Provisional translation only
April 12, 2019EARNINGS BRIEFING FOR THE PERIOD ENDED FEBRUARY 2019
Name of issuer:
Code number:
URL:
Stock listings:

Fukuoka REIT Corporation (FRC)8968
https://www.fukuoka-reit.jp/eng/
Tokyo Stock Exchange, and Fukuoka Stock Exchange

Representative:

Etsuo Matsuyuki CEO & Representative Director

Asset manager:
Representative:
Contact:

Fukuoka Realty Co., Ltd.
Etsuo Matsuyuki CEO & Representative Director
Akira Eguchi
Executive Managing Director and General Manager ofPlanning Dept.
Phone: +81-92-272-3900

Expected date for submitting securities report:
May 31, 2019
Expected commencement date of dividend payments: May 17, 2019
Supplementary documents for earnings briefing
Yes
Analyst meeting (for institutional investors and analysts) Yes(Figures rounded down to nearest mm yen)

1. Performance and situation of assets for the period ended February 2019
(September 1, 2018 to February 28, 2019)(1) Performance(% shows percentage change from previous period)

Operating revenues
mm of yen
Period ended

February 2019
Period ended

August 2018

Operating income%

mm of yen

Ordinary income%

mm of yen

Profit%mm of yen

%

9,242

0.7

3,306

2.1

2,935

2.6

2,934

2.6

9,178

12.0

3,238

9.2

2,861

9.0

2,860

9.0

Profit per unit
Period ended

February 2019
Period ended

August 2018

Return on net assets

Ratio of ordinary income
Ratio of ordinary
income to total assets to operating revenues

3,687 yen

2.9%

1.5%

31.8%

3,593 yen

2.9%

1.5%

31.2%

(2) Dividends
Dividend
per unit

Total
dividend(excl. dividend in(excl. dividend inexcess ofexcess of earnings)
earnings)
Period ended

February 2019
Period ended

August 2018

Dividendin excess ofearnings
per unit

Total
dividendin excess ofearnings

Dividend
per unit(incl. dividend inexcess of
earnings)

Total
dividend(incl. dividend inexcess of earnings)

Payoutratio

Ratio ofdividend
to netassets3,687 yen 2,934 mm yen

0 yen

0 mm yen

3,687 yen 2,934 mm yen 100.0%

2.9%

3,593 yen 2,860 mm yen

0 yen

0 mm yen

3,593 yen 2,860 mm yen 100.0%

2.8%(3) Financial condition

Period ended

February 2019
Period ended

August 2018

Ratio of net assets tototal assets

Total assets

Net assets

Net assets per unit

195,433 mm yen

101,874 mm yen

52.1%

127,982 yen

193,112 mm yen

101,799 mm yen

52.7%

127,888 yen

Cash flows fromfinancing activities

Balance of cash andcash equivalents at
end of period(4) Cash flows condition
Cash flows fromoperating activities
Period ended

February 2019
Period ended

August 2018

Cash flows frominvesting activities

4,832 mm yen(3,604) mm yen(859) mm yen

8,319 mm yen

4,149 mm yen(15,326) mm yen

11,734 mm yen

7,950 mm yen

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

2. Forecast of performance for the period ending August 2019 (March 1, 2019 to August 31, 2019)
and the period ending February 2020 (September 1, 2019 to February 29, 2020)(% shows percentage change from previous period)

Period ending

August 2019
Period ending

February 2020

Operating revenues Operating income

Ordinary income

mm of yen%

mm of yen%

mm of yen

9,305

0.7

3,311

9,321

0.2

3,328

ProfitDividend
per unit

Dividendin excess of(excl. dividend earnings
per unit% in excess ofearnings)%

mm of yen

0.2

2,930 (0.2)2,929(0.2) 3,680 yen

0 yen

0.5

2,946

2,945

0.5 3,700 yen

0 yen(Reference) Forecast profit per unit: Period ending August 2019
Forecast profit per unit: Period ending February 2020

0.5

3,680 yen
3,700 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):
As of February 2019
796,000 units
As of August 2018
796,000 units(ii) Treasury investment units at end of period:
As of February 2019
0 unitAs of August 2018
0 unitNote: Regarding the number of investment units, a basis for calculating profit per unit, please refer to “Per unit information,” onpage 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, profit, 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 the preconditions forthe above forecast figures please refer to “2. Portfolio Management Policy and Management Situation,(2) Management situation – Preconditions for the performance forecast for the period ending August
2019 (March 1, 2019 to August 31, 2019) and the period ending February 2020 (September 1, 2019 toFebruary 29, 2020)” on page 4.

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

Concerning the contents hereinafter, items that Fukuoka REIT Corporation (hereinafter “FRC”) judges “can be omitted
from the disclosure from the standpoint of importance” are not shown in conformity with the “Format and Guidance for
Preparation of Earnings Briefing for REITs” (February 2018).
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 November 29, 2018).
2. Portfolio Management Policy and Management Situation(1) Portfolio management policy
Fukuoka Realty Co., Ltd., the asset management company to which FRC entrusts management of its assets,
approved at its board of directors’ meeting held on March 28, 2019 to partly amend the asset management guidelines(the “Asset Management Guidelines”), its internal regulations. In accordance with this, FRC made partial
amendments to the “Investment policy” disclosed by the latest securities report (submitted on November 29, 2018),
and accordingly submitted an extraordinary report as of the same date.
Below are the modified portions, as underlined, from the descriptions in the latest securities report (submitted on
November 29, 2018).
Chapter 1 Fund Information
I. Fund Status
2. Investment Policy(1) Investment Policy(ii) Investment targets and their acquisition methods(b) Investment types(Preliminaries omitted)<Before amendments>
Use
Investment Ratio

Investment Target

Retail60 – 80%

Urban, Regional and Community facilities

Office buildings

20 – 40%Class A properties, Sale and Leaseback

Others

0 – 20%Hotels, Residential properties, Logistics
facilities and Public facilities

Investment Ratio

Investment Target

Retail40 – 70%

Urban, Regional and Community facilities

Office buildings

20 – 50%Class A properties, Sale and Leaseback

Others

0 – 30%Hotels, Residential properties, Logistics
facilities and Public facilities(The rest omitted)<After amendments>
Use(The rest omitted)(iii) Portfolio building policy for FRC(b) Property management standards
b. Lease contract formats<Before amendments>
In concluding lease contracts with tenants of retail facilities, long-term lease contracts with fixed rents
shall be employed as a rule. For retail facilities in the categories of urban and regional facilities,
however, they shall be managed in a way that allows tenant replacement to reflect the needs ofconsumers by flexibly setting lease periods and introducing fixed-term lease contracts, among othermeasures. Moreover, schemes shall be adopted to enable increased rent income in the period of
economic expansion by combining percentage-of-sales rent lease contracts with fixed-rent lease
contracts.
<After amendments>
In concluding lease contracts with tenants of retail facilities, long-term lease contracts with fixed
rents shall be employed as a rule. For retail facilities in the categories of urban and regional facilities,
however, they shall be managed in a way that allows tenant replacement to reflect the needs ofconsumers by flexibly setting lease periods and introducing fixed-term lease contracts, among othermeasures. Moreover, schemes shall be adopted to enable increased rent income in the period of
economic expansion by combining lease contracts that contain variable rent such as
percentage-of-sales rent and percentage-of-GOP rent lease contracts with fixed-rent lease
contracts.
Furthermore, the disclosure is omitted for the other parts of the “Investment policy,” “Investment target” and “Dividend
policy” since there are no significant changes from the latest securities report (submitted on November 29, 2018).
1

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(2) Management situation(i) Summary of the current fiscal period(a) Brief history of the investment corporation
FRC was established on July 2, 2004 based on the “Act on Investment Trusts and Investment Corporations”(Act No. 198 in 1951 including later revisions) 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 regional characteristics in the real estate industry into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as
Retail in Canal City Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common
space), a commercial complex where specialty shops, cinema complex, theaters, amusement facilities,
hotels and offices are integrally developed (hereinafter “Canal City Hakata”). As of the end of the current
fiscal period (February 28, 2019), FRC manages a total of 29 properties comprising 11 Retail, 8 Officebuildings and 10 Others.
(b) Investment environment and portfolio performance
During the fiscal period under review (the 29th fiscal period), the Japanese economy showed a modest
recovery despite weakness seen recently in exports and production in some areas. Looking ahead, with theemployment and income environment continuing to improve, the economy is expected to continue
recovering moderately due to various political measures proving effective, among other factors, although
weakness will remain in certain areas for some time.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy is expanding
moderately. With regard to the outlook, a mild expansion is expected to continue, although attention shouldbe paid to the impact of the uncertainty about overseas economies and the impact of a labor shortage on the
supply side, among other factors.
As for land price trends, the average rate of change for residential land price rose for the second
consecutive year while the figure for commercial land price and the combined average for residential andcommercial land price rose for the fourth consecutive year, all on a national average basis, according to the2019 Land Market Value Publication. Meanwhile in Fukuoka City, the central area of FRC's investment
targets, land prices continued rising for seven consecutive years, up 12.3% year-on-year for commercial
land and up 5.3% year-on-year for residential land, marking higher rates of increase.
Under such circumstances, FRC acquired Tissage Hotel Naha on December 7, 2018. Completed in
February 2018, Tissage Hotel Naha is a newly-built hotel located in Naha City, Okinawa Prefecture, which isanticipated to achieve high growth.
As for existing properties, FRC continued its efforts to reinforce competitive advantages and customer
drawing ability at Canal City Hakata and other major retail properties, and focused on maintaining andincreasing the occupancy rate of its owned properties. As a result of these endeavors, the averageoccupancy rate of all properties FRC owns was 99.7% at the end of the 29th fiscal period.
When analyzing FRC’s portfolio (on an acquisition price basis) as of the end of the 29th fiscal period byinvestment target area, the investment ratio in the Fukuoka urban area accounted for 77.2%; whenanalyzing by property type, Retail, Office buildings, and Others accounted for 59.2%, 26.9% and 13.9%,
respectively.
(c) Summary of fundraising
In the 29th fiscal period, FRC conducted refinance while raised new funds by utilizing the commitment line to
procure 2,000 mm yen in short-term debt as funds for the acquisition of the above-mentioned property andother purposes. FRC refinanced the short-term debt into long-term debt during the fiscal period. As a result,the balance of its interest-bearing debt outstanding (including investment corporation bonds) at the end of
the period totaled 77,500 mm yen, with the loan-to-value ratio (ratio of interest-bearing debt (including
investment corporation bonds) to total assets) at 39.7% and the ratio of fixed-interest rate debt (ratio ofinterest-bearing debt with fixed interest rates (including investment corporation bonds) to totalinterest-bearing debt) at 90.2% as of the same date.
Going forward, FRC will continue its endeavors to reduce refinancing risks by dispersing debt repayment
dates and extending debt duration. At the same time, FRC will work to mitigate risks of rising interest rates
by shifting to fixed-interest rate borrowings and through other measures.
Moreover, the credit ratings assigned to FRC as of the end of the current fiscal period are as follows.
Credit Rating Agency
Rating Type
RatingRating Outlook
Rating and Investment Information, Inc.
Issuer Rating
A+
Stable(R&I)
Japan Credit Rating Agency, Ltd. (JCR)
Long-term Issuer Rating
AA−
Stable2

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(d) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 9,242 mm yen and operating income
after excluding operating expenses such as expenses related to leasing business and asset management
fees totaled 3,306 mm yen. Ordinary income was 2,935 mm yen and profit amounted to 2,934 mm yen.
Management decided to make a dividend of 3,687 yen per investment unit to meet the requirements ofspecial tax measures for an investment corporation (as stipulated in Article 67-15 of the Act on Special
Measures Concerning Taxation of Japan [Act No. 26 in 1957 including later revisions]). Under this law, aninvestment corporation is allowed to deduct the maximum amount of dividends paid to investors from its
taxable income.
(ii) Forecast for the next fiscal period(a) Portfolio management policy
FRC will further reinforce management and leasing capabilities by cooperating with property managementcompanies including sponsor companies, and secure and maintain the stable operation of the properties bymaking the most use of their advantages.
FRC will make investments based on the basic policy stipulated in its Articles of Incorporation and its basic
philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in“high growth potential markets.” By geographic location, of Fukuoka and Kyushu areas, FRC will invest 60%
to 90% of its assets in the Fukuoka urban area since the Fukuoka urban area is expected to have a 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 fundraising and 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 August 2019 (March 1, 2019 toAugust 31, 2019) and the period ending February 2020 (September 1, 2019 to February 29, 2020).
Concerning preconditions for the forecast, please refer to “Preconditions for the performance forecast for theperiod ending August 2019 (March 1, 2019 to August 31, 2019) and the period ending February 2020
(September 1, 2019 to February 29, 2020)” on page 4.
Period ending August 2019
Operating revenues
Operating income
Ordinary income
ProfitDividend per unit
Dividend in excess ofearnings per unit

9,305 mm yen
3,311 mm yen
2,930 mm yen
2,929 mm yen
3,680 yen
0 yen

Period ending February 2020
Operating revenues
9,321 mm yen
Operating income
3,328 mm yen
Ordinary income
2,946 mm yen
Profit2,945 mm yen
Dividend per unit
3,700 yen
Dividend in excess of
0 yen
earnings per unit
Note: The above forecast figures are calculated based on certain preconditions. The forecast should not be construed asa guarantee of actual performance since actual operating revenues, operating income, ordinary income, profit,
dividend per unit and dividend in excess of earnings per unit may differ due to changes in the businessenvironment.

3

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

Preconditions for the performance forecast for the period ending August 2019 (March 1, 2019 to August 31, 2019) andthe period ending February 2020 (September 1, 2019 to February 29, 2020)
Item
Preconditions
30th fiscal period: March 1, 2019 to August 31, 2019 (184 days)
Calculation period
31st fiscal period: September 1, 2019 to February 29, 2020 (182 days)
Assets under• It is assumed that there will be 29 properties FRC owns as of February 28, 2019.
management• In practice, the number may fluctuate due to changes in assets under management.
Total number of• It is assumed that there will be no issuance of new investment units until February 29,
investment units
2020.
outstanding• The balance of interest-bearing debt outstanding at the end of the 30th fiscal period(August 31, 2019) is expected to total 77,500 mm yen, the same as that at the end of the
29th fiscal period (February 28, 2019). The loan-to-value ratio (interest-bearing debt ÷ total
Interest-bearing
assets × 100) is expected to stand at around 39.5% (as of February 28, 2019, thedebt andloan-to-value ratio stands at 39.7%).
• The balance of interest-bearing debt outstanding at the end of the 31st fiscal period
refinancing(February 29, 2020) is expected to total 77,500 mm yen, same as the end of the 30th fiscal
period (August 31, 2019). The loan-to-value ratio (interest-bearing debt ÷ total assets ×100) is expected to stand at around 39.5%.
• Of leasing revenues – real estate, revenues from properties FRC has already acquired are
calculated based on tenancy agreements that are valid as of April 12, 2019 by taking into
account the competitiveness of the properties and the market environment, etc.
Operating
Of leasing revenues– real estate, revenues from lease contracts with variable rent such as
revenues
percentage-of-sales rent and percentage-of-GOP rent are calculated based on past resultsby taking into account such fluctuation factors as sales and GOP of the relevant tenants.
• For leasing revenues – real estate, 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 properties, the property taxes and city planning taxes for the assets will be
proportionally calculated according to the holding period and adjusted with the former
owner. However, the adjusted amount of the property taxes and city planning taxes to beborne by FRC for the initial year will not be written off since they will be included in theacquisition cost.
• FRC writes off estimated repair costs expected to be required for buildings for the
calculation periods (the 30th and 31st fiscal periods). Actual repair costs may differ
significantly from the estimated amounts since there is the possibility that repair costs are
incurred urgently due to damages to buildings caused by unforeseeable factors, repair
Operatingcosts generally differ largely from period to period, and repair costs are not regularly
expenses
incurred.
• Concerning outsourcing expenses, FRC anticipates 1,913 mm yen for the 30th fiscal
period and 1,907 mm yen for the 31st fiscal period.
• Concerning taxes and other public charges, FRC anticipates 734 mm yen for the 30th
fiscal period and 734 mm yen for the 31st fiscal period. Of these amounts, FRC anticipates
6 mm yen for the 30th fiscal period and 6 mm yen for the 31st fiscal period for Tissage
Hotel Naha it acquired in the 29th fiscal period.
• Concerning depreciation and amortization expenses, FRC anticipates 1,654 mm yen forthe 30th fiscal period and 1,666 mm yen for the 31st fiscal period.
• Concerning interest expenses (including interest expenses on investment corporation
Non-operating
bonds) and expenses related to financing, FRC anticipates 375 mm yen for the 30th fiscal
expensesperiod and 376 mm yen for the 31st fiscal period.
• Dividend (dividend per unit) is calculated based on the dividend policy stipulated in FRC’s
Articles of Incorporation.
Dividend per unit
• Dividend per unit may fluctuate due to fluctuations in leasing revenues caused by changes
in assets under management and tenants or various factors including unexpectedoccurrences of repair.
Dividend in excess• Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned atof earnings per
the moment.
unit• 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.
Other• It is also assumed that there will be no significant unexpected changes in general
economic conditions and the real estate market.

4

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(3) Investment risks
In the extraordinary report submitted on March 28, 2019, FRC made partial amendments to the “Investment risks”
disclosed in the latest securities report (submitted on November 29, 2018).
Below are the modified portions, as underlined, from the descriptions in the latest securities report (submitted on
November 29, 2018).
Chapter 1 Fund Information
I. Fund Status
3. Investment Risks(1) Risk Factors(i) Risks related to the marketability of FRC’s investment securities or investment corporation bonds(c) Risks related to fluctuations of revenues and expenditures<Before amendments>
FRC’s earnings mainly depend on the rent income from the real estate or real estate-backed assets it
acquires (hereinafter collectively referred to as “real estate” in the (1) Risk Factors section). The rent
income from real estate may possibly decrease significantly due to such factors as a decrease in theoccupancy rate of the real estate (including the cases where such a decrease is caused byre-construction of the building or large-scale repairs, etc.) and a decrease in the sales of tenants withwhom percentage-of-sales rent is applied. Moreover, as a result of discussions with the lessees orrequests, etc. from the lessees, the rent may be lowered or its upward revision as stipulated in thecontract may not be conducted (for these risks related to the rent income from real estate, please referto (b) Risks related to lease contracts in (v) Legal risks related to real estate and trust beneficiaryinterests described later). There is no guarantee that the past situations of rents received fromindividual assets are compatible with the future situations of rents to be received from such assets. In
addition, the rent based on the lease contract concluded for such real estate may not always be on theappropriate level compared with the general rent levels.
(The rest omitted)<After amendments>
FRC’s earnings mainly depend on the rent income from the real estate or real estate-backed assets it
acquires (hereinafter collectively referred to as “real estate” in the (1) Risk Factors section). The rent
income from real estate may possibly decrease significantly due to such factors as a decrease in theoccupancy rate of the real estate (including the cases where such a decrease is caused byre-construction of the building or large-scale repairs, etc.), a decrease in the sales of tenants withwhom percentage-of-sales type rent is applied, and a decrease in the GOP of tenants with whom
percentage-of-GOP type rent is applied. Moreover, as a result of discussions with the lessees orrequests, etc. from the lessees, the rent may be lowered or its upward revision as stipulated in thecontract may not be conducted (for these risks related to the rent income from real estate, please referto (b) Risks related to lease contracts in (v) Legal risks related to real estate and trust beneficiaryinterests described later). There is no guarantee that the past situations of rents received fromindividual assets are compatible with the future situations of rents to be received from such assets. In
addition, the rent based on the lease contract concluded for such real estate may not always be on theappropriate level compared with the general rent levels.
(The rest omitted)

5

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

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

28th fiscal period

29th fiscal period(as of August 31, 2018)(as of February 28, 2019)

AssetsCurrent assets
Cash and deposits

2,609,937

3,570,388

Cash and deposits in trust

5,386,980

4,796,296

Operating accounts receivable542,640

676,783

Prepaid expenses

254,144297,375

Consumption taxes receivable

598,560

－

4,737

4,182

9,397,000

9,345,026

OthersTotal current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation

98,000,220(27,296,476)(700,178)(422,173)

1,155,236

873,319(729,404)

1,143,873(462,805)

938,007747
261

1,328,883(1,083,830)

71,881,554

1,400,813

747
(485)

(28,811,313)

1,873,277

1,295,492

Accumulated depreciation

Accumulated depreciation

70,703,743

1,855,414

Vehicles and transport equipment in trust

Tools and fixtures in trust

100,692,867

(533)

214

1,378,452
245,052(1,117,165)

261,286

103,814,610

104,918,451

113,234

7,088

176,905,458

179,150,475

5,545,883

5,545,883

14,39026,6545,560,273

5,572,537

15

17

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

327,135

327,135

Long-term prepaid expenses

850,645972,221

1,187,795

1,309,374

183,653,528

186,032,387

42,55140,44919,177

15,342

61,72855,791

193,112,257

195,433,205

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

Total investment and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance
expenses
Investment unit issuance expenses
Total deferred assets
Total assets
6

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

(thousands of yen)Account

28th fiscal period

29th fiscal period(as of August 31, 2018)(as of February 28, 2019)

Liabilities
Current liabilities
Operating accounts payable

649,469

905,301

4,200,000

8,400,000

Accounts payable-other

18,856

20,908

Accrued expenses

363,618

368,137

Income taxes payable

992

1,047

Accrued consumption taxes－

199,254

Advances received

1,049,850

1,043,991

Deposits received

1,327,250

1,103,147

Total current liabilities

7,610,038

12,041,787

Investment corporation bonds

5,000,000

5,000,000

Long-term debt

66,300,000

64,100,000

375,422

375,482

12,027,489

12,041,779

83,702,912

81,517,261

91,312,950

93,559,049

98,938,764

98,938,764

Unappropriated surplus

2,860,542

2,935,391

Total surplus

2,860,542

2,935,391

Total unitholders’ equity

101,799,306

101,874,156

Total net assets

101,799,306

101,874,156

Total liabilities and net assets

193,112,257

195,433,205

Current maturities of long-term debt

Non-current liabilities

Tenant leasehold and security deposits
Tenant leasehold and security deposits received
in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus7

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(2) Statement of income(thousands of yen)

28th fiscal period

29th fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)

Account
Operating revenues
Leasing revenues – real estate
Other leasing revenues – real estate*1*18,478,614
699,815*1

9,178,430*1

8,604,955
637,878

9,242,834

Operating expenses
Expenses related to leasing business*1, *2

5,287,625*1, *2

5,274,003

520,829532,061

Asset custody fees

6,702

7,182

Administrative service fees

53,87254,581

Director’s compensations

9,600

9,600

Other operating expenses

61,761

Asset management fees

Operating income

5,940,392

59,1673,238,038

5,936,596
3,306,238

Non-operating revenues
Interest received

37

Others

531

39
569

2,162

2,202

Non-operating expenses
Interest expenses
Interest expenses on investment
corporation bonds
Amortization of investment
corporation bond issuance expenses
Amortization of investment unit
issuance expenses
Financing related expenses

254,894

245,801

24,20029,200

1,722

2,102

4,770

3,835

91,901

91,535

Others30

377,518

37372,511

Ordinary income

2,861,088

2,935,928

Profit before income taxes

2,861,088

2,935,928

Income taxes-current

998

Income taxes-deferred

1

1,053
1,000

(2)

1,051

2,860,088

2,934,877

Surplus brought forward

453

514

Unappropriated surplus

2,860,542

2,935,391

Profit8

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(3) Statement of changes in net assets
28th fiscal period (March 1, 2018 to August 31, 2018)(thousands of yen)
Unitholders’ Equity
Surplus
Item

Balance as of March 1, 2018
Changes in the current fiscal
periodIssuance of new investment
units

Unitholders’ capital

Unappropriated surplus

91,142,766

2,623,917

Total
net assets

93,766,684

93,766,684

7,795,998

7,795,998(2,623,464)
2,860,088(2,623,464)
2,860,088(2,623,464)

7,795,998

236,624

8,032,622

8,032,622

98,938,764

2,860,542

101,799,306

101,799,306

7,795,998

Dividend of surplus
ProfitTotal of changes in thecurrent fiscal period
Balance as of August 31,
2018

Total
unitholders’ equity

2,860,088

29th fiscal period (September 1, 2018 to February 28, 2019)(thousands of yen)
Unitholders’ Equity
Surplus
Item

Balance as of September 1,
2018
Changes in the current fiscal
periodUnitholders’ capital

Unappropriated surplus

Total
net assets

2,860,542

101,799,306

101,799,306

Dividend of surplus(2,860,028)(2,860,028)(2,860,028)

Profit2,934,877

2,934,877

2,934,877-

74,84974,84974,84998,938,764

2,935,391

101,874,156

101,874,156

Total of changes in thecurrent fiscal period
Balance as of February 28,
201998,938,764

Total
unitholders’ equity

9

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(4) Dividend statement

Account

28th fiscal period

29th fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)I.

Unappropriated surplus

2,860,542 thousand yen

2,935,391 thousand yen

II.

Total

2,860,028 thousand yen

2,934,852 thousand yen[Dividend per investment
unit][3,593 yen]

[3,687 yen]

III. Surplus brought forward

514 thousand yen

539 thousand yen

Method for calculating dividends

The amount of dividends shall be decided in The amount of dividends shall be decided
accordance with the dividend policy in accordance with the dividend policy
stipulated in Article 38-1-1 of FRC’s Articles stipulated in Article 38-1-1 of FRC’s Articles
of Incorporation and must exceed 90% of of Incorporation and must exceed 90% of
FRC’s distributable profits as stipulated in FRC’s distributable profits as stipulated in
Article 67-15-1 of the Special Taxation Article 67-15-1 of the Special Taxation
Measures Act. Following the above policy, Measures Act. Following the above policy,
FRC shall decide to distribute 2,860,028 FRC shall decide to distribute 2,934,852
thousand yen, which is almost the entire thousand yen, which is almost the entire
amount of unappropriated surplus, as amount of unappropriated surplus, asearnings dividends. Moreover, dividend in earnings dividends. Moreover, dividend inexcess of earnings as stipulated in Article excess of earnings as stipulated in Article38-2 of FRC’s Articles of Incorporation will 38-2 of FRC’s Articles of Incorporation will
not be provided.
not be provided.

(Note) Amounts other than the amounts of dividend per investment units are rounded off to the nearest thousand yen.

10

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(5) Cash flows statement(thousands of yen)Account
Net cash provided by (used in) operating activities
Profit before income taxes
Depreciation and amortization expenses
Amortization of investment corporation bond issuance
expenses
Amortization of investment unit issuance expenses
Interest received
Interest expenses
Decrease (increase) in operating accounts receivables
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits expenses
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
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
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Payments of tenant leasehold and security deposits in trust
Proceeds from restricted trust deposits
Payments for restricted trust deposits
Net cash provided by (used in) investment activities
Net cash provided by (used in) financial activities
Proceeds from short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of investment corporation bonds
Proceeds from issuance of investment units
Payments of investment corporation bond issuance expenses
Payment of investment unit issuance expenses
Dividends paid
Net cash provided by (used in) financial activities
Net increase (decrease) in cash and cash equivalents
Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period

11

28th fiscal period

29th fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)

2,861,088
1,602,568
1,722

2,935,928
1,622,792
2,102

4,770
(37)
279,094(82,691)(598,560)(298,500)
61,299(638)
27,10359,676558,514
6,646(64,233)
3,314
4,421,137
37(271,057)
(778)
428

3,835
(39)
275,001(134,143)
598,560
199,254(10,519)
2,530
5,784
(5,858)(224,102)(43,231)(121,575)
3,668
5,109,987
39(276,266)(998)－

4,149,768

4,832,761(12,130,191)(3,775,257)
8,534(6,536)
1,023,194(228,985)(217,135)
2,872(2,751)(15,326,254)(3,601,665)(15,881)60－
149,480(135,190)－
5,343(6,268)(3,604,122)

4,100,000(4,100,000)
7,200,000(1,600,000)
1,000,000

4,800,000(4,800,000)
2,500,000(500,000)－

7,795,998－(13,660)－(23,013)(2,624,781)
11,734,542
558,055
7,392,916
7,950,972－(2,859,795)(859,795)
368,843
7,950,972
8,319,815

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(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 November 29, 2018).
(8) Notes to changes in the presentation
From the beginning of the 29th fiscal period, FRC applied the Partial Amendments to Accounting Standard for Tax
Effect Accounting (The Accounting Standards Board of Japan Statement No. 28 issued on February 16, 2018) andchanged the presentation method so that deferred tax assets are classified as investment and other assets anddeferred tax liabilities are classified as non-current liabilities.
As a result, deferred tax assets amounting to 15 thousand yen which were presented under current assets on thebalance sheet for the 28th fiscal period have been reclassified as deferred tax assets in the investment and otherassets category.
(9) Notes to financial statements
FRC omits the disclosure of notes to balance sheet, statement of changes in net assets, and cash flows statement,
as well as notes on lease transactions, financial instruments, securities, derivative transactions, related-party
transactions, tax-effect accounting, retirement benefits, asset retirement obligations, rental properties, segment
information and equity method income, etc. since it does not find substantial need for disclosure in the earnings
briefing.
(Notes to statement of income)*1. Breakdown of revenues and expenses related to real estate leasing business(thousands of yen)

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

28th fiscal period

29th fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)

6,883,299
1,123,477
471,838
674,484
25,331

8,478,614

699,815
9,178,430

7,045,595
1,111,443
447,916
616,581
21,296

1,913,254
220,275
661,889

1,908,842
221,346
661,774

58,54055,689595,918
1,602,568

569,325
1,622,792

235,179

5,287,625

234,232

8,604,955

637,878
9,242,834

5,274,003

5,287,625

5,274,003

3,890,804

3,968,831*2. Transactions with affiliated companies(thousands of yen)

Item
Expenses related to real estate leasing business28th fiscal period

29th fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)

1,474,309

12

1,493,926

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

(Per unit information)
28th fiscal period

29th fiscal period(March 1, 2018 to August 31, 2018)

Net assets per investment unit:
Profit per investment unit:(September 1, 2018 to February 28, 2019)

127,888 yen
3,593 yen

Net assets per investment unit:
Profit per investment unit:

127,982 yen
3,687 yen

Note 1: Profit per investment unit is calculated by dividing profit by the day-weighted average number of investment units
outstanding during the fiscal period. Diluted profit per investment unit is not shown since there are no potential
investment units.
Note 2: Calculation of profit per investment unit is based on the following.

Account
Profit (thousands of yen)Amount not attributable to common shareholders(thousands of yen)
Profit attributable to common investment units(thousands of yen)
Average number of investment units during the fiscal
period (units)(Significant subsequent events)
No relevant items.
(10) Change in the number of investment units outstanding
No relevant items.

4. Change in Directors(1) Change in directors in FRC
No relevant items.
(2) Change in directors at Fukuoka Realty Co., Ltd.
No relevant items.

13

28th fiscal period

29th fiscal period(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)

2,860,088

2,934,877——

2,860,088

2,934,877

796,000

796,000

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

5. Reference Information(1) Investment situation(as of February 28, 2019)

Type ofasset

Location

Use(Note 1)

Total value of
properties owned

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

Fukuoka urban area

75,88938.8

Other Kyushu areas

36,698

18.8

Fukuoka urban area

46,035

23.6

Other Kyushu areas--

Fukuoka urban area

20,537

10.5

Other Kyushu areas

5,554

2.8

184,715

94.5

10,717

5.5

195,433

100.0[184,723][94.5]

RetailReal estatein Trust

Office buildings

OthersSubtotal
Deposits and other assets
Total amount of assets (Note 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 2015 census, which states “the number of workers and students aged 15 years orolder (students including those aged 14 years or younger: particular reference) including commuting between theirhomes 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 urbanarea).
Note 2: “Total value of properties owned” 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 figures are rounded off to one decimal place. The total of individual
percentages in the above table may not equal 100%.
Note 4: Figures in parentheses for “Total amount of assets” refer to the value and percentage of real estate owned in effect tothe total amount of assets.
(as of February 28, 2019)

Value on balance sheet(mm of yen)

Percentage of total amount of assets (%)

Total amount of liabilities

93,55947.9

Total amount of net assets

101,87452.1(2) Investment assets(i) Primary issues of investment securities
No relevant items.
(ii) Real estate investment portfolio
No relevant items.

14

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019(iii) Other primary investment assets(A) Values and investment ratios at end of period are as follows.
(as of February 28, 2019)

Acquisitionvalue(mm of yen)
(Note 1)

Value onbalance sheet(mm of yen)

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

Canal City Hakata

32,00030,10732,000Canal City Hakata･B

28,70029,13930,000Park Place Oita

18,62019,557

19,800SunLive City Kokura

6,633

5,628

8,340

Konoha Mall Hashimoto

10,00010,197

10,600

Square Mall Kagoshima Usuki

5,300

4,411

5,620

Kumamoto Intercommunity SC

2,400

2,005

2,860

Hanahata SC

1,130

990

1,250

Kurume Higashi Kushiwara SC

2,500

2,075

2,790

K’s Denki Kagoshima

3,550

3,019

3,710

Real estate property nameMarinoa City Fukuoka (Marina
Side Building)Retail subtotal:
Canal City Business Center
Building

5,250

5,455

6,060

116,083

112,587

123,030

14,60013,22615,800Gofukumachi Business Center

11,2009,036

14,300Sanix Hakata Building

4,400

3,845

5,980

Taihaku Street Business Center

7,000

5,995

8,410

Higashi Hie Business Center

5,900

4,505

7,580

Tenjin Nishi-Dori Center Building

2,600

2,694

3,100

Tenjin North Front Building

2,800

2,543

3,900

Higashi Hie Business Center II

4,230

4,187

4,440

Office buildings subtotal:

52,73046,03563,510Amex Akasakamon Tower

2,060

1,720

1,840

City House Keyaki Dori

1,111

927

1,140

Aqualia Chihaya

1,280

1,206

1,720

D-Wing Tower

2,800

2,710

3,560

Granfore Yakuin Minami

1,100

1,126

1,310

Hotel FORZA Oita

1,530

1,433

1,820

Tissage Hotel Naha

2,835

2,924

3,030

Tosu Logistics Center

1,250

1,195

1,430

LOGICITY Minato Kashii

8,150

7,897

8,880

LOGICITY Hisayama

5,050

4,949

5,250

Others subtotal:
Total

27,166
195,979

26,092
184,715

29,980216,520

Note 1:
Note 2:
Note 3:

Investment
ratio(%) (Note 3)

Real estate appraiser

Tanizawa Sogo
Appraisal Co., Ltd.
Tanizawa Sogo
14.6
Appraisal Co., Ltd.
Japan Real Estate
9.5
InstituteJapan Real Estate
3.4
InstituteTanizawa Sogo
5.1
Appraisal Co., Ltd.
Japan Real Estate
2.7
InstituteJapan Real Estate
1.2
InstituteTanizawa Sogo
0.6
Appraisal Co., Ltd.
Tanizawa Sogo
1.3
Appraisal Co., Ltd.
Tanizawa Sogo
1.8
Appraisal Co., Ltd.
Tanizawa Sogo
2.7
Appraisal Co., Ltd.
59.2
Tanizawa Sogo
7.4
Appraisal Co., Ltd.
Tanizawa Sogo
5.7
Appraisal Co., Ltd.
Japan Real Estate
2.2
InstituteJapan Real Estate
3.6
InstituteTanizawa Sogo
3.0
Appraisal Co., Ltd.
Japan Real Estate
1.3
InstituteJapan Real Estate
1.4
InstituteTanizawa Sogo
2.2
Appraisal Co., Ltd.
26.9
Daiwa Real Estate
1.1
Appraisal Co., Ltd.
Daiwa Real Estate
0.6
Appraisal Co., Ltd.
Japan Real Estate
0.7
InstituteTanizawa Sogo
1.4
Appraisal Co., Ltd.
Tanizawa Sogo
0.6
Appraisal Co., Ltd.
Japan Real Estate
0.8
InstituteTanizawa Sogo
1.4
Appraisal Co., Ltd.
Japan Real Estate
0.6
InstituteTanizawa Sogo
4.2
Appraisal Co., Ltd.
Tanizawa Sogo
2.6
Appraisal Co., Ltd.
13.9
100.0
16.3

“Acquisition value” refers to the amount (purchasing prices shown on the purchasing contracts) not including expenses forthe acquisition of relevant properties (agency fees and taxes and other public charges).
“Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity withthe method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation and rules stipulated by theInvestment Trusts Association, Japan.
“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 figures are rounded off to one decimal place.

15

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2019

(B) Summary of the real estate leasing business(as of February 28, 2019)

Real estate property name

Number oftenants(Note 1)

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

Totalleased floor
space (m2)

Totalleasingrevenues(mm of yen)
(Note 4)

Percentage of
total
leasingrevenues(%) (Note 5)

Canal City Hakata

1 [49]

100.0

46,604.75

46,604.75

1,294

14.0

Canal City Hakata･B
Park Place Oita
SunLive City Kokura
Konoha Mall Hashimoto

1 [46]
1 [104]
1
1 [127]

99.0
99.8
100.0
100.0

68,827.77
113,834.22
61,450.22
22,121.03

68,137.75
113,559.44
61,450.22
22,121.03

1,618
1,178
289
838

17.5
12.7
3.1
9.1

Square Mall Kagoshima Usuki

12

100.0

14,602.88

14,602.88

258

2.8

Kumamoto Intercommunity SC

2

100.0

6,968.66

6,968.66

90

1.0

Hanahata SC

2

100.0

2,801.15

2,801.15

41

0.4

Kurume Higashi Kushiwara SC

1

100.0

6,467.80

6,467.80

88

1.0

K’s Denki Kagoshima

1

100.0

7,296.17

7,296.17

111

1.2

Marinoa City Fukuoka (Marina
Side Building)

1

100.0

33,069.82

33,069.82

178

1.9

24 [346](Note 2)99.7

384,044.47

383,079.67

5,986

64.8

1 [62]

100.0

23,031.01

23,031.01

633

6.9

35
16
1 [69]
1 [25]

100.0
100.0
99.1
100.0

19,905.34
6,293.75
14,677.30
13,614.59

19,905.34
6,293.75
14,545.78
13,614.59

537
199
306
336

5.8
2.2
3.3
3.6

1

100.0

3,339.32

3,339.32

86

0.9

11
2
68 [221](Note 2)
1 [66]
1 [40]
1 [104]
1 [131]
1 [97]
1
1

100.0
100.0

5,252.41
6,214.77

5,252.41
6,214.77

140
165

1.5
1.8

99.9

92,328.49

92,196.97

2,405

26.0

98.8
95.6
99.3
95.0
98.0
100.0
100.0

4,821.25
2,710.86
5,619.69
7,187.59
2,496.06
5,785.44
3,758.76

4,765.67
2,591.66
5,579.76
6,827.76
2,446.14
5,785.44
3,758.76

Tosu Logistics Center

1

100.0

4,173.29

4,173.29

LOGICITY Minato Kashii

2

100.0

43,233.72

43,233.72

LOGICITY Hisayama

1

100.0

24,505.65

24,505.65

68
38
59
114
37
63
39
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)

0.7
0.4
0.6
1.2
0.4
0.7
0.4
Undisclosed(Note 6)
Undisclosed(Note 6)
Undisclosed(Note 6)99.4

104,292.31

103,667.85

850

9.2

99.7

580,665.27

578,944.49

9,242

100.0

Retail subtotal:
Canal City Business Center
Building
Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center
Higashi Hie Business Center
Tenjin Nishi-Dori Center
Building
Tenjin North Front Building
Higashi Hie Business Center II
Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha

Others subtotal:
Total
Note 1:

Note 2:
Note 3:Note 4:Note 5:Note 6:

11 [444](Note 2)103
[1,011](Note 2)

“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 BusinessCenter is an office building with a residential tower. Its number of end tenants comprises 12 offices and 57 residences.
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
in the totals column for “Number of tenants.”“Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the figures arerounded off to one decimal place.
“Total leasing revenues” is the total of real estate leasing revenues and other revenues from real estate rent in the current
fiscal period.
“Percentage of total leasing revenues” is obtained by dividing each property’s total leasing revenues by the total amount of
total leasing revenues. The total of individual percentages in the above table may not equal 100%, since the figures arerounded off to one decimal place.
The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

16