofspecial tax measures for an investment corporation (as stipulated in Article 67-15 of the Special Taxation
Measures Law of Japan [Law No. 26 in 1957 including later revisions, hereinafter the “Special Taxation
Measures Law”]). Under this law, an investment corporation is allowed to deduct the maximum amount ofdividends paid to investors from its taxable income.
(ii) Forecast for the next fiscal period(a) Portfolio management policy
FRC will increase management and rent capabilities by cooperating with property management companies
including sponsor companies even in a weak consumer spending environment and maintain the stable
operation of the properties by making the most use of their advantages.
FRC will invest based on the basic policy stipulated in its Articles of Incorporation and its basic
philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in“high growth potential markets.” By geographic location, of Fukuoka and Kyushu areas, FRC invests 60%
to 90% of its assets in the Fukuoka urban area, since the Fukuoka urban area is expected to have a highpopulation growth rate in the future. In addition to the Fukuoka urban area, management has decided toactively acquire properties in major cities, if there are regions or properties where FRC can generate
investment merits from community-oriented viewpoints. FRC will acquire high quality properties withadequate use of its advantages, such as information gathering ability in the areas, good knowledge ofregional properties and close relations with the local business community and governments, so thatinvestors can continue to invest in FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraisingand try to maintain a solid financial structure.
(b) Significant events that have occurred after the end of the current fiscal period
No relevant items(c) Performance forecast for the next fiscal period
FRC aims to achieve the following performance goals for the period ending February 2013 (September 1,
2012 to February 28, 2013) and the period ending August 2013 (March 1, 2013 to August 31, 2013).
Concerning preconditions for the forecast, please refer to “Preconditions for the performance forecast forthe period ending February 2013 (September 1, 2012 to February 28, 2013) and the period ending August
2013 (March 1, 2013 to August 31, 2013),” on page 6.
Period ending February 2013
Operating revenues

7,208 mm yen
4

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

1,994 mm yen
1,993 mm yen
16,200 yen
0 yen

Period ending August 2013
Operating revenues
Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

7,191 mm yen
1,994 mm yen
1,993 mm yen
16,200 yen
0 yen

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

5

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

Preconditions for the performance forecast for the period ending February 2013 (September 1, 2012 to February 28,2013) and for the period ending August 2013 (March 1, 2013 to August 31, 2013)
Item
Calculation period
Assets undermanagement
Number ofinvestment units
issuedInterest-bearing debt
and refinancing

Operating revenues

Operating expenses

Non-operating
expensesDividend per unit
Dividend in excessof earnings per unit
Other

Preconditions
17th fiscal period: from September 1, 2012 to February 28, 2013 (181 days)
18th fiscal period: from March 1, 2013 to August 31, 2013 (184 days)
 It is assumed that there will be 19 properties which FRC owned as of August 31, 2012.
 In practice, they may fluctuate due to changes in assets under management.
 It is assumed that there will be no issuance of new investment units until the end of the
fiscal period ending August 2013.
 The balance of interest-bearing debt outstanding on August 31, 2013 is expected to total
72,100 mm yen, a decrease of 1,250 mm yen from the end of the current period (August
31, 2012). The loan-to-value ratio (interest-bearing debt  total assets  100) is expected
to stand at around 45.5% (as of August 31, 2012, the loan-to-value ratio stands at 46.0%).
 In the period ending February 2013, FRC refinanced long-term debt totaling 2,600 mm
yen that became due for repayment in September 2012 into long-term debt. Moreover, it isassumed that FRC will repay a total of 1,100 mm yen in short-term debt and refinancelong-term debt totaling 9,500 mm yen that will become due for repayment in February
2013 into long-term debt.
 In the period ending August 2013, it is assumed that FRC will refinance long-term debt of
600 mm yen that will become due for repayment in March 2013 as well as long-term debt
of 1,000 mm yen that will become due for repayment in June 2013 into long-term debt.
 Of real estate rent revenues, revenues from properties FRC has already acquired are
calculated based on tenancy agreements that are valid as of today by taking into accountthe competitiveness of the properties and the market environment.
Of real estate rent revenues, revenues from percentage lease contracts are calculated basedon past results by taking into account sales fluctuation factors of the relevant tenants.
 Concerning real estate rent revenues, tenant vacancies are taken into account to a certain
extent. It is assumed that there will be no rent arrears or non-payments by tenants.
 When acquiring assets under management, the fixed property tax and city planning tax forthe assets will be proportionally calculated according to the holding period and adjustedwith the former owner. FRC will not write them off since it will include the relevant
adjusted amount in the acquisition cost.
 FRC writes off estimated repair costs for buildings for the calculation periods, the periods
ending February 2013 and August 2013. Actual repair costs may differ significantly fromthe estimated amounts since there is the possibility that repair costs are incurred urgently
due to damages to buildings caused by unforeseeable factors, repair costs generally differ
largely from period to period, and repair costs are not regularly incurred.
 Concerning outsourcing expenses, FRC anticipates 1,489 mm yen for the period ending
February 2013 and 1,505 mm yen for the period ending August 2013.
 Concerning taxes and other public charges, FRC anticipates 539 mm yen for the period
ending February 2013 and 550 mm yen for the period ending August 2013.
 Concerning depreciation and amortization expenses, FRC anticipates 1,276 mm yen forthe period ending February 2013 and 1,287 mm yen for the period ending August 2013.
 Concerning interest payment and expenses related to financing, FRC anticipates 624 mm
yen for the period ending February 2013 and 630 mm yen for the period ending August
2013.
 Dividend (dividend per unit) is calculated based on the dividend policy stipulated in
FRC’s Articles of Incorporation.
 Dividend per unit may fluctuate due to fluctuations in rent revenues caused by changes in
assets under management and tenants or various factors including unexpected occurrencesof repair.
 Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned at
the moment.
 It is assumed that there will be no significant revisions to laws and regulations, the tax
system, and accounting standards that may influence the forecast figures.
 It is also assumed that there will be no significant unexpected changes in general
economic conditions and the real estate market.

(3) Investment risks
The disclosure is omitted, since there are no significant changes from the “Investment risks” disclosed in the latest
securities report (submitted on May 29, 2012).

6

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

3. Financial Statements(1) Balance sheets(thousands of yen)Account

15th fiscal period(as of February 29, 2012)

16th fiscal period(as of August 31, 2012)

AssetsCurrent assets
Cash and deposits

3,386,507

2,370,735

Cash and deposits in trust

4,768,082

5,293,998

Operating accounts receivable

277,337

311,075

Prepaid expenses

274,218

308,190—

91,789Consumption taxes receivable
Deferred tax assets
OthersTotal current assets

19

346

12,162

22,346

8,718,329

8,398,481

Noncurrent assets
Property, plant and equipment
Buildings in trust, netAggregate of accumulated depreciation
Structures in trust, net

66,859,921(10,992,802)

55,867,119

1,105,256

Aggregate of accumulated depreciation(292,831)

Machinery and equipment in trust, net(133,265)

812,425(567,688)

Lands in trust

58,633,447(318,392)

813,885

427,028
218,679

1,072,411

Aggregate of accumulated depreciation(12,115,804)
1,132,278

351,944

Aggregate of accumulated depreciation
Tools and fixtures in trust, net

70,749,251(147,112)

279,916

1,108,673
504,722(634,583)

474,09087,057,619

88,615,021

Construction in progress in trust

215,660

10,711

Total property, plant and equipment

144,676,226

148,827,072

1,765,318

1,765,318

21,04021,6391,786,358

1,786,957

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

100,000

100,000

Long-term prepaid expenses

484,124465,396

Total investment and other assets

594,124575,396

147,056,709

151,189,427

Investment unit issuance expenses

17,915

13,436

Total deferred assets

17,915

13,436

155,792,953

159,601,345

Intangible assets
Leasehold right in trust
Other intangible assets in trust
Total intangible assets
Investment and other assets

Total noncurrent assets
Deferred assets

Total assets

7

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

(thousands of yen)Account

15th fiscal period(as of February 29, 2012)

16th fiscal period(as of August 31, 2012)

Liabilities
Current liabilities
Operating accounts payable

543,922881,730

Short-term debt

500,000

1,100,000

18,250,000

13,850,000

Account payable-other

15,822

66,822

Accrued expenses

301,798

314,557

Current maturities of long-term debt

Income taxes payable

944

5,527

Accrued consumption taxes

150,990—

Advances received

794,980

837,959

Deposits received

671,675

1,066,179

Total current liabilities

21,230,134

18,122,777

50,675,000

58,400,000

331,545

305,592

12,333,382

11,602,709

63,339,927

70,308,302

84,570,061

88,431,079

69,177,628

69,177,628

2,045,264

1,992,637

Total surplus

2,045,264

1,992,637

Total Net Assets

71,222,892

71,170,265

Total net assets

71,222,892

71,170,265

Total liabilities and net assets

155,792,953

159,601,345

Noncurrent liabilities
Long-term debt payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits received intrust
Total noncurrent liabilities
Total liabilities
Net assets
Net Assets
Shareholders’ capital
Surplus
Unappropriated surplus

8

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012(2) Statements of income(thousands of yen)Account

15th fiscal period(September 1, 2011 to
February 29, 2012)

16th fiscal period(March 1, 2012 toAugust 31, 2012)

6,682,912

6,596,812

1. Operating revenues
Rent revenues- real estate
Other rental revenues-real-estate

249,029

6,931,942

497,427

7,094,239

2. Operating expenses
Expenses related to rent business

3,757,328

3,964,116

Asset management fees

413,246

421,505

Asset custody fees

5,805

5,874

Administrative service fees

46,04948,938

Director’s compensations

9,600

9,600

575

1,006

Bad debt expenses
Other operating expenses

61,912

Operating income

4,294,518

47,757

2,637,423

4,498,799
2,595,440

3. Non-operating revenues
Interest received

744

753

Refund of property taxes and city planning taxes—

84,414

Appropriation of balance related to amended return—

12,876

Others

2,705

3,449

454

98,4994. Non-operating expenses
Interest payment
Amortization of investment unit issuance expenses
Financing related expenses
Others474,736

510,860

4,478

4,478

115,350

124,597—594,565

48,664

688,601

Ordinary income

2,046,307

2,005,338

Net income before income taxes

2,046,307

2,005,338

Income taxes-current

1,092

5,676

Income taxes based on amended return

—

7,400

Income taxes-deferred0

Net income

1,093

(326)

12,751

2,045,214

1,992,587

Retained earnings brought forward

50

50

Unappropriated retained earnings

2,045,264

1,992,637

9

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012(3) Statement of changes in net assets
15th fiscal period (September 1, 2011 to February 29, 2012)(thousands of yen)
Net Assets
Item

Balance as of September 1, 2011

Retained earnings

Shareholders’capitalUnappropriatedretained earnings

Total
net assets

Total
Net Assets

69,177,628

2,082,302

71,259,930

71,259,930

Dividend of retained earnings—(2,082,252)(2,082,252)(2,082,252)

Net income—

2,045,214

2,045,214

2,045,214—(37,037)(37,037)(37,037)

69,177,628

2,045,264

71,222,892

71,222,892

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of February 29, 2012

16th fiscal period (March 1, 2012 to August 31, 2012)(thousands of yen)
Net Assets
Item

Balance as of March 1, 2012

Retained earnings

Shareholders’capitalUnappropriatedretained earnings

Total
Net Assets

Total
net assets

69,177,628

2,045,264

71,222,892

71,222,892

Dividend of retained earnings—(2,045,214)(2,045,214)(2,045,214)

Net income—

1,992,587

1,992,587

1,992,587—(52,626)(52,626)(52,626)

69,177,628

1,992,637

71,170,265

71,170,265

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of August 31, 201210

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

(4) Dividend statement
Account

15th fiscal period(September 1, 2011 to
February 29, 2012)

16th fiscal period(March 1, 2012 toAugust 31, 2012)

I. Unappropriated retained earnings

2,045,264 thousand yen

1,992,637 thousand yen

II. Total

2,045,214 thousand yen

1,992,548 thousand yen(16,621 yen)

(16,193 yen)

50 thousand yen

89 thousand yen(Dividend per investment unit)

III. Retained earnings brought forward
Method for calculating dividends

The amount of dividends shall be
The amount of dividends shall bedecided in accordance with the dividend decided in accordance with the dividend
policy stipulated in Article 38-1-1 ofpolicy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and must FRC’s Articles of Incorporation andexceed 90% of FRC’s distributablemust exceed 90% of FRC’s distributableprofits as stipulated in Article 67-15 of profits as stipulated in Article 67-15 of
the Special Taxation Measures Law of
the Special Taxation Measures Law ofJapan. Following the above policy, FRC Japan. Following the above policy, FRC
shall decide to distribute 2,045,214
shall decide to distribute 1,992,548
thousand yen, which is almost the entire thousand yen, which is almost the entire
amount of unappropriated retained
amount of unappropriated retained
earnings, as earnings dividends.
earnings, as earnings dividends.
Moreover, dividend in excess of earnings Moreover, dividend in excess of earnings
as stipulated in Article 38-2 of FRC’s
as stipulated in Article 38-2 of FRC’s
Articles of Incorporation will not be
Articles of Incorporation will not beprovided.
provided.
Note: Concerning amounts other than dividend per investment unit, fractions of 1,000 yen are omitted.

11

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

(5) Cash flows statements(thousands of yen)
15th fiscal period(September 1, 2011 to
February 29, 2012)

Account

16th fiscal period(March 1, 2012 toAugust 31, 2012)

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

2,046,307

2,005,338

Depreciation and amortization expenses

1,177,245

1,242,487

4,478

4,478

Amortization of investment unit issuance expenses
Interest received

(744)

(753)

Interest payment

474,736

510,860

Decrease (increase) in operating account receivables

81,947(33,737)

Decrease (increase) in consumption taxes receivable

451,247(91,789)

Increase (decrease) in accrued consumption taxes

150,990(150,990)

Increase (decrease) in operating account payable(50,262)

141,740

2,342

49,678

Increase (decrease) in account payable-other
Increase (decrease) in accrued expenses

2,947

3,060

Increase (decrease) in advances received(51,015)

42,979

Increase (decrease) in deposits expenses(277,815)

394,504

Decrease (increase) in prepaid expenses

37,887(33,972)

Decrease (increase) in long-term prepaid expenses

48,976

18,727

Others, net

9,261

24,220Subtotal

4,108,532

4,126,833

744

753

(472,101)(501,162)(900)(8,922)

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

41,374426

3,677,649

3,617,928(841,554)(5,229,355)(5,606)(3,368)120—

II. Net cash provided by (used in) investment activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits(90)(25,952)

Proceeds from tenant leasehold and security deposits in trust

473,209

158,363

Repayment of tenant leasehold and security deposits in trust(192,577)(889,035)

Proceeds from restricted trust deposits

—

2,362

Payments for restricted trust deposits—(29,392)(566,499)(6,016,378)

Net cash provided by (used in) investment activities
III. Net cash provided by (used in) financial activities
Increase in short-term debt payable

17,000,000

8,600,000

Decrease in short-term debt payable(21,000,000)(8,000,000)

Proceeds from long-term debt payable

5,500,000

9,400,000

Repayment of long-term debt payable(1,575,000)(6,075,000)

Dividends paid

(2,078,755)(2,043,437)(2,153,755)

1,881,562

957,395(516,887)

V. Balance of cash and cash equivalents at beginning of period

7,197,195

8,154,590

VI. Balance of cash and cash equivalents at end of period

8,154,590

7,637,703

Net cash provided by (used in) financial activities
IV. Net increase (decrease) in cash and cash equivalents

12Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012(6) Notes on the going concern assumption
No relevant items(7) Significant accounting policies
The disclosure is omitted, since there are no significant changes from contents disclosed by the latest securities
report (submitted on May 29, 2012).
(8) Notes to financial statements
FRC omits the disclosure of notes to balance sheets, statements of income (except for certain part), statements ofchanges in Net Assets, and cash flows statements, as well as notes on lease transactions, financial instruments,
securities, derivative transactions, related-party transactions, tax-effect accounting, retirement benefits, asset
retirement obligations and rental properties, since it does not find substantial need for disclosure in the earnings
briefing.
(Notes to the Statements of Income)15th fiscal period(September 1, 2011 to February 29, 2012)—

16th fiscal period(March 1, 2012 to August 31, 2012)
The “Appropriation of balance related to amended return”
in the Statements of Income represents the tax payment
amount, etc. incurred as a result of the amended return forincome taxes and the increased amount in income taxes
for the current fiscal period, both of which were paid by
Fukuoka Realty Co., Ltd. based on the asset managementagreement with FRC.
This matter causes no impact on the dividend payment forthe 16th fiscal period.

(Per unit information)
15th fiscal period(September 1, 2011 to February 29, 2012)
Net assets per investment unit:
578,812 yen
Net income per investment unit: 16,621 yen

16th fiscal period(March 1, 2012 to August 31, 2012)
Net assets per investment unit:
578,384 yen
Net income per investment unit: 16,193 yen

Net income per investment unit is calculated by dividing
net income by the weighted average number of investment
units outstanding during the fiscal period.

Net income per investment unit is calculated by dividing
net income by the weighted average number of investment
units outstanding during the fiscal period.

Diluted net income per investment unit is not shown since
there are no potential investment units.

Diluted net income per investment unit is not shown since
there are no potential investment units.

Note: Calculation of net income per investment unit is based on the following.
15th fiscal period(September 1, 2011
to February 29, 2012)

Account
Net income (thousands of yen)Amount not attributable to common shareholders (thousands of yen)
Net income attributable to common investment units (thousands of yen)
Average number of investment units during the fiscal period (units)(Significant subsequent events)
16th fiscal period(March 1, 2012 to August 31, 2012)

No relevant items(9) Change in the number of investment units outstanding
No relevant items

4. Change in Directors(1) Change in directors in FRC
No relevant items

13

16th fiscal period(March 1, 2012 toAugust 31, 2012)

2,045,214

1,992,587——

2,045,214

1,992,587

123,050

123,050

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

(2) Change in directors in Fukuoka Realty Co., Ltd.
Masayasu Saki
Appointed to Chairman (as of June 25, 2012)
Etsuo Matsuyuki

Appointed to CEO and Representative Director (as of June 25, 2012)

Seiji Yagi

Newly appointed to Director (part-time) (as of June 25, 2012)

Kenji Tsugami

Newly appointed to Director (part-time) (as of June 25, 2012)

Yasumichi Hinago

Resigned from Director (part-time) (as of June 25, 2012)

Officers of Fukuoka Realty Co., Ltd. as of October 10, 2012 are listed below.
(as of October 10, 2012)
Title

Chairman

Name

Masayasu
Saki

Career Summary

April 1969
April 1985
June 1987
June 1992

June 1996
June 1998
November 1999
November 2000
July 2003
April 2006
June 2006
July 2006
June 2012
June 2012
CEO &Representative
Director

Etsuo
Matsuyuki

April 1980
June 2004
April 2005
July 2006

July 2009

August 2010

June 2011
January 2012
June 2012Managing Directorand Head of Planning
Dept.

Yoichi Nishio

April 1985
September 2005
July 2008
January 2009
June 2011
June 2012

Joined The Nippon Fudosan Bank, Limited. (Currently, Aozora
Bank, Ltd.)
Appointed Vice Branch Manager, London BranchAppointed President of Nippon Credit International (securities
company as British subsidiary)
Appointed member of the Board and General Manager ofTokyo Branch, The Nippon Credit Bank, Ltd. (currently,
Aozora Bank, Ltd.)
Appointed Executive Director
Appointed Senior Managing Director
Appointed Director at CSK K.K.
Appointed Senior Executive Officer at Sanyo Shinpan FinanceCo., Ltd. (currently, SMBC Consumer Finance Co., Ltd.)
Appointed CEO of Fitch Ratings Japan
Appointed Advisor of Fukuoka Realty Co., Ltd.
Appointed CEO of Fukuoka Realty Co., Ltd.
Appointed CEO & Representative Director of Fukuoka REIT
Corporation (current position)
Appointed outside director at Hasegawa Co., Ltd. (current
position)
Appointed Chairman of Fukuoka Realty Co., Ltd. (current
position)
Joined Japan Development Bank (currently Development Bankof Japan)Appointed Manager, Human Resources Division
Appointed General Manager, Management Division
Seconded to Fukuoka Jisho Co., Ltd.
Appointed to Deputy General Manager, Development BusinessGroup
Joined Fukuoka Jisho Co., Ltd.
Appointed Executive Officer and Deputy General Manager,
Development Business Group and General Manager, Building
Division
Appointed Executive Officer and General Manager,
Accounting & Finance Division and in charge of General
Affairs Division and Finance Division
Appointed Managing Director and Head of Planning Dept.,
Fukuoka Realty Co., Ltd.
Appointed Managing Director and Executive Officer, Fukuoka
Jisho Co., Ltd.
Appointed CEO & Representative Director, Fukuoka Realty
Co., Ltd. (current position)
Joined The Nippon Credit Bank, Ltd. (currently, Aozora Bank,
Ltd.)
Appointed General Manager, Real Estate Finance Division
Appointed Senior Vice President, New City Corporation
Appointed Managing Director and Head of Finance
Department, Fukuoka Realty Co., Ltd.
Appointed Managing Director
Appointed Managing Director and Head of Planning Dept.
(current position)

14

Numberof units
owned
0

0

0

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

Director (part-time)

Hiroshi
Shimuta

October 2000
December 2003
April 2004
April 2005
June 2007

Registered as attorney in law
Appointed Auditor, Fukuoka Realty Co., Ltd.
Appointed Head of Compliance OfficeAppointed Head of Compliance Dept.
Joined Nishimura Tokiwa Law Office (currently, Nishimura
Asahi Law Office) (current position)
June 2007
Appointed Director, Fukuoka Realty Co., Ltd.
Director (part-time)
Seiji Yagi
April 1968
Joined The Nippon Fudosan Bank, Limited. (currently, Aozora
Bank, Ltd.)
June 1991
Appointed Director
June 1996
Appointed Managing Director
June 1998
Joined Fukuoka Jisho Co., Ltd.
June 2001
Joined Fukuoka City Bank, Co., Ltd. (currently, The
Nishi-Nippon City Bank, Ltd.)
Appointed Director
July 2002
Joined Fukuoka Jisho Co., Ltd.
August 2002
Appointed Senior Managing Director
August 2003
Appointed President & Representative Director
August 2011
Appointed Vice Chairman & Director (current position)
June 2012
Appointed Director, Fukuoka Realty Co., Ltd. (current
position)
Director (part-time)
KenjiApril 1973
Joined The Industrial Bank of Japan, Limited
TsugamiJune 1999
Appointed General Manager, Eighth Marketing Division
November 2000 Jointed Kyushu Electric Power Co., Inc.
Appointed Group Manager, Overseas Business Group,
Business Development Division
July 2001
Appointed Supervising Group Manager, Overseas BusinessGroup, Business Development Division
July 2002
Appointed General Manager, Overseas Business Division
June 2007
Appointed Executive Officer and Branch Manager, Fukuoka
BranchJune 2009
Appointed Director, Managing Executive Officer and General
Manager, Business Development Division and General
Manager, Telecommunications Division
June 2010
Appointed Director, Managing Executive Officer and General
Manager, Business Development Division
July 2010
Appointed Director, Managing Executive Officer and General
Manager, International Business Division
June 2012
Appointed Director, Fukuoka Realty Co., Ltd. (current
position)
June 2012
Appointed Vice President & Representative Director, Kyushu
Electric Power Co., Inc. (current position)
Auditor (part-time)
Masanori
April 1978
Joined Fukuoka Sogo Bank, Ltd. (currently, The Nishi-Nippon
TasakaCity Bank, Ltd.)
August 2000
Appointed Deputy General Manager, Planning Division
July 2003
Appointed General Manager, Planning Division and Head,
Risk Supervision Office
October 2004
Appointed Assistant General Manager, General Planning
Division
April 2005
Seconded to NCB Management Information Service Co., Ltd.
(currently, NCB Research& Consulting Co., Ltd.)
Appointed General Manager, Business Alliance Division
April 2006
Appointed Director, Masanori Tasaka Tax & Accounting
Office (current position)
June 2006
Appointed Auditor, Fukuoka Realty Co., Ltd. (current position)(Note )Masayasu Saki serves concurrently as Director of Fukuoka Realty Co., Ltd., the asset management company, and CEO &Representative Director of FRC. The concurrent offices were approved by the Commissioner of Financial Services Agency as ofJune 22, 2006, based on the provisions of Article 13, the Investment Trusts and Investment Corporations Law before it was revised
pursuant to the provisions of Article 5, the Law to Partially Revise the Securities and Exchange Law (2006 Law No. 65).

15

0

0

0

0

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012

5. Reference Information(1) Investment situation(as of August 31, 2012)
Type of asset

Real estate in
Trust

Location(Note 1)

Purpose

RetailOffice building
OthersTotal value of
properties held
(mm of yen)
(Note 2)

Percentage of
total assets(%)(Note 3)

Fukuoka urban area

66,875

41.9

Other Kyushu areas

36,138

22.6

Fukuoka urban area

40,501

25.4

Other Kyushu areas——

Fukuoka urban area

7,088

4.4

Other Kyushu areas——

150,603

94.4

Subtotal

Deposits and other assets
8,998
5.6
Total amount of assets
159,601100.0(Note 4)(150,614)(94.4)
Note 1: “Fukuoka urban area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City
for school and work, according to the 2005 census, which states “the number of workers and students aged 15 years orolder commuting between their homes and places of work or school” conducted by Fukuoka City and the Statistics
Bureau of the Ministry of Internal Affairs and Communications.
“Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area) and Yamaguchi Prefecture.
Note 2: “Total value of properties held” is based on the value on the balance sheet (the value of real estate in trust is the bookvalue after depreciation).
Note 3: Concerning the “Percentage of total assets,” the numbers are rounded off to one decimal place. The total of individual
percentages in the above table may not equal 100%.
Note 4: Figures in parentheses for “Total amount of assets” refer to the value and percentage of real estate held in effect to thetotal amount of assets.
(as of August 31, 2012)
Percentage of total amount of assets(%)

Value on balance sheet(mm of yen)
Total amount of liabilities

88,431

55.4

Total amount of net assets

71,17044.6(2) Investment assets(i) Primary issues of investment securities
No relevant items

16

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012(ii) Real estate investment portfolio(a) Values and investment ratios at end of period are as follows.
(as of August 31, 2012)

Real estate property nameAcquisitionvalue(mm of yen)
(Note 1)

Value on balancesheet(mm of yen)

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

Investment
ratio
(%)
(Note 3)

Tanizawa Sogo
Appraisal Co., Ltd.
Tanizawa Sogo
18.7
Appraisal Co., Ltd.
Japan Real Estate
10.2
InstituteJapan Real Estate
4.3
InstituteJapan Real Estate
3.4
InstituteJapan Real Estate
1.6
InstituteJapan Real Estate
3.5
InstituteTanizawa Sogo
0.7
Appraisal Co., Ltd.
Tanizawa Sogo
1.6
Appraisal Co., Ltd.
Tanizawa Sogo
2.3
Appraisal Co., Ltd.

Canal City Hakata

32,00031,51932,200Canal City Hakata B

28,70028,85328,800Park Place Oita

15,70017,115

16,800SunLive City Kokura

6,633

6,134

7,410

Square Mall Kagoshima Usuki

5,300

4,957

4,910

Kumamoto Intercommunity SC

2,400

2,213

2,440

AEON Hara Shopping Center

5,410

5,424

4,660

Hanahata SC

1,130

1,077

1,170

Kurume Higashi Kushiwara SC

2,500

2,338

2,530

K’s Denki Kagoshima

3,550

3,379

3,400

Retail subtotal:

103,323

103,014104,320

Canal City Business Center
Building

14,60014,00114,800Gofukumachi Business Center

11,20010,037

12,800Sanix Hakata Building

4,400

4,228

4,720

Taihaku Street Business Center

7,000

6,834

6,660

Higashi Hie Business Center

5,900

5,399

6,040

Office buildings subtotal:

43,10040,50145,020Amex Akasakamon Tower

2,060

1,925

1,670

City House Keyaki Dori

1,111

1,055

1,020

Aqualia Kego

2,800

2,813

3,250

Aqualia Chihaya

1,280

1,294

1,390

Others:

7,251

7,088

7,330

4.7

153,674

150,603

156,670

100.0

Total

Real estate appraiser

20.8

67.2
Tanizawa Sogo
Appraisal Co., Ltd.
Tanizawa Sogo
7.3
Appraisal Co., Ltd.
Japan Real Estate
2.9
InstituteJapan Real Estate
4.6
InstituteTanizawa Sogo
3.8
Appraisal Co., Ltd.
9.5

28.0
Daiwa Real EstateAppraisal Co., Ltd.
Daiwa Real Estate
0.7
Appraisal Co., Ltd.
Japan Real Estate
1.8
InstituteJapan Real Estate
0.8
Institute
1.3

Note 1: “Acquisition value” refers to the amount (purchasing prices shown on the purchasing contracts) not including expenses
for the acquisition of relevant properties (agency fees and taxes and other public charges).
Note 2: “Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity
with the method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation and rules stipulated by
the Investment Trusts Association, Japan.
Note 3: “Investment ratio” is obtained by dividing each property’s acquisition value by the total acquisition value. The total ofindividual percentages in the above table may not equal 100%, since the numbers are rounded off to one decimal place.
.

17

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended August 2012(b) Summary of the real estate rental business(as of August 31, 2012)
Percentage of
Total
Total
total
leased floor
rental revenues
rental revenues
space(mm of yen)(%)(m2)
(Note 4)(Note 5)36,568.94
1,009
14.2

Number oftenants(Note 1)

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

Canal City Hakata

1 (21)

79.5

45,975.25

Canal City Hakata B (Note 6)

1 (50)

99.6

68,804.89

68,562.77

1,586

22.4

Park Place Oita

1

99.6

104,917.10

104,547.53

1,099

15.5

Real estate property name(106)

SunLive City Kokura

1

100.0

61,450.22

61,450.22

293

4.1

Square Mall Kagoshima Usuki

11

100.0

14,602.59

14,602.59

348

4.9

Kumamoto Intercommunity SC

2

100.0

6,968.66

6,968.66

90

1.3

AEON Hara Shopping Center

1

100.0

27,580.75

27,580.75

212

3.0

Hanahata SC

2

100.0

2,801.15

2,801.15

41

0.6

Kurume Higashi Kushiwara SC

1

100.0

6,467.80

6,467.80

88

1.2

K’s Denki Kagoshima1
22 (196)(Note 2)100.0

7,296.17

7,296.17

111

1.6

97.1

346,864,58

336,846.58

4,881

68.8

1

99.3

23,018.60

22,860.28

600

8.5

97.2

19,907.79

19,354.58

502

7.1

Retail subtotal:
Canal City Business Center
Building
Gofukumachi Business Center

27

Sanix Hakata Building

19

100.0

6,293.76

6,293.76

200

2.8

Taihaku Street Business Center

1

(63)

97.0

14,653.97

14,217.00

301

4.2

Higashi Hie Business Center

1 (18)
49 (185)(Note 2)
1 (63)

96.3

13,695.51

13,190.15

339

4.8

97.9

77,569.63

75,915.77

1,943

27.4

93.6

4,821.25

4,511.33

63

0.9

1

(36)

85.1

2,710.86

2,307.43

34

0.5

1

(117)

89.9

7,415.36

6,667.28

114

1.6

Office buildings subtotal:
Amex Akasakamon Tower
City House
Keyaki Dori
Aqualia Kego

(58)

Aqualia Chihaya

1 (104)
99.3
5,619.69
5,579.76
56
0.8
4 (320)
Others subtotal:
92.7
20,567.16
19,065.80269
3.8(Note 2)75 [701]
Total
97.0
445,001.37
431,828.15
7,094
100.0
(Note 2)
Note 1: “Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and officebuildings among relevant properties. For the number of tenants in pass-through master leasing properties, the number ofsections stipulated in the tenancy agreements with end tenants is shown in parentheses. The Taihaku Street Business Centeris an office building with a residential tower. Its number of tenants comprises 12 offices and 51 residences.
Note 2: The subtotal and total of all the tenants in other than pass-through master leasing properties and the number of sections
stipulated in the tenancy agreements with end tenants for pass-through master leasing properties is shown in parentheses inthe totals column for “Number of tenants.”
Note 3: “Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the numbers arerounded off to one decimal place.
Note 4: “Total rental revenues” are the total of real estate rent revenues and other revenues from real estate rent in the current fiscal
period.
Note 5: “Percentage of total rental revenues” is obtained by dividing each property’s total rental revenues by the total amount of
total rental revenues. The total of individual percentages in the above table may not equal 100%, since the numbers arerounded off to one decimal place.
Note 6: The calculation base for rents in some lease agreements may include the area of common spaces that are closely related tothe exclusive spaces for lease. The figures in the table above include the area of such common spaces. Furthermore, thetotal leasable floor space is 63,709.60m2 when counting only the area of exclusive spaces that can be leased, while the totalleased floor space is 63,467.48m2 when counting only the contracted area of exclusive spaces indicated in the leaseagreements.

(3) Investment target
The disclosure is omitted, since there are no significant changes from the “Investment target” disclosed by the latest
securities report (submitted on May 29, 2012).

18