22nd Fiscal Period

Report on Performance andManagement Status (Semiannual Report)
March 1, 2015 to August 31, 2015

Fukuoka REIT
Corporation

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

I. Overview of Fukuoka REIT Corporation
To Our Unitholders
We would like to express our sincere appreciation to all unitholders for your continued support of
Fukuoka REIT Corporation (FRC).
We are pleased to report on the performance results and management status of FRC for the twentysecond fiscal period (March 1, 2015 to August 31, 2015).
FRC started as Japan's first REIT specializing in regional properties. Its mission is to raise capitalfor the Fukuoka and Kyushu areas from Japanese and overseas prime investors by incorporatinghigh quality properties into its portfolio, and thus contribute to the vitalization and enhancement of theattractiveness of the urban landscape of these areas. Since our listing in June 2005, we have exhibited
consistent growth and achieved stable performance through the support of our unitholders and sponsor
companies. We are grateful for the support, as we have now entered the tenth year of operation.
Etsuo Matsuyuki
During the fiscal period under review, the Japanese economy remained on course for a modest
CEO & Representative Director,
recovery despite variations observed in the pace of improvement. Looking ahead, with the employment
Fukuoka REIT Corporationand income environment continuing to improve, the economy is expected to keep recoveringmoderately thanks to various political measures proving effective. In the Fukuoka and Kyushu area, the core investment target area
for FRC, the economy was also on track for a modest recovery, with housing investment and capital investment picking up due tothe consistently improving employment and income environment, although consumer spending remained somewhat weak in certain
areas.

As for land price trends, the national average over the past year from July 2014 decreased at a slower pace both for residential landand commercial land, according to the government's Prefectural Land Price Survey announced in September 2015. In Fukuoka City,
the central area of FRC's investment targets, land prices continued rising for the third consecutive year, up 4.8% for commercial land
and up 2.1% for residential land, both on a year-on-year basis, recording higher rates of increase.
Under such circumstances, FRC increased its capital by approximately 11.7 billion yen through issuing new investment units in April
2015, and used the proceeds to acquire LOGIPORT Island-city Hakata (acquisition price: 8.15 billion yen) and Marinoa City Fukuoka(Marina Side Building) (acquisition price: 5.25 billion yen). In addition, with the acquisition of the adjacent land of Park Place Oita for
590 million yen, the total value of the assets under management has steadily expanded to 179.7 billion yen, compared with the 73.5
billion yen upon listing, all on an acquisition price basis.
Other existing properties also operated solidly under our management, leading to the average occupancy rate of all properties FRC
owns to be 99.5% at the end of the twenty-second fiscal period. Canal City Hakata, FRC's flagship property, generated strong sales
to steadily increase earnings, through a variety of measures to absorb strong demand from inbound foreign tourists.
As a result of these management endeavors, net income for the fiscal period surpassed the forecast, bringing the dividend per unit
to 3,563 yen.
Going forward, FRC will continue to exert its strengths as a REIT specializing in regional properties and quickly respond to market
changes, while receiving support and cooperation from powerful sponsors who are leaders in the Kyushu business world. As we
do so, we will strive to achieve stable growth of our portfolio in the medium to long term and secure stable earnings through steadyasset management. We at FRC are also resolved to pursue our mission of maximizing investor interests based on our management
philosophy of "Act Local, Think Global."
We greatly appreciate your continued support and cooperation.

CONTENTS
I.

Overview of Fukuoka REIT Corporation
To Our Unitholders
Financial Summary
ProfileAsset Portfolio Growth at Fukuoka REIT Corporation
Recent Situation at Canal City Hakata in Terms of Serving Inbound Tourists

1
2
3
5
5

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

FUKUOKA REIT CORPORATION

1

6
22
23
25
26
27
28

I. Overview of Fukuoka REIT Corporation

Financial Summary
Financial Highlights for 22nd Fiscal Period (ended August 2015)
Dividend per unit came to 3,563 yen, surpassing the forecast by 113 yen.
Category(unit)

18th fiscal period

19th fiscal period

20th fiscal period

21st fiscal period

22nd fiscal period(March 1, 2013 toAugust 31, 2013)(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)(September 1, 2014 to
February 28, 2015)(March 1, 2015 toAugust 31, 2015)

Operating revenues

mm yen

7,565

7,574

7,779

7,789

8,423

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

mm yen

4,751

4,732

4,800

4,829

5,229

mm yen

1,343

1,354

1,387

1,390

1,458

mm yen

2,848

2,801

2,824

2,860

3,167

Ordinary income

mm yen

2,272

2,239

2,263

2,370

2,663

Net income

mm yen

2,271

2,238

2,262

2,369

2,661

yen

16,458

16,219

3,278

3,435

3,563

units

138,000

138,000

690,000

690,000

747,000

Total assets (at end of period)

mm yen167,857

167,492

167,824

167,369

181,597

Total net assets (at end of period)

mm yen81,712

81,67981,70381,81193,804days
Days in fiscal period
Number of investment
properties
properties at end of period
Number of tenants (at end of period) (Note 3)

184

181

184

181

184

23

23

24

25

27

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

886

868

894

1,003

1,001

Total leasable floor space (at end of period)m2

466,824.38

466,087.01

475,682.05

478,197.10

554,464.84

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

%

98.8

98.1

99.3

99.6

99.5

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

Business Forecasts for 23rd and 24th Fiscal Periods
FRC expects dividend per unit for the 23rd and 24th fiscal periods to remain at the 3,500 yen level.
22nd fiscal period

23rd fiscal period

24th fiscal period(March 1, 2015 to August 31, 2015)(September 1, 2015 to February 29, 2016)(unit)

Results

Forecast(March 1, 2016 to August 31, 2016)

Operating revenues

mm yen

8,423

8,261

8,338

Leasing NOI (Note)

mm yen

5,229

5,179

5,242

Depreciation and amortization
expenses

mm yen

1,458

1,476

1,528

Operating income

mm yen

3,167

3,089

3,086

Ordinary income

mm yen

2,663

2,615

2,616

Net income

mm yen

2,661

2,614

2,615

Dividend per unityen (1)

3,563–

Latest dividend forecast per unityen (2)

3,450

3,500

Difference from forecast

yen (1)-(2)

+113

–

747,000

747,000

Category

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

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

FUKUOKA REIT CORPORATION

2Forecast–
3,500–
747,000

I. Overview of Fukuoka REIT Corporation

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

Overview of the Investment Corporation
Fukuoka REIT Corporation

Name:

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

Sponsors

5%

5%

The Bank of Fukuoka, Ltd.

50%

5%

5%

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

Director

10%

Outsidedirector

Fukuoka Realty Co., Ltd.

Fukuoka Jisho Co., Ltd. (Note 1)

Saibu Gas Co., Ltd.

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

5%

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

KYUSHU RAILWAY COMPANYRoyal Holdings Co., Ltd.

(Note 1) Concluded MOU with Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. concerning pipeline support.

Financial Highlights
Total assets

181.5 bn yen (as of August 31, 2015)

Total debt

72.4 bn yen (as of August 31, 2015)

LTV (Total debt / Total assets)

S&P
Credit ratings

39.9% (as of August 31, 2015)

A−(Stable)R&I

A＋(Stable)JCR

AA−(Stable)Investment Unit Price
Investment unit price

188,700 yen(as of August 31, 2015)

Total number of investment units outstanding

747,000 units(as of August 31, 2015)

Market capitalization

140.9 bn yen(Unit price × Units outstanding)(as of August 31, 2015)

Net assets per unit

125,574 yen(as of August 31, 2015)

Market net assets per unit (Note 2)

148,035 yen(as of August 31, 2015)

FUKUOKA REIT CORPORATION(Note 2) Market net assets per unit = {(Total appraisal value at endof period based on appraisal reports of real estate held at endof period − Total value on balance sheets of real estate heldat end of period (excluding construction in progress in trust)) +(Net assets at end of period)} / Total number of investment units
outstanding3

I. Overview of Fukuoka REIT Corporation

ProfileDividend Performance
22nd fiscal period end

August 31, 2015

22nd fiscal period dividend

3,563 yen per unit（yen）(semiannual periods ending every February and August)

3,802

3,726
4,000 （19,014）3,687（18,632）（18,438）

22nd fiscal period days

184 days

Dividend yield

3.7% {(Dividend / Days × 365) / Unit price (as of August 31, 2015)}

3,672 3,699 3,674 3,609（18,499）（18,373）3,468（18,360）（18,049）3,475 3,479
3,563（17,377）（17,397）3,356 3,293 3,384 3,324（17,341）
3,238 3,257 3,291 3,243
3,435（16,922）（16,783）（16,621）（16,465）（16,458）（16,219）3,278（16,289）（16,193）

3,000

2,000

1,000

0

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

99.3

98.8

17th

18th

19th

20th

21st

22nd

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

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

100

99.8

99.0

99.4

99.4

99.7

98.8

99.4

99.2

99.1

98.8

99.0

98.6

99.6

98.1

95

97.0

98.1

99.3

99.6

99.5

20th

21st

22nd

90

85
2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

19th

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

Overview of the AssetManager
Name:

Investment type (based on acquisition price)

Fukuoka Realty Co., Ltd.

Representative: Etsuo Matsuyuki
CEO & Representative
Director
Address:

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

Established:

December 26, 2003

27.0%

60.7%
Investment area (based on acquisition price)

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

TEL:

Office buildings

RetailFukuoka metropolitan area

78.1%

Total leasable floor space2

Capital:200,000,000 yen(Note) Figures are based on properties owned as of August 31, 2015.

FUKUOKA REIT CORPORATION

4

Other
Kyushu areas

21.9%

Occupancy rate at end of period
99.5%

554,464.84m

Others 12.3%

Asset Portfolio Growth at Fukuoka REIT Corporation
Acquisitions from outside parties

Acquisitions from sponsor companies■Listing
Canal City Hakata
Canal City Business Center Building
Park Place Oita
Gofukumachi Business Center

32,00014,60015,700
11,200■17th
Tenjin Nishi-Dori Center Building 2,600■10th
Higashi Hie Business Center 5,900■22nd
LOGIPORT Island-city Hakata
8,150
Marinoa City Fukuoka (Marina Side Building) 5,250
Adjacent land of Park Place Oita
590

■14th
Canal City Hakata・B 28,700■16th
Aqualia Kego
2,800
■21st
Aqualia Chihaya 1,280
Granfore Yakuin Minami 1,100■18th
D-Wing Tower
2,800
Hotel FORZA Oita
1,530
Tenjin North Front Building 2,800
■20th
(%)
Tosu Logistics Center 1,250■7th
Hanahata SC
1,130City House Keyaki Dori
1,111
Kurume Higashi Kushiwara SC 2,500■3rd
Sanix Hakata Building 4,400

200,000 30

LTV

■5th
Amex Akasakamon Tower
2,060
Square Mall Kagoshima Usuki 5,300
Kumamoto Intercommunity SC 2,400■2ndSunLive City Kokura 6,633(mm yen)(Properties)

No. of properties■8th
K’s Denki Kagoshima 3,550

70

Acquisition capacity:
approx.
36,800 mm yen■6th
AEON Hara Shopping Center 5,410■4th
Taihaku Street Business Center 7,000

60

150,000
20

50

Properties

100,000
40
10

LTV

50,000

30

20

0 0

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

19th

20th

21st

22nd

(Aug 2005) (Feb 2006) (Aug 2006) (Feb 2007) (Aug 2007) (Feb 2008) (Aug 2008) (Feb 2009) (Aug 2009) (Feb 2010) (Aug 2010) (Feb 2011) (Aug 2011) (Feb 2012) (Aug 2012) (Feb 2013) (Aug 2013) (Feb 2014) (Aug 2014) (Feb 2015) (Aug 2015)* Kominedai Community Mall, acquired in the 3rd fiscal period and sold in the 6th fiscal period, was omitted from the acquired assets presented above.
* Higashi Hie Business Center, acquired in the 10th fiscal period, was acquired both from an outside party and a sponsor. Accordingly, its acquisition price has been divided equally and added to the acquisition
price of assets acquired from outside parties and acquired from sponsor companies, respectively.
* As the senior equity interest in an anonymous partnership managed by CCH Bridge Y.K. was redeemed in the 14th fiscal period, it is excluded from total acquired assets from the 14th fiscal period onward.
* Assets acquired from sponsor companies include properties acquired through arrangements made by the sponsor companies.

Recent Situation at Canal City Hakata in Terms of Serving Inbound Tourists
Monthly comparison of sales of Canal City Hakata (Note 1) and the number of cruise ship port calls (Note 2)
39

4,500

(mm yen)Annual Cruise Ship Port Calls

4,000

38

37

2013: 38 Calls

40(planned)

2014: 115 Calls

Cruise ship calls to the Port of Hakata have shown a significant
increase in 2015. On top of this, new measures have been
implemented throughout the entire Canal City Hakata facilities toserve and absorb the demand of inbound tourists.

35

2015: 276 Calls (including planned calls)
32

3,500

31

(planned)

30
27(planned)

3,000

24

(planned)

2,500

20

2,000

■Changes in Sales of Canal City Hakata and the Number of Cruise Ship Port Calls■Parking lots from July 1, 2015

■Wi-Fi services from July 15, 2015

Established new parking lots
for sightseeing buses

Started free Wi-Fi services■Tax exemption counters from■Currency exchange machines from

Opened tax-exemption
procedure counters

Newly established automated currency
exchange machines

25

20

17
14

1,500

14

11
9

1,000
6

11

2
0

1

2

3

2013 port calls

11

102014 port calls2015 port calls
2013 sales

July 16, 2015

September 26, 20152014 sales

6
4

15
12

9

8

5

500

15

5

4

1

4

5

4

2
0

2015 sales

10Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Source: Prepared by Fukuoka Realty Co., Ltd. based on the official data posted on the Port of Hakata website.
(Note 1) The sales figures represent combined sales of Canal City Hakata and Canal City Hakata・B owned by FRC.
(Note 2) The numbers include port calls scheduled as of September 1, 2015.

Hakozaki wharf
Chuo wharf

4,905 passenger
boarding

3,807 passenger
boarding

Approx. 3.5km

Approx. 2.5km

Canal City Hakata■Location from Canal City Hakata to each wharf
Canal City Hakata is situated in close proximity to the Chuo
wharf and Hakozaki wharf at which large cruise ships are
docked. The property is very conveniently located for cruise ship
tourists from China to shop within the limited timeframe of theirstay. During their stay, visitors can enjoy shopping, eating anddrinking at Canal City Hakata for about 1.5 to 2 hours.
With around 190 sightseeing coaches arriving at Canal City
Hakata on peak days, FRC has endeavored to more efficiently
operate the facilities by expanding the parking lots.

FUKUOKA REIT CORPORATION

5After acquisition onew properties

II. Semiannual Report
Overview of Asset Management
1. Changes in operating results and financial position
18th fiscal period(March 1, 2013 toAugust 31, 2013)(September 1, 2013 to
February 28, 2014)

19th fiscal period

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

21st fiscal period

22nd fiscal period

mm yen7,565[7,565]
4,716[4,157]
2,848
2,272
2,271
167,857[4.5]
81,712[14.8]
79,441

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

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

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

8,423[8,423]
5,256[4,651]
3,167
2,663
2,661
181,597[8.5]
93,804[14.7]
91,142

Fiscal Period(unit)

Operating revenues

mm yen[Leasing business revenues]

mm yenOperating expenses

mm yen[Expenses related to leasing business]

mm yenOperating income
Ordinary income
Net income
Total assets

mm yenmm yen(a)

mm yen(b)

mm yen(c)

mm yen[Change from previous period]

Net assets%[Change from previous period]%

Unitholders’ equity
Total number of investment
units outstanding(March 1, 2015 toAugust 31, 2015)

units

138,000

138,000

690,000

690,000

747,000

Net assets per unit(c)/(d)(Note 3)yen592,119

118,376

118,410

118,567

125,574

Total dividend
Dividend per unit(e)

mm yen(e)/(d)yen

2,238
16,219[16,219]
[–]

2,261
3,278
[3,278]
[–]

2,370
3,435
[3,435]
[–]

2,661
3,563
[3,563][–](d)[Earnings dividend per unit]

yen[Dividend in excess of earnings per unit]

yen

2,271
16,458[16,458][–](Note 4)%

1.4 [2.7]

1.3 [2.7]

1.3 [2.7]

1.4 [2.9]

1.5 [3.0](Note 4)%3.0 [5.9]

2.7 [5.5]

2.8 [5.5]

2.9 [5.8]

3.0 [6.0](c)/(b)

%

48.7

48.8

48.7

48.9

51.7

%
(e)/(a)

%

[4.4]
100.0

[0.1]
100.0

[(0.1)]
100.0

[0.2]
100.0

[2.8]
100.0

23

23

24

25

27

466,824.38

466,087.01

475,682.05

478,197.10

554,464.84

98.8

98.1

99.3

99.6

99.5

1,343

1,354

1,387

1,390

1,458

612
4,751
184

848
4,732
181

740
4,800
184

328
4,829
181

445
5,229
184

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

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

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

FUKUOKA REIT CORPORATION

6

II. Semiannual Report

Overview of Asset Management
2. Management situation(1) Brief history of the investment corporation
Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on Investment Trusts andInvestment Corporations” (Act No. 198 in 1951 including later revisions, hereinafter the “Investment Trusts Act”) and listed on
the Tokyo Stock Exchange Group Inc. and the Fukuoka Stock Exchange on June 21, 2005 as the nation’s first real estate
investment trust specializing in regional properties (code number: 8968). FRC invests in real estate throughout Kyushu (including
Okinawa Prefecture), with a central focus on Fukuoka City, and Yamaguchi Prefecture (hereinafter the “Fukuoka/Kyushu area”)
by using expertise in regional characteristics, a strength in the real estate industry.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retail in Canal
City Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common space), a commercial complex
where specialty shops, cinema complex, theaters, amusement facilities, hotels and offices are integrally developed (hereinafter“Canal City Hakata”). As of the end of the 22nd fiscal period (August 31, 2015), FRC manages a total of 27 properties
comprising 11 Retail, 7 Office buildings and 9 Others.

(2) Investment environment and portfolio performance
During the fiscal period under review, the Japanese economy remained on course for a modest recovery despite variations
observed in the pace of improvement. Looking ahead, with the employment and income environment continuing to improve,the economy is expected to keep recovering moderately thanks to various political measures proving effective. In the Fukuoka
and Kyushu area, the core investment target area for FRC, the economy was also on track for a modest recovery, withhousing investment and capital investment picking up due to the consistently improving employment and income environment,
although consumer spending remained somewhat weak in certain areas.
As for land price trends, the national average over the past year from July 2014 decreased at a slower pace both forresidential land and commercial land, according to the government's 2015 Prefectural Land Price Survey. In Fukuoka City, thecentral area of FRC's investment targets, land prices continued rising for the third consecutive year, up 4.8% for commercial
land and up 2.1% for residential land, both on a year-on-year basis, recording higher rates of increase.
Under such circumstances, FRC focused on stringently selective investment in accordance with its investment policy. This
led to the acquisition of LOGIPORT Island-city Hakata (acquisition price: 8,150 million yen) on March 27, 2015, Marinoa City
Fukuoka (Marina Side Building) (acquisition price: 5,250 million yen) on May 1, 2015 and the adjacent land of Park Place Oita
(acquisition price: 590 million yen) on May 28, 2015. For existing properties, FRC continued its efforts to reinforce competitive
advantages and customer drawing ability at Canal City Hakata and other major retail facilities, and focused on maintaining
and increasing the occupancy rate of its owned properties. As a result of these endeavors, the average occupancy rate of allproperties FRC owns was 99.5% at the end of the 22nd 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 78.1%; when analyzing by property type, Retail, Office buildings, and Others accounted for 60.7%,
27.0% and 12.3%, respectively.

(3) Summary of fundraising
In the 22nd fiscal period, FRC procured 11,701 million yen by issuing new investment units (payment date: April 27, 2015 for
57,000 units), as well as increasing long-term debt by 1,700 million yen, in order to acquire the above-mentioned properties
and for other purposes. FRC also refinanced 6,200 million yen in long-term debt that matured in June through August
2015. As a result, the balance of interest-bearing debt outstanding (including the investment corporation bonds) at the endof the 22nd fiscal period totaled 72,400 million yen, with the loan-to-value ratio (ratio of interest-bearing debt (including theinvestment corporation bonds) to total assets) at 39.9%. In addition, FRC concluded an interest rate swap agreement (notional
principal of 2,000 million yen) on August 27, 2015. This brought the ratio of fixed-interest rate debt (including investment
corporation bonds) at the end of the fiscal period to 75.3%. Going forward, FRC will continue its efforts to reduce refinancing
risks by dispersing the debt repayment dates and increasing the average length of time until debt maturity, and to mitigate
risks of rising interest rates by shifting to fixed-interest rate borrowings and through other measures.
FUKUOKA REIT CORPORATION

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II. Semiannual Report

Overview of Asset Management
Moreover, the credit ratings assigned to FRC as of the end of the 22nd fiscal period are as follows:
Credit Rating Agency

Rating Type

RatingRating Outlook

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

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

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

Issuer Rating

A+

StableLong-term Senior Debts Rating

AA−

StableJapan Credit Rating Agency, Ltd. (JCR)(4) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 8,423 million yen and operating income after excluding
operating expenses such as expenses related to rent business and asset management fees totaled 3,167 million yen. Ordinary
income was 2,663 million yen and net income was 2,661 million yen.
Management decided to make a dividend of 3,563 yen per investment unit to meet the requirements of special tax measures
for an investment corporation (as stipulated in Article 67-15 of the Act on Special Measures Concerning Taxation [Act No. 26
in 1957 including later revisions, hereinafter the “Special Taxation Measures Act”]). Under this law, an investment corporation isallowed to deduct the maximum amount of dividends paid to investors from its taxable income.

3. Change in the number of investment units issued
Changes in unitholders’ capital from the incorporation of FRC to the end of the 22nd fiscal period are as follows:
Number of investment units
issued (units)
Increase
Balance
July 2, 2004
Established through private placement250
250November 8, 2004 Additional issue of investment units through private offering
82,80083,050June 20, 2005
Additional issue of new investment units through public offering
7,000
90,050July 21, 2005
Additional issue of new investment units through third-party allotment
2,000
92,050
September 7, 2006 Additional issue of new investment units through public offering
15,000107,050
March 1, 2011
Additional issue of new investment units through public offering
16,000123,050
March 1, 2013
Additional issue of new investment units through public offering
14,950138,000
March 1, 2014
Split of investment units
552,000
690,000
April 27, 2015
Additional issue of new investment units through public offering
57,000747,000
Date

Item

Unitholders’ capital

Remarks(mm of yen)

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

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441
91,142(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 1) FRC was established with an issue of investment units at 500,000 yen per unit.
(Note 2) New investment units were issued through private offering at the issue price of 500,000 yen per unit for the purpose of procuring funds for acquiring new properties, etc.
(Note 3) New investment units were issued through public offering at the issue price of 880,000 yen per unit (purchase price of 849,200 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 4) New investment units were issued through third-party allotment at the purchase price of 849,200 yen per unit.
(Note 5) New investment units were issued through public offering at the issue price of 766,360 yen per unit (purchase price of 739,772 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 6) New investment units were issued through public offering at the issue price of 576,083 yen per unit (purchase price of 557,078 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 7) New investment units were issued through public offering at the issue price of 710,580 yen per unit (purchase price of 686,529 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 8) FRC implemented a 5-for-1 split of its investment units.
(Note 9) New investment units were issued through public offering at the issue price of 212,257 yen per unit (purchase price of 205,290 yen) for the purpose of procuring funds for acquiring new properties, etc.

[Changes in market price of investment certificates]
The highest and lowest (closing price) market prices on the Real Estate Investment Trust Section of the Tokyo Stock
Exchange, Inc., on which FRC’s investment certificates are listed, in each fiscal period are as follows:
Fiscal period
HighestLowest18th fiscal period(March 1, 2013 toAugust 31, 2013)

893,000 yen
704,000 yen

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

868,000 yen
708,000 yen

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

20th fiscal period(Note 2)
(March 1, 2014 toAugust 31, 2014)

171,400 yen
171,000 yen

199,000 yen
157,100 yen

21st fiscal period(Note 2)22nd fiscal period(Note 2)

244,400 yen
186,200 yen

226,000 yen
187,100 yen(September 1, 2014 to
February 28, 2015)(March 1, 2015 toAugust 31, 2015)(Note 1) The highest and lowest prices of the investment unit price are based on the closing prices on the Real Estate Investment Trust Section of the Tokyo Stock Exchange, Inc.
(Note 2) In accordance with the 5-for-1 split of FRC’s investment units with March 1, 2014 as the effective date, the investment units are traded at the price after ex rights, starting on February 26, 2014.

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II. Semiannual Report

Overview of Asset Management
4. Results of dividend, etc.
With respect to the dividend for the 22nd fiscal period, FRC determined to distribute the whole unappropriated surplus (except
for the fraction amount, which is the dividend per unit of less than 1 yen) to be eligible for special tax measures for an investment
corporation (as stipulated in Article 67-15 of the Special Taxation Measures Act) that allow FRC to deduct the maximum amountof earnings dividend from its taxable income. Accordingly, dividend per unit for the fiscal period was 3,563 yen.
(thousands of yen)
Fiscal period
Unappropriated surplus
Undistributed earnings
Total dividends[Dividend per unit]

Earnings dividends[Earnings dividend per unit]

Contribution refund[Contribution refund per unit]

18th fiscal period

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

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

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

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

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

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

–

–

[–]

22nd fiscal period(September 1, 2014 to
February 28, 2015)[–](March 1, 2015 toAugust 31, 2015)

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

2,661,720
159
2,661,561[3,563 yen]
2,661,561[3,563 yen]–[–]

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

6. Significant events that have occurred after the end of the 22nd fiscal period
No relevant items.

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II. Semiannual Report

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

19th fiscal period

20th fiscal period

2,000,000 units

2,000,000 units

138,000 units
8,470

18th fiscal period
as of August 31, 2013

21st fiscal period

22nd fiscal period

10,000,000 units

10,000,000 units

10,000,000 units

138,000 units

690,000 units

690,000 units

747,000 units

7,156

7,386

7,350

10,524as of February 28, 2014

as of August 31, 2014

as of February 28, 2015

as of August 31, 2015

2. Matters related to investment units
The following table sets forth the major unitholders of FRC as of August 31, 2015.
Investment units held (units)

NameJapan Trustee Service Bank, Ltd. (Trust account)
Fukuoka Jisho Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust account)
Trust & Custody Service Bank, Ltd. (Securities investment trust account)
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
MetLife, Inc.
Kazuhiko Enomoto
The Bank of New York Mellon SA/NV 10
Shikoku Railway Company
Mizuho Trust & Banking Co., Ltd.
Total

232,426
64,775
46,16338,992
26,133
16,47911,985
10,2459,130
9,000
465,328

Percentage of total number ofinvestment units outstanding (%) (Note)
31.11
8.67
6.17
5.21
3.49
2.20
1.60
1.37
1.22
1.20
62.29

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

3. Matters related to directors(1) The names of FRC’s directors, etc. and their fees for the 22nd fiscal period are as
follows:
Title

Name of directors, etc.

Major concurrent assignments

Total fee for each title for the
22nd fiscal period(thousands of yen) (Note 2)

CEO and Representative Director
Supervisory Directors
Independent Auditor

Etsuo Matsuyuki
Takashi Shinohara
Hiroyasu Shindo
PricewaterhouseCoopers Aarata

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

–

6,000
3,600
11,000(Note 1) The CEO and Representative Director and Supervisory Directors do not possess investment units of FRC under their own name or under another person’s name. Although there are cases where theSupervisory Directors may be directors of companies other than those stated above, none of the companies or those stated above have vested interest in FRC.
(Note 2) The fees for the CEO and Representative Director and Supervisory Directors are the amounts paid to them in the 22nd fiscal period, and the fee to the Independent Auditor is the amount payable to it(estimate) for audits pertaining to the 22nd fiscal period.

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

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II. Semiannual Report

Overview of the Investment Corporation
4. Names of asset management company, asset custodian and generaladministrators as of the end of the 22nd fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as ofAugust 31, 2015.
Category of entrustment

Name

Asset Management Company

Fukuoka Realty Co., Ltd.

Asset Custodian

Mitsubishi UFJ Trust and Banking Corporation

General Administrator (accounting matters, etc.)

Mitsubishi UFJ Trust and Banking Corporation

General Administrator (administration of unitholders’ list)

Sumitomo Mitsui Trust Bank, Limited

General Administrator (administration of investment corporation bonds registry)

Sumitomo Mitsui Banking Corporation

Status of FRC’s Assets under Management
1. FRC’s asset structure
21st fiscal period

Type of asset

Area

Use

22nd fiscal period

as of February 28, 2015

Total value of
properties held

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

as of August 31, 2015

Percentage of
total assets

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

Percentage of
total assets(%) (Note 3)

Fukuoka urban area

65,54239.2

70,643

38.9

Other Kyushu areas

35,885

21.4

36,13919.9

Fukuoka urban area

44,25926.4

43,983

24.2

Other Kyushu areas

–

–

–

–

Fukuoka urban area

10,7996.5

18,911

10.4

Other Kyushu areas

2,759

1.6

2,728

1.5

Deposits and other assets

8,123

4.9

9,191

5.1

Total amount of assets (Note 4)

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

181,597[172,416]

100.0[94.9]

RetailReal estate in trust

Office buildings

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

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II. Semiannual Report

Status of FRC’s Assets under Management
2. Major assets owned by FRC
The following is an overview of the major assets owned by FRC as of August 31, 2015.
Real estate property name (Note 1)

Book value(mm of yen)

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

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

Main use

Canal City Hakata

30,622

46,483.22

46,233.72

99.5

17.5

RetailCanal City Hakata·B

28,39668,806.66

68,559.07

99.6

19.1

RetailPark Place Oita (Note 4)

18,010109,588.00

109,459.56

99.9

13.8

RetailSunLive City Kokura

5,959

61,450.22

61,450.22

100.0

3.5

RetailSquare Mall Kagoshima Usuki

4,659

14,602.88

14,602.88

100.0

3.0

RetailKumamoto Intercommunity SC

2,104

6,968.66

6,968.66

100.0

1.1

RetailAEON Hara Shopping Center

5,293

27,313.53

27,313.53

100.0

2.5

RetailHanahata SC

1,036

2,801.15

2,801.15

100.0

0.5

RetailKurume Higashi Kushiwara SC

2,205

6,467.80

6,467.80

100.0

1.0

RetailK’s Denki Kagoshima

3,198

7,296.17

7,296.17

100.0

1.3

RetailMarinoa City Fukuoka (Marina Side Building)

5,294

33,069.82

33,069.82

100.0

1.4

RetailRetail subtotal:

106,783

384,848.11

384,222.58

99.8

64.8

Canal City Business Center Building

13,57023,030.44

23,030.44

100.0

7.7

Office building

Gofukumachi Business Center

9,535

19,905.34

19,802.20

99.5

6.2

Office building

Sanix Hakata Building

4,022

6,293.76

6,027.06

95.8

2.3

Office building

Taihaku Street Business Center

6,480

14,677.27

14,506.18

98.8

3.5

Office building

Higashi Hie Business Center

4,931

13,674.96

13,674.96

100.0

3.9

Office building

Tenjin Nishi-Dori Center Building

2,709

3,339.32

3,339.32

100.0

1.0

Office building

Tenjin North Front Building

2,734

5,252.39

5,252.39

100.0

1.6

Office building

43,98386,173.48

85,632.55

99.4

26.3

1,808

4,821.25

4,749.72

98.5

0.8

Others990

2,710.86

2,588.58

95.5

0.5

OthersAqualia Kego

2,683

7,415.36

7,115.16

96.0

1.4

OthersAqualia Chihaya

1,231

5,619.69

5,380.61

95.7

0.7

Others

D-Wing Tower

2,811

7,187.58

6,621.49

92.1

1.3

OthersHotel FORZA Oita

1,461

5,785.44

5,785.44

100.0

0.7

OthersTosu Logistics Center

1,266

4,173.29

4,173.29

100.0(Note5)

OthersGranfore Yakuin Minami

1,186

2,496.06

2,421.34

97.0

0.5

OthersLOGIPORT Island-city Hakata

8,199

43,233.72

43,233.72

100.0(Note 5)

OthersOthers subtotal:

21,63983,443.25

82,069.35

98.4

8.9

Total

172,406

554,464.84

551,924.48

99.5

100.0

Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori

(Note 1) The properties listed above are owned in the form of trust beneficiary interest.
(Note 2) “Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the numbers are rounded off to one decimal place.
(Note 3) “Percentage of total leasing business revenue” is rounded off to one decimal place. The percentage of total leasing business revenue of respective properties in the above table may not equal 100%.
(Note 4) The figures include those for the property’s adjacent land that FRC acquired on May 28, 2015. The same shall apply hereafter.
(Note 5) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

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II. Semiannual Report

Status of FRC’s Assets under Management
3. Details of real estate properties in the portfolio
The following table provides details of the real estate properties owned by FRC as of August 31, 2015.

Real estate property nameForm ofownership

Location

2-22, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka City
2-1, 1-Chome, Sumiyoshi,
Canal City Hakata·B
Hakata Ward, Fukuoka City1, 2-Chome, Koen Dori Nishi,
Park Place Oita
Oita City, Oita
14-1, 2-Chome, Kami Kuzuhara,
SunLive City Kokura
Kokura Minami Ward, Kitakyushu
City
2-18, 2-Chome, Usuki,
Square Mall Kagoshima Usuki
Kagoshima City, Kagoshima
1-5, 1-Chome, Kozono, HigashiKumamoto Intercommunity SC
Ward, Kumamoto City
27-52, 6-Chome, Hara, Sawara
AEON Hara Shopping Center
Ward, Fukuoka City
9-12, 4-Chome, Hanahata,
Hanahata SC
Minami Ward, Fukuoka City
370-3 Higashi Kushiwara,
Kurume Higashi Kushiwara SC
Kurume City, Fukuoka
4-12, Tokai-cho, Kagoshima
K’s Denki Kagoshima
City, Kagoshima
Marinoa City Fukuoka (Marina Side 12-30, 2-Chome, Odo, Nishi
Building)
Ward, Fukuoka City
Retail subtotal:
2-25, 1-Chome, Sumiyoshi,
Canal City Business Center Building
Hakata Ward, Fukuoka City
10-10, Kami Gofukumachi,
Gofukumachi Business Center
Hakata Ward, Fukuoka City
1-23, 2-Chome, Hakataeki
Sanix Hakata Building
Higashi, Hakata Ward, Fukuoka
City
3-21 Gokushomachi, Hakata
Taihaku Street Business Center
Ward, Fukuoka City
1-2, 3-Chome, Higashi Hie,
Higashi Hie Business Center
Hakata Ward, Fukuoka City
5-28, 2-Chome, Tenjin, Chuo
Tenjin Nishi-Dori Center Building
Ward, Fukuoka City
4-20, 4-Chome, Tenjin, Chuo
Tenjin North Front Building
Ward, Fukuoka City
Office buildings subtotal:
4-23, 2-Chome, Maizuru, Chuo
Amex Akasakamon Tower
Ward, Fukuoka City
16-21, 2-Chome, Kego, Chuo
City House Keyaki DoriWard, Fukuoka City
13-17, 2-Chome, Kego, Chuo
Aqualia Kego
Ward, Fukuoka City
3-12, 4-Chome, Chihaya,
Aqualia Chihaya
Higashi Ward, Fukuoka City
10-38, 2-Chome, Daimyo, Chuo
D-Wing Tower
Ward, Fukuoka City
5-18, 1-Chome, Chuo-cho, Oita
Hotel FORZA Oita
City, Oita
1607 Momota, Himekata-cho
Tosu Logistics Center
Aza, Tosu City, Saga
11-20, 1-Chome, Hirao, Chuo
Granfore Yakuin Minami
Ward, Fukuoka City
3-4, 2-chome, Minato Kashii,
LOGIPORT Island-city Hakata
Higashi Ward, Fukuoka City
Others subtotal:
Total
Canal City Hakata

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

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

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

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

46,483.22

32,70030,62268,806.66

29,60028,396

109,588.00

17,93418,010Japan Real Estate Institute61,450.22

7,760

5,959

Japan Real Estate Institute14,602.88

5,210

4,659

Japan Real Estate Institute6,968.66

2,610

2,104

Japan Real Estate Institute27,313.53

4,500

5,293

Japan Real Estate Institute2,801.15

1,210

1,036

6,467.80

2,700

2,205

7,296.17

3,620

3,198

33,069.82

5,390

5,294

384,848.11

113,234

106,783

23,030.44

14,80013,57019,905.34

12,9009,535

6,293.76

5,020

4,022

Japan Real Estate Institute

14,677.27

7,120

6,480

Japan Real Estate Institute13,674.96

6,320

4,931

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

2,870

2,709

Japan Real Estate Institute5,252.39

3,230

2,734

Japan Real Estate Institute86,173.48

52,26043,983

4,821.25

1,830

1,808

2,710.86

1,020

990

7,415.36

3,590

2,683

Japan Real Estate Institute

5,619.69

1,570

1,231

Japan Real Estate Institute7,187.58

3,220

2,811

Tanizawa Sogo Appraisal
Co., Ltd.

5,785.44

1,660

1,461

Japan Real Estate Institute4,173.29

1,320

1,266

Japan Real Estate Institute2,496.06

1,210

1,186

43,233.72

8,270

8,199

83,443.25
554,464.84

23,690189,184

21,639172,406

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

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

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

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

Status of FRC’s Assets under Management
22nd fiscal period

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

Real estate property name

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

Canal City Hakata
Canal City Hakata·B
Park Place Oita
SunLive City Kokura
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
AEON Hara Shopping Center
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Marinoa City Fukuoka (Marina Side
Building)
Retail subtotal:
Canal City Business Center Building
Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center
Higashi Hie Business Center
Tenjin Nishi-Dori Center Building
Tenjin North Front Building
Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Kego
Aqualia Chihaya
D-Wing Tower
Hotel FORZA Oita
Tosu Logistics Center
Granfore Yakuin Minami
LOGIPORT Island-city Hakata

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

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

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

103 [1,003](Note 2)
(Note 2)(%) (Note 3)(March 1, 2015 to August 31, 2015)

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

100.0
100.0
99.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0

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

15.8
20.6
15.2
3.8
3.3
1.2
2.7
0.5
1.1
1.4

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

1 [46]
1 [49]
1 [105]
1
13
2
1
2
1
1

99.5
99.6
99.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,470
1,611
1,166
292
256
90
212
40
88
111

17.5
19.1
13.8
3.5
3.0
1.1
2.5
0.5
1.0
1.3

–

–

–

1

100.0

118

1.4

99.9

5,111

65.6

25 [222]

99.8

5.459

64.8

100.0
99.5
100.0
99.5
98.7
100.0
100.0

622
497
195
297
332
86
129

8.0
6.4
2.5
3.8
4.3
1.1
1.7

99.6

2,161

27.7

1 [61]
36
18
1 [68]
1 [23]
1
13
71 [220]

100.0
99.5
95.8
98.8
100.0
100.0
100.0

649
521
196
298
328
86
132

7.7
6.2
2.3
3.5
3.9
1.0
1.6

99.4

2,213

26.3

98.6
97.2
94.2
98.2
94.6
100.0
100.0
94.0
–

65
37
113
57
113
63
42
24
–

0.8
0.5
1.5
0.7
1.5
0.8
0.5
0.3
–

97.0

516

6.6

1 [66]
1 [40]
1 [124]
1 [101]
1 [128]
1
1
1 [96]
2
10 [559]

98.5
95.5
96.0
95.7
92.1
100.0
100.0
97.0
100.0

66
38
115
57
112
63
(Note 5)39
(Note 5)

0.8
0.5
1.4
0.7
1.3
0.7
(Note 5)0.5
(Note 5)

98.4

749

8.9

99.6

7,789

100.0

106 [1,001]

99.5

8,423

100.0

(Note 2)

(Note 2)

(Note 2)
(Note 2)

(Note 1) “Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and office buildings among relevant properties. For the number of tenants in pass-throughmaster leasing properties, the number of sections stipulated in the tenancy agreements with end tenants is shown in square brackets. The Taihaku Street Business Center is an office building witha residential tower. Its number of tenants comprises 12 for the office building and 56 for the residence in the 22nd fiscal period (12 for the office building and 58 for the residence in the 21st fiscal
period).
(Note 2) The total of all the tenants in other than pass-through master leasing properties and the total number of sections stipulated in the tenancy agreements with end tenants for pass-through master leasing
properties is shown in square brackets in the subtotal and total columns for “Number of tenants.”(Note 3) “Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the numbers are rounded off to one decimal place.
(Note 4) “Percentage of total leasing business revenue” is rounded off to one decimal place, and the total of individual percentages in the above table may not equal 100%.
(Note 5) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

4. Securities incorporated in the portfolio
No relevant items.

FUKUOKA REIT CORPORATION

14

II. Semiannual Report

Status of FRC’s Assets under Management
5. List of specific transaction contract amount and status of fair value
The following table provides the contract amount of specific transaction by FRC and the status of its fair value as of August 31,
2015.
Contract amount, etc.
Category

Of which,exceeding 1 year

(Note 1)

Interest rate swap transaction (Payable
fixed; Receivable floating)

Off-market transaction

Total

Fair value(mm of yen)Type

(mm of yen)
(Note 2)22,50020,500(97)

22,50020,500(97)(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors..

6. Status of other assets
All real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in theportfolio” on page 13. There is no incorporation of other specified assets as of the end of the 22nd fiscal period.

7. Status of owned assets by country and region
As of the end of the 22nd fiscal period, no overseas real estate properties in countries or regions other than Japan areincorporated into FRC’s portfolio.

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

Real estate property
nameLocation

PurposeSchedule
Total

Amount paid
Amountduring thealready paid
periodCanal City Hakata

Hakata Ward,
Fukuoka City

Common area repairs and improvements

From October 2015
to July 2016

767

3

–

Canal City Hakata·B

Hakata Ward,
Fukuoka City

Common area repairs and improvements

From October 2015
to July 2016

1,291

6

–

Park Place Oita

Oita City, Oita

Common area repairs and improvements

From September 2015
to March 2016

150

–

–

Square Mall
Kagoshima Usuki

Kagoshima City,
Common area repairs and improvements
Kagoshima

From October 2015
to July 2016

37

–

–

Marinoa City Fukuoka Nishi Ward,(Marina Side Building) Fukuoka City

Common area repairs and improvements

From November 2015
to July 2016

54

–

–

Canal City BusinessCenter Building

Hakata Ward,
Fukuoka City

Common area repairs and improvements

From January 2016
to May 2016

131

0

–

Gofukumachi Business Hakata Ward,
CenterFukuoka City

Common area repairs and improvements

From February 2016
to August 2016

101

–

–

Amex Akasakamon
Tower

Common area repairs and improvements

August 2016

26

–

–

Chuo Ward,
Fukuoka CityFUKUOKA REIT CORPORATION

15

II. Semiannual Report

Capital Expenditures for Owned Real Estate
2. Capital expenditures during the 22nd fiscal period
The following table provides the overview of major construction work that was completed in the 22nd fiscal period out of
the capital expenditures totaling 445 million yen. Furthermore, FRC conducted construction of 703 million yen in total in the
22nd fiscal period, combined with the 248 million yen in repair and maintenance expenses that were classified as expenses inaccounting and 9 million yen in expenses for restoration to former state.
Real estate property nameLocation

PurposeConstruction cost

Period(mm of yen)

Canal City Hakata

Hakata Ward, Fukuoka City

Common area repairs and improvements

From April 2015
to August 2015

Canal City Hakata B

Hakata Ward, Fukuoka City

Common area repairs and improvements

From April 2015
to August 2015

181

Gofukumachi Business Center

Hakata Ward, Fukuoka City

Common area repairs and improvements

From June 2015
to August 2015

51

Taihaku Street Business Center

Hakata Ward, Fukuoka City

Common area repairs and improvements

August 2015

52

51

3. Reserves for long-term repair and maintenance plans
FRC has deposited the following amounts from the cash flows generated during the 22nd fiscal period in order to fund largescale repair and maintenance work in the medium- to long-term future, based on long-term repairs and maintenance plans
prepared for respective properties.
(millions of yen)
Fiscal period

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

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

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

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

22nd fiscal period(March 1, 2015 toAugust 31, 2015)

Balance of deposits at beginning of period

350

700

700

800

800

Deposits during the period

350

–

100

–

–

Amounts used from deposits during the period

–

–

–

–

–

Deposits carried forward to the next period

700

700

800

800

800

FUKUOKA REIT CORPORATION

16

II. Semiannual Report

Expenses and Liabilities
1. Details of expenses related to asset management(thousands of yen)
21st fiscal periodItem22nd fiscal period(September 1, 2014 to
February 28, 2015)(a) Asset management fees(b) Asset custody fees(c) Administrative service fees(d) Directors’ compensations(e) Other operating expenses
Total(March 1, 2015 toAugust 31, 2015)

454,6526,241
47,8009,600
60,246
578,540

486,520
6,327
47,7679,600
54,600604,817(Note) Aside from the amounts of the asset management fees shown above, 5,500 thousand yen was paid for asset management related to the acquisition of Granfore Yakuin Minami (with the amount includedin the acquisition cost of the property) during the 21st fiscal period, and 55,350 thousand yen was paid for asset management related to the acquisition of LOGIPORT Island-city Hakata, Marinoa City
Fukuoka (Marina Side Building) and the adjacent land of Park Place Oita during the 22nd fiscal period.

2. Status of debt
As of the end of the 22nd fiscal period (August 31, 2015), FRC has the following debt from respective financial institutions.
Category
LenderDrawdown
dateAugust 31,
2009
Sumitomo Mitsui Banking
June 30,
2010
Corporation
July 29,
Sumitomo Mitsui Trust Bank
2011
March 1,The Bank of Fukuoka
2011
Current
March 1,
The
Nishi-Nippon
City
Bank
maturities of
2011
long-term
March 1,Development Bank of Japan
debt
2011
February 29,
Mizuho Bank
2012
August 31,
Development Bank of Japan
2009
July 29,
Shinsei Bank
2011
SubtotalJune 30,Development Bank of Japan2009
August 31,
Development Bank of Japan2009
December 30,
The Bank of Fukuoka
2010Long-term
July 29,
The Bank of Fukuoka
2011
debt
July 29,
The Nishi-Nippon City Bank
2011
The Dai-Ichi Life Insurance
July 29,
2011
Company
July 29,
Shinsei Bank
2011
Development Bank of Japan

Balance asof March 1,
2015

Balance as ofAugust 31,
2015

Averageinterest
rate (%)

4,000

–

1.950

1,200

–

1.074

1,000

–

1.041

2,000

2,000

0.621

2,000

2,000

0.774

2,000

2,000

0.771

500

500

1.117

–

4,000

2.170

–

1,000

1.208

12,70011,500

2,175

2,100

2.200

4,000

–

2.170

1,500

1,500

0.623

2,000

2,000

1.305

2,000

2,000

1.305

1,000

1,000

1.800

1,000

–

1.208

(mm of yen)

(mm of yen)

Repayment
date

Repayment
methodUse offunds

Description

August 31,
2015
June 30,
2015
July 31,2015
February 29,
2016
February 29,
2016
February 29,
2016
February 29,
2016
August 31,
2016
July 29,
2016

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

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

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

June 30,(Note 2)2017
August 31, Lump-sum upon2016
maturity
December 30, Lump-sum upon2016
maturity
July 31,
Lump-sum upon2017
maturity
July 31,
Lump-sum upon2017
maturity
July 31,
Lump-sum upon
2018
maturity
July 29,
Lump-sum upon2016
maturity

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

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee(Note 1)FUKUOKA REIT CORPORATION

17

II. Semiannual Report

Expenses and Liabilities
Category
LenderThe Bank of Fukuoka
The Hiroshima BankThe Oita BankThe Eighteenth BankThe Shinwa Bank
The Kitakyushu Bank
The Kagoshima Bank
Resona Bank
Sumitomo Mitsui Banking
Corporation
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation
Resona Bank
The Higo Bank
Long-term
debt

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

Drawdown
date

Balance as ofAugust 31,
2015

Averageinterest
rate (%)

1,500

1,500

0.773

500

500

1.182

500

500

1.182

500

500

1.182

500

500

1.182

500

500

1.182

100

100

1.168

400

400

1.218

500

500

1.338

2,000

2,000

1.170

500

500

1.203

600

600

1.253

300

300

1.203

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

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

0.858

600

600

0.573

2,000

2,000

1.033

2,500

2,500

0.775

1,900

1,900

0.671

1,700

1,700

0.671

1,100

1,100

0.721

1,500

1,500

0.521

600

600

0.521

600

600

0.523

(mm of yen)

December 30,
2011
December 30,
2011
December 30,
2011
December 30,
2011
December 30,
2011
December 30,
2011
January 31,
2012
January 31,
2012
January 31,
2012
March 1,
2012
March 30,
2012
March 30,
2012
March 30,
2012

June 29,2012

September 28,
2012
September 28,
Resona Bank
2012
February 1,
The Nishi-Nippon City Bank
2013
February 28,
The Nishi-Nippon City Bank
2013
February 28,
Mizuho Bank
2013
February 28,
Sumitomo Mitsui Trust Bank
2013
Mitsubishi UFJ Trust andFebruary 28,
2013
Banking Corporation
February 28,
Aozora Bank
2013
Mitsubishi UFJ Trust andMarch 29,
2013
Banking Corporation
Sumitomo Mitsui Trust Bank

Balance asof March 1,
2015(mm of yen)

Repayment
date

Repayment
methodUse offunds

Description(Note 1)FUKUOKA REIT CORPORATION

18

December 30, Lump-sum upon Refinance2017
maturity
fund
December 30, Lump-sum upon Refinance2016
maturity
fund
December 30, Lump-sum upon Refinance2016
maturity
fund
December 30, Lump-sum upon Refinance2016
maturity
fund
December 30, Lump-sum upon Refinance2016
maturity
fund
December 30,
Lump-sum
Refinance
2016
upon maturity
fund
January 31,
Lump-sum
Refinance
2017
upon maturity
fund
January 31,
Lump-sum
Refinance
2017
upon maturity
fund
January 31,
Lump-sum
Refinance
2019
upon maturity
fund
March 31,
Lump-sum
Acquisition
2017
upon maturity
fund
March 31,
Lump-sum
Refinance
2017
upon maturity
fund
March 31,
Lump-sum
Refinance
2017
upon maturity
fund
March 31,
Lump-sum
Refinance
2017
upon maturity
fund

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

June 30,
2017

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

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

Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity

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

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

Expenses and Liabilities
Category
Drawdown
dateLenderJune 28,
2013

Aozora Bank
Mizuho Bank
The Norinchukin Bank
The Bank of Saga
Mizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu BankThe Iyo Bank
The Higo Bank
Long-term
debt

July 31,
2014

July 31,2014

August 29,
2014
The Bank of Tokyo-Mitsubishi September 25,
2014
UFJ
Sumitomo Mitsui Banking
June 30,
2015
Corporation
July 31,
Sumitomo Mitsui Trust Bank
2015
August 31,
Development Bank of Japan2015
August 31,
The Bank of Fukuoka
2015
August 31,
The Nishi-Nippon City Bank
2015
Subtotal
Total

Development Bank of Japan

Balance asof March 1,
2015

Balance as ofAugust 31,
2015

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds

Description

1,000

1,000

0.573

June 30,
2020

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

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

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

0.538

July 31,2019

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

0.835

July 30,
2021

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

4,000

4,000

1.010

500

500

0.520

–

1,600

0.525

–

1,500

0.611

–

4,000

0.880

–

400

0.521

–

400

0.870

August 31,
2022
September 25,
2019
June 30,
2022
July 31,2023
August 31,
2023
August 31,
2022
August 31,
2023

Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity

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

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

56,075
68,77558,90070,400(mm of yen)

(mm of yen)

(Note 1)

(Note 1) The average interest is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest of debt for which FRC conducted interest rate
swap transactions in order to hedge against interest rate fluctuation risks is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The debt is subject to repayment of 75 million yen on the final day of every 6 months following the final day of December 2009 as the initial repayment date, with 1,875 million yen to be repaid on
the final repayment date. Furthermore, as the 150 million yen scheduled for repayment within a year is included in Long-term debt for the convenience of comparison, the balances do not match thefigures recorded on the balance sheets as Current maturities of long-term debt and Long-term debt payable.

3. Status of investment corporation bonds
As of August 31, 2015, FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Balance as of
Balance as of
Decrease during
March 1,
August 31,
the fiscal period
2015
2015
(mm of yen)
(mm of yen)First Series ofDecember 30,
Unsecured Bonds
2013

2,000

CouponMaturity
date

1.32

December 29,
2023

(%)

Maturity
methodUse

Description(mm of yen)

–

2,000

Lump-sum Repayment of No collateral/
upon maturity
No guarantee
debt(Note 1)
(Note 2)

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

FUKUOKA REIT CORPORATION

19

II. Semiannual Report

Acquisitions and Sales during the 22nd Fiscal Period
1. Acquisition and sale of real estate and asset-backed securities, etc.
Acquisition
Asset type

Name of real estate

Real estate in trust
Real estate in trust
Real estate in trust

Acquisition date

Acquisition priceMarch 27,2015
May 1,
2015
May 28,2015

LOGIPORT Island-city
HakataMarinoa City Fukuoka(Marina Side Building)
Adjacent land of Park Place
Oita

Sale
Transfer date

(mm of yen)

Gain or loss on
saleBook value

Sale price(mm of yen)

(mm of yen)

(mm of yen)

8,150

–

–

–

–

5,250

–

–

–

–

590

–

–

–

–

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

2. Acquisition and sale of other assets
No relevant items.

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

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

Acquisition
Acquisition
Acquisition

LOGIPORT Island-city
HakataMarinoa City Fukuoka(Marina Side Building)
Adjacent land of Park
Place Oita

Real estate in Trust
Real estate in Trust
Real estate in Trust

March 27,2015
May 1,
2015
May 28,2015

Real estate appraiser

Appraisal date

(mm of yen)

8,150

8,180 Tanizawa Sogo Appraisal Co., Ltd.

5,250

5,270 Tanizawa Sogo Appraisal Co., Ltd.

590

601 Japan Real Estate InstituteFebruary 1,
2015
February 1,
2015
May 1,
2015(Note 1) The acquisition price refers to the amount (purchase price shown the purchasing contact) not including expenses for the acquisition of the relevant property (transaction brokerage fees and taxes andother public charges, etc.).
(Note 2) The appraisal value above is based on the “Real Estate Appraisal Standards, Specific Thesis Chapter 3: Appraisal on Prices of Real Estate Subject to Securitization.”(2) Other
Of those transactions carried out by FRC that are required to have the value, etc. reviewed pursuant to the provisions ofArticle 201 of the Investment Trusts Act, no transaction was subject to the review for the 22nd fiscal period other than thetransactions described in (1) above.

4. Transactions with interested parties, etc.
(1) Transaction status
Category

Transaction amount, etc.
Purchase amount, etc. (thousands of yen)

Total

Sale amount, etc. (thousands of yen)

13,990,000–

Fukuoka Jisho Co., Ltd.

5,840,000 [41.7%]

– [–]

Total

5,840,000 [41.7%]– [–]Breakdown of transactions with interested parties, etc.

(Note 1) The figures in the above table refer to the amounts shown on the purchasing contracts.
(Note 2) Interested parties, etc. refer to the interested parties of the asset management company who have concluded an asset management agreement with FRC and are designated in Article 123 of the
Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of these interested parties, etc., the above table indicates the business partner with which FRC conducted transaction
during the 22nd fiscal period.

FUKUOKA REIT CORPORATION

20

II. Semiannual Report

Acquisitions and Sales during the 22nd Fiscal Period(2) Amount of fees paid, etc.
FRC paid the following fees to the interested parties, etc. during the 22nd fiscal period.
Category

Breakdown of transactions with interested parties, etc.

Total paid fees(A)

Paid party(thousands of yen)

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

Other operating expenses (Note 2)

Paid amount (B)(B)/(A)(%)(thousands of yen)

Fukuoka Jisho Co., Ltd.
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
380,201
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,288,404 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,253,545 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.

9,815
1,612
268,857
98,968921,733
204,472
60,758
243,503
219,408174

20,636

47.6
7.8
70.7
26.0
71.5
15.9
4.7
19.4
17.5
0.0

(Note 1) Interested parties, etc. refer to the interested parties, etc. of the asset management company who has concluded an asset management agreement with FRC, as designated in Article 123 of the
Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of these interested parties, etc., the above table indicates the paid parties to which FRC paid fees during the 22nd
fiscal period.
(Note 2) The property leasing brokerage fees, outsourcing fees and other operating expenses include property leasing brokerage fees, etc. paid to third parties through interested parties, etc.
(Note 3) The property management fees do not include the following construction supervision fees. In addition, of the fees below, the construction supervision fees paid upon acquiring real estate are includedin the acquisition cost of the relevant real estate.
Fukuoka Jisho Co., Ltd.
16,545 thousand yen
Park Place Oita Co., Ltd.
2,221 thousand yen(Note 4) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 22nd fiscal period. The amounts include construction
work fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd. 410,136 thousand yen
Park Place Oita Co., Ltd.
59,742 thousand yen
Sunlife Co., Ltd.
72,751 thousand yen(Note 5) The outsourcing fees shown above are paid fees, etc. regarding building management outsourcing fees, and do not coincide with the Outsourcing fees described in VIII. Notes to Financial Statements(Notes to statements of income) that include property management fees and others.

5. Transactions with the asset management company regarding
concurrent work conducted by the asset management company
The asset management company (Fukuoka Realty Co., Ltd.) concurrently conducts land and building transaction business but
there was no relevant transaction conducted in the 22nd fiscal period. Moreover, the asset management company does notconcurrently conduct any of the class 1 financial instruments transaction business, class 2 financial instruments transaction
business or real estate syndication business, and has no such transactions with FRC.

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

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

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

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

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

21

III. Independent Auditor's Report

FUKUOKA REIT CORPORATION

22

IV. Balance Sheets(thousands of yen)
22nd fiscal period

21st fiscal period

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

AssetsCurrent assets
Cash and deposits

2,545,162

2,331,908

Cash and deposits in trust

4,438,305

5,267,938

Operating accounts receivable

318,677

434,567

Prepaid expenses

248,214

267,938–

246,657

Consumption taxes receivable
Deferred tax assets

9

62

4,209

4,536

7,554,578

8,553,609

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

79,100,573

Structures in trust

1,311,964

Accumulated depreciation(484,118)

Machinery and equipment in trust

585,826

Accumulated depreciation(241,057)

Vehicles and transport equipment in trust
Accumulated depreciation

60,841,364
827,846(521,623)

344,768(262,400)

Accumulated depreciation(877,740)

64,240,475
953,657

618,646
356,245747(151)
1,248,071

83,847,220(19,606,745)
1,475,281

747

Tools and fixtures in trust
Lands in trust*1(18,259,209)

596

(198)

548

1,250,581
370,331
95,084,266*1(926,118)

324,463*1

104,756,397

18,696

10,276

157,487,870

170,642,063

1,765,318

1,765,318

12,3188,976

1,777,637

1,774,294

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

100,000

110,000

Long-term prepaid expenses

411,366

456,882

Total investment and other assets

521,366

576,882

159,786,874

172,993,240

Investment corporation bond issuance expenses

17,357

16,375Investment unit issuance expenses

11,08434,538Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold right in trust
Other intangible assets in trust
Total intangible assets
Investment and other assets

Total noncurrent assets
Deferred assets

Total deferred assets
Total assets

28,44250,913

167,369,896

181,597,763

FUKUOKA REIT CORPORATION

23

IV. Balance Sheets(thousands of yen)Account

22nd fiscal period

21st fiscal period(as of February 28, 2015)(as of August 31, 2015)

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

507,169

726,913

12,850,000

11,650,000

Accounts payable - other

24,80732,134

Accrued expenses

330,419

351,432

Income taxes payable

734

1,744

Accrued consumption taxes

168,301–

Advances received

930,019

1,014,843

Deposits received
Total current liabilities

673,421

1,049,290

15,484,873

14,826,359

Noncurrent liabilities
Investment corporation bonds

2,000,000

2,000,000

Long-term debt payable

55,925,000

58,750,000

316,031331,243

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

Total noncurrent liabilities

11,832,568*1

11,885,673

70,073,599

72,966,916

85,558,472

87,793,276

79,441,236

91,142,766

Unappropriated surplus

2,370,187

2,661,720

Total surplus

2,370,187

2,661,720

Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus

Total unitholders’ equity
Total net assets

81,811,423*3

Total liabilities and net assets

81,811,423
167,369,896

FUKUOKA REIT CORPORATION

24

93,804,487*393,804,487
181,597,763

V. Statements of Income(thousands of yen)
21st fiscal period

Account

22nd fiscal period(September 1, 2014 to
February 28, 2015)(March 1, 2015 toAugust 31, 2015)

Operating revenues
Leasing revenues - real estate*1

7,342,920

Other leasing revenues - real estate*1446,484*1, *24,350,094

7,789,404*1

7,902,500*1

520,821

8,423,321

Operating expenses
Expenses related to leasing business
Asset management fees

*1, *2454,652

4,651,490
486,520

Asset custody fees

6,241

6,327

Administrative service fees

47,80047,767

Director’s compensations

9,600

9,600

Other operating expenses

60,246

Operating income

4,928,634

54,6002,860,769

5,256,307
3,167,014

Non-operating revenues
Interest received
Others

660

706

1,675

2,336

1,302

2,009

Non-operating expenses
Interest expenses

365,592374,293

Interest expenses on investment corporation bonds

13,09813,296

Amortization of investment corporation bond issuance
expenses982

982

Amortization of investment unit issuance expenses

5,542

10,219107,117106,699

Financing related expenses
Others15492,34815

505,506

Ordinary income

2,370,757

2,663,517

Net income before income taxes

2,370,757

2,663,517

Income taxes-current

867

Income taxes-deferred18

Net income

1,886
885

(53)

1,833

2,369,872

2,661,683

Surplus brought forward

314

37

Unappropriated surplus

2,370,187

2,661,720

FUKUOKA REIT CORPORATION

25

VI. Statements of Changes in Net Assets
21st fiscal period (September 1, 2014 to February 28, 2015)
Item
Balance as of September 1, 2014
Changes in the current fiscal period
Dividend of surplus
Net income
Total of changes in the current fiscal period
Balance as of February 28, 2015

(thousands of yen)
Total unitholders’ equity

79,441,236

Unitholders’ Equity
Surplus
Unappropriated surplus
2,262,134

81,703,371

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

Unitholders’ capital

22nd fiscal period (March 1, 2015 to August 31, 2015)

Item
Balance as of March 1, 2015
Changes in the current fiscal period
Issuance of new investment units
Dividend of surplus
Net income
Total of changes in the current fiscal period
Balance as of August 31, 2015

Unitholders’ capital
79,441,236(thousands of yen)
Unitholders’ Equity
Surplus
Unappropriated surplus
2,370,187

11,701,530

11,701,530
91,142,766

Total net assets(2,370,150)
2,661,683
291,533
2,661,720

FUKUOKA REIT CORPORATION

26

Total unitholders’ equity

Total net assets

81,811,423

81,811,423

11,701,530(2,370,150)
2,661,683
11,993,063
93,804,487

11,701,530(2,370,150)
2,661,683
11,993,063
93,804,487

VII. Cash Flow Statements(thousands of yen)
21st fiscal period

Account

22nd fiscal period(September 1, 2014 to
February 28, 2015)(March 1, 2015 toAugust 31, 2015)

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

2,370,757

2,663,517

Depreciation and amortization expenses

1,390,656

1,458,153

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

982

982

5,542

10,219Interest received

(660)

(706)

Interest expenses

378,691

387,590

Decrease (increase) in operating account receivables

83,640(115,889)

Decrease (increase) in consumption taxes receivable-(246,657)

Increase (decrease) in accrued consumption taxes

53,196(168,301)

Increase (decrease) in operating accounts payable

39,903

159,326

Increase (decrease) in accounts payable-other

6,930(8,290)

Increase (decrease) in accrued expenses

2,084

20,828

Increase (decrease) in advances received

5,759

84,824

Increase (decrease) in deposits expenses(369,533)

375,869

Decrease (increase) in prepaid expenses

52,187(19,723)

Decrease (increase) in long-term prepaid expenses

97,625(45,515)

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

865(1,630)4,118,629

4,554,594

660

706

(382,901)(387,405)(1,295)(876)

3,735,093

4,167,019(1,473,781)(14,543,468)

30

21,096

Net cash provided by (used in) investment activities
Purchase of property, plant and equipment in trust
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits(667)(5,884)

Proceeds from tenant leasehold and security deposits in trust

84,091

837,785

Repayments of tenant leasehold and security deposits in trust(59,648)(784,680)-(10,000)

Payments of tenant leasehold and security deposits in trust
Proceeds from restricted trust deposits

5,754

5,534

Payments for restricted trust deposits(8,406)(8,890)(1,452,627)(14,488,507)

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

21,500,000

Repayments of short-term debt payable(500,000)(21,500,000)

Proceeds from long-term debt payable

500,000

7,900,000

Repayments of long-term debt payable(375,000)(6,275,000)-

11,701,530

Proceeds from issuance of investment units
Payment of investment unit issuance expenses-(22,261)

Dividends paid

(2,260,823)(2,369,757)

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

10,934,511

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

613,023

Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period

7,273,713
6,920,356*1

FUKUOKA REIT CORPORATION

27

6,920,356*1

7,533,380

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

2. Accounting for deferred assets

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

3. Standards for recognition of revenues and expenses

Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses themethod of charging the corresponding amounts of assessed taxes to the current fiscal period as expenses
related to leasing business.
Furthermore, FRC includes an amount equivalent to the property taxes, etc. paid to the sellers during
the first fiscal year as an acquisition cost, not as expenses, in connection with the acquisition of real estateor entrusted beneficiary interests in real estate as entrusted property. Property taxes, etc. capitalized inacquisition cost amounted to 78,533 thousand yen for the fiscal period ended August 31, 2015.

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

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

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

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

FUKUOKA REIT CORPORATION

28

VIII. Notes to Financial Statements(Notes to balance sheets)*1. Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:(thousands of yen)
21st fiscal period

22nd fiscal period

as of February 28, 2015

Buildings in trust
Lands in trust

as of August 31, 2015

6,276,793
11,618,595
17,895,389

Total

6,703,703
16,101,020
22,804,724

Secured liabilities are as follows:(thousands of yen)
21st fiscal period

22nd fiscal period

as of February 28, 2015

Tenant leasehold and security deposits
received in trust

as of August 31, 2015

1,946,509

1,981,957

2. Balance of unused committed line of credit
FRC has executed committed line of credit agreements with its banks primarily to conduct efficient and dynamic cash management.
[Committed line of credit agreement 1](thousands of yen)
21st fiscal period

22nd fiscal period

as of February 28, 2015

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of August 31, 2015

6,000,000–

6,000,000–

6,000,000

6,000,000[Committed line of credit agreement 2](thousands of yen)
21st fiscal period

22nd fiscal period

as of February 28, 2015

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of August 31, 2015

7,000,000–

7,000,000–

7,000,000

7,000,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
(thousands of yen)
21st fiscal period

22nd fiscal period

as of February 28, 2015

as of August 31, 2015

50,00050,000FUKUOKA REIT CORPORATION

29

VIII. Notes to Financial Statements(Notes to statements of income)*1. Breakdown of revenues and expenses related to real estate leasing business.
(thousands of yen)
21st fiscal period

22nd fiscal period

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

6,403,867
1,076,907
421,726(September 1, 2014 to
February 28, 2015)

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

(March 1, 2015 toAugust 31, 2015)

7,342,920

429,118
17,366478,940
41,880446,484
7,789,404

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

1,668,605
248,273597,541
57,441
466,266
1,458,153
155,208

4,350,094
4,350,094
3,439,309*2. Transactions with affiliated companies.

(thousands of yen)
21st fiscal period

22nd fiscal period(September 1, 2014 to
February 28, 2015)

Expenses related to real estate leasing business(March 1, 2015 toAugust 31, 2015)

1,366,769

1,555,181(Notes to statements of changes in net assets)
Total number of authorized investment units and total number of investment units issued.
21st fiscal period

22nd fiscal period

as of February 28, 2015

Total number of authorized investment units
Total number of investment units issued

as of August 31, 2015

10,000,000 units
690,000 units

10,000,000 units
747,000 units(Notes to cash flow statements)*1. Relationship between the balance of cash and cash equivalents at end of period and the amounts of the corresponding accounts on the balance sheets.
(thousands of yen)
21st fiscal period

22nd fiscal period(September 1, 2014 to
February 28, 2015)

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents(March 1, 2015 toAugust 31, 2015)

2,545,162
4,438,305(63,111)6,920,356

2,331,908
5,267,938(66,467)
7,533,380(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

FUKUOKA REIT CORPORATION

30

7,902,500

520,821
8,423,321

4,651,490
4,651,490
3,771,831

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

21st fiscal period

22nd fiscal period

as of February 28, 2015

Due within 1 year
Due after 1 year

as of August 31, 2015

6,118,585
23,906,537
30,025,123

Total

6,233,828
27,605,287
33,839,116(Notes to financial instruments)
1. Matters concerning status of financial instruments(1) Policy on handling financial instruments
In order to secure stable earnings and steady growth of assets under management, FRC procures funds primarily throughborrowings from financial institutions, issuance of investment corporation bonds or issuance of investment units forproperty acquisitions, repair and maintenance work, repayment of interest-bearing debt and other purposes.
In procuring interest-bearing debt, FRC borrows funds primarily in long-term, fixed interest debt based on the policyof establishing a solid financial structure, and conducts conservative operations intended to secure financial stability andliquidity by dispersing debt payment dates and utilizing committed lines of credit and through other measures.
With regard to surplus funds, FRC manages them as various deposits and savings, etc. to support efficient management
while considering security.
FRC conducts derivative transactions only for the purpose of hedging the risk of future interest rate fluctuation, and not
for the purpose of speculation.
(2) Description of financial instruments and associated risks, and risk management structure
Debt and investment corporation bonds are funds procured primarily for acquiring real estate trust beneficiary interests andrefinancing of borrowings. Borrowings and investment corporation bonds are exposed to liquidity risks upon debt payment
dates, but FRC works to mitigate these risks by such measures as appropriately controlling the ratio of interest-bearing
debt to total assets and executing commitment line agreements with local financial institutions that are lenders to secure
on-hand liquidity.
In addition, borrowings with floating interest rates are exposed to interest rate fluctuation risks. However, FRC works
to reduce the risks by such measures as adjusting the ratio of the balance of borrowings with floating interest rates tototal borrowings in accordance with the financial environment and other factors. FRC conducts derivative transactions(specifically interest rate swap transactions) for part of its borrowings with floating interest rates in order to hedge the risk
of future fluctuations in the rates of interest payable. Furthermore, assessment of the effectiveness of these interest rate
swaps is omitted as it has been determined that they have met the requirements for special accounting. FRC executes andmanages its derivative transactions in accordance with its financial derivative transaction management policies and, it does
so only with financial institutions it determines to have a certain level of creditworthiness, by reference to their credit ratings,
to reduce counterparty risks.
FRC manages surplus funds in large time deposits. Such deposits are subject to the risks of failure of the financial
institutions holding the deposits as well as other credit risks. FRC mitigates the risks by limiting its deposits to financial
institutions with a certain level of creditworthiness by reference to their credit ratings as well as by setting short durations
for these deposits.
Tenant leasehold and security deposits received in trust are deposits from tenants and are exposed to liquidity risks if
tenants move out before the contracts expire. FRC mitigates this risk by such measures as securing on-hand liquidity.
(3) Supplementary explanation on matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, may include values based on reasonablecalculations when there is no market price. Certain assumptions are made in calculating those values, and there may becases where the values will vary when different assumptions are used.
As for the contract value and other conditions of derivative transactions indicated in “2. Matters concerning fair value offinancial instruments,” the contract value is not an indicator of the market risks related to such transactions.
FUKUOKA REIT CORPORATION

31

VIII. Notes to Financial Statements

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

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

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

Fair value(Note 1)

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

Difference––––
76,30059,492
343,941(9,550)470,184––

The following table includes the book values for financial instruments recorded on the balance sheets, the corresponding
fair values and the difference between these amounts as of August 31, 2015. Please note that the following table does notinclude those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)

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

Book value recorded on thebalance sheets
2,331,908
5,267,938
7,599,847–
11,650,000
2,000,000
58,750,000
1,240,273
73,640,273––

Fair value(Note 1)2,331,908
5,267,938
7,599,847–
11,769,869
2,099,325
59,481,598
1,234,116
74,584,908––

Difference––––
119,869
99,325
731,598(6,157)
944,635––(Note 1) Calculation method for fair value of financial instruments(1) Cash and deposits, (2) Cash and deposits in trust and (3) Short-term debt
As these are settled within a short period of time, the fair value is approximately the same as the book value and is thus stated at that book value.
(4) Current maturities of long-term debt, (5) investment corporation bonds and (6) Long-term debt
The fair value of long-term debt with fixed interest rates (including debt with practical fixed interest rates through interest rate swaps) and investment corporation bonds (the “debt, etc.”) is calculatedby discounting the total amount of principal and interest by the rate assumed as being applicable in the event of a new drawdown of similar debt, etc.
The fair value of long-term debt with floating interest rates is based on the book value, as the contract terms require the interest rates to be revised in a certain period of time (within six months) andthus is considered to be nearly equal to the book value.
(7) Tenant leasehold and security deposits received in trust
The fair value of tenant leasehold and security deposits received in trust, which are deposited by the lessees, is calculated by discounting the future cash flows of such deposits by a reasonably
estimated rate that takes into account the term remaining until the reimbursement deadline and credit risks.
(8) Derivative transactions
Please refer to (Notes to derivative transactions)

FUKUOKA REIT CORPORATION

32

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

(thousands of yen)

21st fiscal period

22nd fiscal period

as of February 28, 2015

Tenant leasehold and security deposits
received in trust

as of August 31, 2015

10,525,298

10,645,399

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

(Note 3) Amount of redemption of monetary claims scheduled to be due after closing of accounts (February 28, 2015).
(thousands of yen)Due in 1 year or less
2,545,162
4,438,305
6,983,468

Cash and deposits
Cash and deposits in trust
Total

Amount of redemption of monetary claims scheduled to be due after closing of accounts (August 31, 2015)(thousands of yen)Due in 1 year or less
2,331,908
5,267,938
7,599,847

Cash and deposits
Cash and deposits in trust
Total(Note 4) Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of February 28, 2015).
(thousands of yen)
Long-term debt
Investment
corporation bonds

Due in 1 year or less
12,850,000–

1 to 2 years
10,250,000–

2 to 3 years
23,875,000

3 to 4 years
2,100,000––

4 to 5 years
8,400,000–

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

Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of August 31, 2015).
(thousands of yen)
Long-term debt
Investment
corporation bonds

Due in 1 year or less
11,650,000–

1 to 2 years
20,450,000–

2 to 3 years
10,200,000

3 to 4 years
4,200,000–

FUKUOKA REIT CORPORATION–

33

4 to 5 years
5,700,000–

Due after 5 years
18,200,000
2,000,000

VIII. Notes to Financial Statements(Notes to derivative transactions)
1. Derivatives to which hedge accounting is not applied
21st fiscal period (as of February 28, 2015)
Not applicable.

22nd fiscal period (as of August 31, 2015)
Not applicable.

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

Type of derivative transactions, etc. Main hedged item

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

Interest rate swap transaction
Payable fixed; Receivable floating

20,500,000

Long-term debt

18,500,000–(*)(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt payable for accounting purposes. Accordingly, their fair value is included in the fair value of therelevant long-term debt payable (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

22nd fiscal period (as of August 31, 2015)
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing ofaccounts for each method of hedge accounting.
(thousands of yen)
Method of hedge accounting
Special accounting for interest rate swaps

Type of derivative transactions, etc. Main hedged item

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

Interest rate swap transaction
Payable fixed; Receivable floating

22,500,000

Long-term debt

20,500,000(*)–(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt payable for accounting purposes. Accordingly, their fair value is included in the fair value of therelevant long-term debt payable (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

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

21st fiscal period

22nd fiscal period

as of February 28, 2015

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

as of August 31, 2015

62
62
62

9
9
9

2. Breakdown of significant components that caused difference between effective statutory income tax rate and effective income tax rate after application of tax effectaccounting.
(%)
21st fiscal period

22nd fiscal period

as of February 28, 2015

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

FUKUOKA REIT CORPORATION

as of August 31, 2015

33.96
(33.95)
0.03
0.04

34

33.94
(33.92)0.04
0.07

VIII. Notes to Financial Statements

3. Modification to amounts of deferred tax assets and deferred tax liabilities due to changes in the corporate tax rate, etc.
With the Act Concerning Partial Amendment of the Income Tax Act, Etc. (Act No. 9 of 2015) promulgated on March 31, 2015, the income tax rate will be lowered, effective for the fiscal period starting on orafter April 1, 2015. In accordance with this, the effective statutory tax rate used to calculate deferred tax assets and deferred tax liabilities concerning temporary differences that are expected to be reversed
in and after the fiscal period starting September 1, 2015 will be changed from 33.94% to 32.11%. The tax rate change will have only a minimum impact on FRC.

(Information on related parties)
1. Transactions with related parties(1) Parent company and major corporate unitholders
21st fiscal period (from September 1, 2014 to February 28, 2015)
(thousands of yen)Classification

Name

Location

Capital

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

Generalreal estatebusiness

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

Ownership in
FRC
Direct[9.39%]

IndirectDescription ofrelationship

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

1,366,769(Note 3)Operatingaccounts
payableBalanceat end ofperiod123,905(Note 3)

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

22nd fiscal period (from March 1, 2015 to August 31, 2015)
(thousands of yen)Classification

Name

Location

Capital

Fukuoka Jisho Hakata Ward,
Other affiliates
4,000,000
Co., Ltd.
Fukuoka City
(Note 3)Business
description

Generalreal estatebusiness

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

Ownership in
FRC
Direct[8.67%]

Indirect[1.17%]

Description ofrelationship

Description of Transaction
Categorytransaction
amountPurchase ofreal estate(Note 1)

Consignmentof real estateConsignment
management, etc. of real estate
management,
etc. (Note 2)

5,840,000(Note 4)

1,555,181(Note 4)

Balanceat end ofperiod––Operatingaccounts
payable215,314(Note 4)(Note 1) Transaction terms and conditions are determined in reference to appraisal values by third parties and after negotiating on prices.
(Note 2) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 3) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Canal City Hakata, Canal City Hakata·B, Canal City Business Center and Taihaku
Street Business Center. The lease contract is a master lease type with pass-through rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s
revenues. For properties covered by the said type of agreements, the above table shows figures that regard end tenants as direct lessees.
(Note 4) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

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

22nd fiscal period (March 1, 2015 to August 31, 2015)
Not applicable.

FUKUOKA REIT CORPORATION

35

VIII. Notes to Financial Statements(3) Sister companies
21st fiscal period (from September 1, 2014 to February 28, 2015)
(thousands of yen)Classification

Name

Location

CapitalBusiness
description

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

Subsidiaries of Park Place Oita
Oita City, Oita
Co., Ltdother affiliates(Note 2)400,000

Real estatebusiness–

Subsidiaries of Fukuoka Realty Hakata Ward,other affiliates
Co., Ltd.
Fukuoka City

Asset
management
200,000of FRCand otherbusinesses–

Description ofrelationship

Description of Transaction
Categorytransaction
amountConsignment
Consignmentof real estateof real estate
management,
management, etc. etc. (Note 1)
Asset
Payment
management ofof asset
FRC, etc. andmanagement
concurrent service fees (Note 4)of officer (Note 3)

565,844(Note 5)454,652(Note 5)

Balanceat end ofperiodOperatingaccounts
payable121,109

Accruedexpenses

220,504(Note 5)(Note 5)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded a real estate lease and management consignment agreement with Park Place Oita Co., Ltd. for Park Place Oita. The lease contract is a master lease type with pass-through rent,
in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the property covered by the said type of agreement, the above table shows
figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a Director of Fukuoka Realty Co., Ltd.
(Note 4) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

22nd fiscal period (from March 1, 2015 to August 31, 2015)
(thousands of yen)Classification

Name

Location

CapitalBusiness
description

Subsidiaries of Park Place Oita
Oita City, Oita
Co., Ltdother affiliates(Note 2)400,000

Subsidiaries of Fukuoka Realty Hakata Ward,other affiliates
Co., Ltd.
Fukuoka City

Asset
management
200,000of FRCand otherbusinesses

Real estatebusiness

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

Description ofrelationship

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

567,497–

Asset
Payment
management ofof asset
FRC, etc. andmanagement
concurrent service fees (Note 4)of officer (Note 3)

486,520(Note 5)(Note 5)

Balanceat end ofperiodOperatingaccounts
payable136,008

Accruedexpenses

240,649(Note 5)(Note 5)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded a real estate lease and management consignment agreement with Park Place Oita Co., Ltd. for Park Place Oita. The lease contract is a master lease type with pass-through rent,
in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the property covered by the said type of agreement, the above table shows
figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a Director of Fukuoka Realty Co., Ltd.
(Note 4) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

(4) Directors and major individual unitholders
21st fiscal period (September 1, 2014 to February 28, 2015)
Not applicable.

22nd fiscal period (March 1, 2015 to August 31, 2015)
Not applicable.

FUKUOKA REIT CORPORATION

36

VIII. Notes to Financial Statements

2. Parent company and major affiliated companies
21st fiscal period (September 1, 2014 to February 28, 2015)
Not applicable.

22nd fiscal period (March 1, 2015 to August 31, 2015)
Not applicable.

(Notes to properties for lease)
FRC owns retail, office buildings and residential properties for lease in the Kyushu area centering on Fukuoka Prefecture. The
following table provides the book value recorded on the balance sheets, amount of change during the period and fair value ofthese properties for lease.
(thousands of yen)
21st fiscal period

Use

Retail(September 1, 2014 to
February 28, 2015)

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

Office buildings

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

OthersTotal

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

22nd fiscal period(March 1, 2015 toAugust 31, 2015)

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

101,444,917
5,347,690
106,792,608
113,234,000

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

44,261,050(277,083)
43,983,967
52,260,000

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

13,559,539
8,080,243
21,639,782
23,690,000

159,128,838
136,669
159,265,508
173,681,000

159,265,508
13,150,850
172,416,358
189,184,000(Note 1) Amount recorded on the balance sheets is the cost of acquisition less accumulated depreciation.
(Note 2) Of the amount of change during the 21st fiscal period, the amount of increase is primarily attributable to the acquisition of Granfore Yakuin Minami (1,200 million yen) and capital expenditures (328million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,390 million yen). Of the amount of change during the 22nd fiscal period, the amountof increase is primarily attributable to the acquisition of new properties (14,163 million yen in total) and capital expenditures (445 million yen), and the amount of decrease is primarily attributable todepreciation and amortization expenses (1,458 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers.

FUKUOKA REIT CORPORATION

37

VIII. Notes to Financial Statements

The following table provides the income (loss) from properties for lease.
(thousands of yen)
21st fiscal period

Use

RetailOffice buildings

Others

Total(September 1, 2014 to
February 28, 2015)

Amount recorded on the statements of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statements of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statements of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statements of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing business22nd fiscal period(March 1, 2015 toAugust 31, 2015)

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

5,459,799
3,095,364
2,364,435

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

2,213,552
1,224,723
988,829

516,635
227,516
289,118

749,970
331,402418,567

7,789,404
4,350,094
3,439,309

8,423,321
4,651,490
3,771,831(Note) Real estate leasing business revenues and expenses related to real estate leasing business are comprised of leasing business revenues and accompanying expenses (outsourcing fees, depreciation
and amortization expenses, taxes and other public charges, etc.), and are recorded as Leasing revenues - real estate, Other leasing revenues - real estate and Expenses related to leasing business,
respectively.

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

[Related information]

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

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

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

22nd fiscal period (from March 1, 2015 to August 31, 2015)(1) Information by product and service
Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers
exceed 90% of operating revenues recorded in the statements of income.

(2) Information by region(a) Operating revenue

FUKUOKA REIT CORPORATION

38

VIII. Notes to Financial Statements(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of
property, plant and equipment recorded on the balance sheets.

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

(Notes to per unit information)
21st fiscal period(September 1, 2014 to February 28, 2015)

Net assets per unit (yen)Net income per unit (yen)22nd fiscal period(March 1, 2015 to August 31, 2015)

118,567
3,434

125,574
3,649(Note 1) Net income per unit was calculated by dividing the net income by the daily weighted average number of investment units. Diluted net income per unit is not stated as there are no diluted investment
units.
(Note 2) Net income per unit was calculated based on the following data:

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

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

22nd fiscal period(March 1, 2015 to August 31, 2015)

2,369,872–
2,369,872
690,000

2,661,683–
2,661,683
729,342(Notes to cash distributions)(thousands of yen)Account

22nd fiscal period

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

I. Unappropriated surplus

2,370,187

2,661,720

II. Total dividend

2,370,150[3,435 yen]

2,661,561[3,563 yen]

37

159

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

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15
of the Act on Special Taxation Measures.
Following the above policy, FRC proposed to distribute
2,661,561 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

[Dividend per unit]

III. Surplus brought forward

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

(Notes to significant subsequent events)
No relevant items.

FUKUOKA REIT CORPORATION

39

VIII. Notes to Financial Statements(Schedule of securities)
No relevant items.

(Schedule of contract amount, etc. and fair value of derivativetransactions and forward exchange transactions)(thousands of yen)
Category

Type

Special accounting for interest rate swaps

Interest rate swap transaction
Payable fixed; Receivable floating

Total

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

Fair value

22,500,000

20,500,000(97,747)

22,500,000

20,500,000(97,747)(Note 2)

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

(Schedule of property, plant and equipment, and intangible assets)(thousands of yen)
Balance as ofMarch 1,
2015

Increase

Balance as ofAugust 31,
2015

Accumulated Depreciation for
depreciation
the period

Net property
andequipment

Description

Buildings in trust

79,100,573

4,746,647–

83,847,220

19,606,745

1,347,536

64,240,475(Note)

Structures in trust

1,311,964

Machinery andequipment in trust

163,316–

1,475,281

521,623

37,505

953,657(Note)

585,826

32,820–618,646

262,400

21,342356,245(Note)

747

–

–

747

198

47

548

in trust

1,248,071

2,509

–

1,250,581

926,118

48,378324,463(Note)

Land in trust

95,084,266

9,672,130–

104,756,397––

104,756,397(Note)

18,696

10,276

18,696

10,276––

10,276(Note)

Type of asset

Vehicles andTotal property, transport
plant and equipment in trust
equipment Tools and fixtures

Construction inprogress in trust

177,350,147

14,627,700

18,696

191,959,151

21,317,087

1,454,810

170,642,063

Leasehold right in
trust

1,765,318––

1,765,318––

1,765,318

Other intangible
assets in trust

33,426––33,42624,449

3,342

8,976

Subtotal

Total
intangible
assetsDecrease

Subtotal
Total

1,798,744––

1,798,744

24,4493,342

1,774,294

179,148,892

14,627,700

18,696

193,757,895

21,341,537

1,458,153

172,416,358(Note) The main increase occurred due to the acquisition of new properties.

(Schedule of other specified assets)
No relevant items.

(Schedule of investment corporation bonds)
Issue

First Series ofUnsecured Bonds

Issue date

December 30,
2013

Balance as
Decrease
Balance as ofof March 1, during the fiscal August 31,
2015
period2015

Coupon(%)

Maturity date

Maturity
methodUse

Description(thousands yen)(thousands of yen)(thousands of yen)

2,000,000–

2,000,000

1.32

December 29,
2023

Lump-sumupon maturity

Repayment ofdebt

No collateral/
No guarantee(Note 1)

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

FUKUOKA REIT CORPORATION

40(Note 2)

VIII. Notes to Financial Statements(Schedule of debt)
Category
LenderBalance as
Averageof August 31,
interest rate Repayment date(thousands of yen) (thousands of yen)2015(%) (Note 1)
Increase

2015(thousands of yen)

Decrease(Note 2)–3,000,000

3,000,000–

Resona Bank–

600,000

600,000––

3,142,857

3,142,857–(Note 2)–440,000

440,000–

The Bank of Nagasaki(Note 2)–

314,285

314,285–(Note 2)The Oita Bank–

314,285

314,285–(Note 2)The Bank of Saga–

188,571

188,571–

The Bank of Fukuoka–

2,333,333

2,333,333–

Resona Bank–

466,666

466,666––

2,500,000

2,500,000–(Note 2)–350,000

350,000–

The Bank of Nagasaki(Note 2)–250,000

250,000–

The Oita Bank

(Note 2)–250,000

250,000–

The Bank of Saga

(Note 2)–150,000

150,000–(Note 2)The Bank of Fukuoka–

666,666

666,666–

Resona Bank–

133,333

133,333–

The Nishi-Nippon City
Bank (Note 2)–

642,857

642,857–

Resona Bank–

90,00090,000–(Note 2)–64,28564,285–The Oita Bank

(Note 2)–64,28564,285–The Bank of Saga

(Note 2)–

38,571

38,571–The Bank of Fukuoka(Note 2)–500,000

500,000–

Resona Bank–

100,000

100,000–

The Nishi-Nippon City
Bank (Note 2)–

500,000

500,000–

Resona Bank
(Note 2)–70,00070,000–

The Bank of Nagasaki(Note 2)–50,00050,000–The Oita Bank

(Note 2)–50,00050,000–

The Bank of Saga

(Note 2)–30,00030,000–

The Bank of Fukuoka(Note 2)–250,000

250,000–

Resona Bank–

50,00050,000–

The Nishi-Nippon City–

357,142

357,142–

Resona Bank
(Note 2)–50,00050,000–(Note 2)The Bank of Nagasaki–

35,71435,714–The Oita Bank

(Note 2)–35,71435,714–The Bank of Saga–

21,42821,428–Subtotal

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

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

(Note 2)

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

(Note 2)

(Note 2)Bank(Note 2)

Use of funds

Description(thousands of yen)

The Bank of Fukuoka(Note 2)Current
maturitiesoflong-term
debt

Balance asof March 1,

0.480

April 27, 2015

Acquisition fundNo collateral/ No guarantee

0.480

April 27, 2015

Acquisition fundNo collateral/ No guarantee

0.480

May 1, 2015

Refinance fundNo collateral/ No guarantee

0.480

May 1, 2015

Refinance fundNo collateral/ No guarantee

0.480

June 30, 2015

Refinance fundNo collateral/ No guarantee

0.480

June 30, 2015

Refinance fundNo collateral/ No guarantee

0.480

July 31, 2015

Refinance fundNo collateral/ No guarantee

0.480

July 31, 2015

Refinance fundNo collateral/ No guarantee

0.480

August 31, 2015

Refinance fundNo collateral/ No guarantee

0.480

August 31, 2015

Refinance fundNo collateral/ No guarantee–

18,100,000

18,100,000–

Development Bank ofJapan

4,000,000–

4,000,000

–

1.950

August 31, 2015

Refinance fundNo collateral/ No guarantee

Sumitomo Mitsui Banking
Corporation

1,200,000–

1,200,000

–

1.074

June 30, 2015

Refinance fundNo collateral/ No guarantee

Sumitomo Mitsui TrustBank

1,000,000–

1,000,000

–

1.041

July 31, 2015

Refinance fundNo collateral/ No guarantee

The Bank of Fukuoka

2,000,000––

2,000,000

0.621

February 29, 2016

Acquisition fundNo collateral/ No guarantee

The Nishi-Nippon CityBank

2,000,000––

2,000,000

0.774

February 29, 2016

Acquisition fundNo collateral/ No guarantee

Development Bank ofJapan

2,000,000––

2,000,000

0.771

February 29, 2016

Acquisition fundNo collateral/ No guarantee

FUKUOKA REIT CORPORATION

41

Category
LenderCurrent
maturitiesoflong-termdebtLong-term
debt

Mizuho Bank

Balance asof March 1,

Balance as
Averageof August 31,
interest rate Repayment date(thousands of yen) (thousands of yen)2015(%) (Note 1)
Increase

2015(thousands of yen)

Decrease

Use of funds

Description(thousands of yen)

500,000––

500,000

1.117

February 29, 2016

Refinance fundNo collateral/ No guarantee–

4,000,000–

4,000,000

2.170

August 31, 2016

Refinance fundNo collateral/ No guarantee–

1,000,000–

1,000,000

1.208

July 29, 2016

Refinance fundNo collateral/ No guarantee

Subtotal

12,700,000

5,000,000

6,200,000

11,500,000

Development Bank ofJapan
Development Bank ofJapan
The Bank of Fukuoka
The Bank of Fukuoka
The Nishi-Nippon CityBank
The Dai-Ichi Life
Insurance Company
Shinsei Bank
The Bank of Fukuoka
The Hiroshima Bank

2,175,000–

75,0002,100,000

2.200(Note 3)

Refinance fundNo collateral/ No guarantee

Development Bank ofJapan
Shinsei Bank

4,000,000–

4,000,000

–

2.170

August 31, 2016

Refinance fundNo collateral/ No guarantee

1,500,000
2,000,000

–
–

–
–

1,500,000
2,000,000

0.623
1.305

December 30, 2016
July 31, 2017

Refinance fund
Refinance fundNo collateral/ No guarantee

2,000,000––

2,000,000

1.305

July 31, 2017

Refinance fundNo collateral/ No guarantee

1,000,000––

1,000,000

1.800

July 31, 2018

Refinance fundNo collateral/ No guarantee

1,000,000
1,500,000
500,000–––

1,000,000–––
1,500,000
500,000

1.208
0.773
1.182

July 29, 2016
December 30, 2017
December 30, 2016

Refinance fund
Refinance fund
Refinance fundNo collateral/ No guarantee

The Oita Bank

500,000––

500,000

1.182

December 30, 2016

Refinance fundNo collateral/ No guarantee

The Eighteenth Bank

500,000––

500,000

1.182

December 30, 2016

Refinance fundNo collateral/ No guarantee

The Shinwa Bank

500,000––

500,000

1.182

December 30, 2016

Refinance fundNo collateral/ No guarantee

The Kitakyushu Bank

500,000––

500,000

1.182

December 30, 2016

Refinance fundNo collateral/ No guarantee

The Kagoshima Bank

100,000––

100,000

1.168

January 31, 2017

Refinance fundNo collateral/ No guarantee

Resona Bank

400,000––

400,000

1.218

January 31, 2017

Refinance fundNo collateral/ No guarantee

Sumitomo Mitsui Banking
Corporation

500,000––

500,000

1.338

January 31, 2019

Refinance fundNo collateral/ No guarantee

Mitsubishi UFJ Trust andBanking Corporation

2,000,000

2,000,000

1.170

March 31, 2017

Acquisition fundNo collateral/ No guarantee

Sumitomo Mitsui Banking
Corporation

500,000––

500,000

1.203

March 31, 2017

Refinance fundNo collateral/ No guarantee

Resona Bank

600,000––

600,000

1.253

March 31, 2017

Refinance fundNo collateral/ No guarantee

The Higo Bank

300,000––

300,000

1.203

March 31, 2017

Refinance fundNo collateral/ No guarantee

The Bank of Fukuoka

1,000,000––

1,000,000

The Nishi-Nippon CityBank

1,000,000––

1,000,000

The Oita Bank

700,000––

700,000

The Miyazaki Bank

700,000––

700,000

The Shinwa Bank

600,000––

600,000

0.858

June 30, 2017

Refinance fundNo collateral/ No guarantee

The Iyo Bank

500,000––

500,000

The Bank of Saga

500,000––

500,000

The Eighteenth Bank

500,000––

500,000

The Kitakyushu Bank

500,000––

500,000

Sumitomo Mitsui TrustBank

600,000––

600,000

0.573

September 30, 2016

Refinance fundNo collateral/ No guarantee

Resona Bank

2,000,000––

2,000,000

1.033

September 29, 2017

Refinance fundNo collateral/ No guarantee

The Nishi-Nippon CityBank

2,500,000––

2,500,000

0.775

February 29, 2020

Acquisition fundNo collateral/ No guarantee

The Nishi-Nippon CityBank

1,900,000––

1,900,000

0.671

February 28, 2018

Refinance fundNo collateral/ No guarantee

Mizuho Bank

1,700,000––

1,700,000

0.671

February 29, 2020

Refinance fundNo collateral/ No guarantee

Sumitomo Mitsui TrustBank

1,100,000––

1,100,000

0.721

February 28, 2018

Refinance fundNo collateral/ No guarantee

Mitsubishi UFJ Trust andBanking Corporation

1,500,000––

1,500,000

0.521

February 28, 2018

Refinance fundNo collateral/ No guarantee

Aozora Bank

600,000––

600,000

0.521

February 28, 2018

Refinance fundNo collateral/ No guarantee

Mitsubishi UFJ Trust andBanking Corporation

600,000––

600,000

0.523

March 30, 2018

Refinance fundNo collateral/ No guarantee

1,000,000––

1,000,000

0.573

June 30, 2020

Refinance fundNo collateral/ No guarantee

Aozora BankFUKUOKA REIT CORPORATION42

No collateral/ No guarantee

No collateral/ No guarantee
No collateral/ No guarantee

VIII. Notes to Financial Statements

Category
LenderLong-term
debt

Mizuho Bank
The Norinchukin Bank
The Bank of Saga
Mizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu BankThe Iyo Bank
The Higo Bank
Development Bank ofJapan
The Bank of TokyoMitsubishi UFJ
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui TrustBank
Development Bank ofJapan
The Bank of Fukuoka
The Nishi-Nippon CityBank
Subtotal
Total

Balance asof March 1,

2015(thousands of yen)

Balance as
Averageof August 31,
interest rate Repayment date(thousands of yen) (thousands of yen)2015(%) (Note 1)
Increase

Decrease

Use of funds

Description(thousands of yen)

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

–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–

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

4,000,000––

500,000

–

–

0.538

July 31, 2019

Refinance fundNo collateral/ No guarantee

0.835

July 30, 2021

Refinance fundNo collateral/ No guarantee

4,000,000

1.010

August 31,2022

Refinance fundNo collateral/ No guarantee–

500,000

0.520

September 25,2019

Refinance fundNo collateral/ No guarantee

1,600,000–

1,600,000

0.525

June 30, 2022

Refinance fundNo collateral/ No guarantee–

1,500,000–

1,500,000

0.611

July 31, 2023

Refinance fundNo collateral/ No guarantee–

4,000,000–

4,000,000

0.880

August 31, 2023

Refinance fundNo collateral/ No guarantee–

400,000–

400,000

0.521

August 31, 2022

Refinance fundNo collateral/ No guarantee

0.870

August 31, 2023

Refinance fundNo collateral/ No guarantee–

400,000–

400,000

56,075,000
68,775,000

7,900,000
12,900,000

5,075,000
11,275,000

58,900,000
70,400,000(Note 1) The average interest is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest of debt for which FRC conducted interest rate
swap transactions is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The borrowings are made based on the commitment line agreements between FRC and respective banks.
(Note 3) The debt is subject to repayment of 75 million yen on the final day of every 6 months following the final day of December 2009 as the initial repayment date, with 1,875 million yen to be repaid on
the final repayment date. Furthermore, as the 150 million yen scheduled for repayment within a year is included in Long-term debt for the convenience of comparison, the balances do not match thefigures recorded on the balance sheets as Current maturities of long-term debt and Long-term debt payable.
(Note 4) Amount of repayment of long-term debt scheduled to be due within 5 years after closing of accounts.

(thousands of yen)
Long-term debt

1 to 2 years
20,450,000

2 to 3 years
10,200,000

3 to 4 years
4,200,000

FUKUOKA REIT CORPORATION

4 to 5 years
5,700,000

43