Fukuoka REIT Corporation
Introduction of Our REIT （8968）

http://www.fukuoka-reit.jp

Investment Highlights

Opportunity to invest
in a select retail/office
portfolio in the region.

Growing Fukuoka area
backed by strong
inflow ofyounger population.

SophisticatedAM/PM teamwith strong
local business support.

2

Right timing toinvest in Fukuoka.

Profile
Company Profile• Company• Asset Management Company• Sponsors• Listed date

Fukuoka REIT Corporation
Fukuoka Realty
Fukuoka Jisho, Kyushu Electric Power, Royal Holdings, The Bank of Fukuoka,
The Nishi-Nippon City Bank, Nishi-Nippon Railroad, Saibu Gas, Kyudenko,
Kyushu Railway Company
6/21/2005 (Tokyo Stock Exchange, Fukuoka Stock Exchange)

Financial Highlights• Equity Market Cap• Total Debt
• Debt Ratings

JPY 94,593 million (as of 2/28/2006)
JPY 33,700 million (as of 2/28/2006)
A- (S&P)

Dividend Information• Previous Fiscal Period End• Cash Dividend (actual)• Yield (actual)• Yield Gap (actual)

2/28/2006 (semi-annually, every February and August)
JPY 18,438 per share
4.19% (as of 4/17/2006)
2.24% (Comparison with 10-year JGB as of 4/17/2006)

Current Pricing• Stock Price• Outstanding Units• 52 Week High• 52 Week Low

JPY 887,000 (as of 4/17/2006)
92,050JPY 910,000 (6/21/2005)
JPY 763,000 (9/15/2005)

Portfolio Summary• Asset Types• Asset Areas• Properties• Total Leasable Area
• Occupancy

3

Retail 64.6%, Office 35.4% (as of 2/28/2006)
Kyushu, Japan (mainly Fukuoka metropolitan area)
7 (as of 2/28/2006) Two more properties newly acquired on march 2006
260,470.9 m2 (as of 2/28/2006)
99.0% (as of 2/28/2006)

Summary“Act Local,
Think Global”“A Leader in Population
Growth”

o Japan’s first region-specific REITo The Fukuoka metropolitan area boasts the top population
growth rate of the four largest metropolitan areas in Japano Vibrant, new and large properties represented by“Vibrant,
New and Large”

Canal City Hakatao Pipeline support by the Fukuoka Jisho Group, Kyushu’s largest“Proactive Sponsorshipby Kyushu’s
Business Leaders”
4

integrated developero Proactive participation by leaders of Kyushu’s business world
including Kyushu Electric Power

Concept
: : :

A c t

L o c a l ,T h i n k

G l o b a l: : :Concept

Hometown

Portfolio

Strategy

Appendix

Concept: Characteristics of Fukuoka REIT
1

Act Local, Think Global

2

Differentiated Risks and Standout Returns
Fukuoka REIT is primarily focused on retail properties in Fukuoka and Kyushu, giving it
differentiated risk and standout return characteristics that differ from REITs investing in the Tokyo
metropolitan office market

6Hometown: : :A

L e a d e r

i n

P o p u l a t i o n

G r o w t h: : :Concept

Hometown

Portfolio

Strategy

AppendixHometown: Where is Fukuoka/Kyushu

Tokyo
Osaka

8

Kyushu Region

Fukuoka Pref.

■ 7 prefectures■ “#16” GDP in the world■ 14mm Population■ Industry－Semiconductor－Automotive－Processed foodproducts■ 1.5h flight from Tokyo, Seoul,
Shanghai■ Population: 2.47mm(Metropolitan Area), 5mm(Pref.)■ Strong history of commerce with
Korea and China of more than
1,000 years

Kyushu, Westernmost Island of the 4 Main Japanese Islands, is the Closest to Asia

Concept

Hometown

Portfolio

Strategy

AppendixHometown: Size of the Fukuoka Metropolitan Area
Populations of Major Japanese Metropolitan Areas

Fukuoka Metropolitan Area
Fukuoka City and municipalities from which 10% or more of the population
commutes to school or work in Fukuoka City
Fukuoka City population: 1.34 million

Fukuoka metropolitan area population: 2.37 million

Tokyo
Metropolitan Area
30.28 million people

osaka
Metropolitan Area
12.20 million people

Fukuoka
Metropolitan Area
2.47 million people

NagoyaMetropolitan Area
5.46 million people

Source：Tabulated by the Japan Economic Research Institute based on
the 2000 National Census conducted by the Ministry of Internal Affairs
and Communications

9

Fukuoka is the Fourth Largest Metropolitan Area in Japan following Tokyo, Osaka and Nagoya

Concept

Hometown

Portfolio

Strategy

AppendixHometown: Estimated Future Population Changes
Projected Future Values

Actual Values

150

Actual values fromnational census

140

Medium estimates of the
National Institute ofPopulation and Social Security
Research

Tokyo Metropolian Area
Nagoya Metropolitan Area
Osaka Metropolitan Area

130

Fukuoka Metropolitan Area
Nation Wide

120

110

100

90
1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

Source:Fukuoka Shintoshin Kaihatsu Co., Ltd. prepared based on the established national census figures of the Ministry of Internal Affairs andCommunications (MIC) for 1985-2000, unverified figures for the 2005 national census by MIC, Estimated Future Japanese Population(medium estimates) of the National Institute of Population and Social Security Research compiled in January 2002 and December 2003
figures for the “Estimated Future Population of Japanese Municipalities” issued by the same body.
Note) Graph formed after establishing the national and municipal populations in 1985 as 100

10

Fukuoka Metropolitan Area’s Population will Continue to Grow

Concept

Hometown

Portfolio

StrategyHometown: Size of the Kyushu Economy
Country Comparison of Kyushu’s GDP
Source： Global Statistics 2005: National Economic Figures issued by the Statistics
Bureau of the Ministry of Internal Affairs and Communications and the2002 Prefectural Citizens Economic Figures issued by the Cabinet Office’s
Economic and Social Research InstituteInternational Comparison of Kyushu Economy with Countries

Note:

11

Kyushu’s land area is based on investigations by Japan’s Geographic Survey Institute. Figures of foreign countries are those of 2000.
Kyushu’s population is based on the Citizen Registers of 2004. Those of foreign countries are estimates of 2003.
Export and import values are for 2002 for both Kyushu and foreign countries, calculated at 1US$ = 122 yen.

Kyushu’s GDP is Near Australia’s in Size

Appendix

Concept

Hometown

Portfolio

Strategy

AppendixHometown: Kyushu’s Industries ～Automotives / IT
Distribution of Primary Automobile and IT
Companies in Kyushu

DENSO Kitakyushu Plant(Kitakyushu City)

Toyota Motors Kyushu(Wakamiya City, Fukuoka Prefecture)
Nissan Motor, Kyushu Plant(Kanda-machi,Fukuoka Prefecture)

Toyota Motors Kyushu, Kanda Plant(Kanda-machi, Fukuoka Prefecture)

Concentration of the Automobile Industry(Trends of Toyota Parts Companies)

Recent Trends in Kyushu of Toyota Parts Companies

DENSO

Building a new diesel vehicle fuel injection
device plant at an investment of about 20
billion yen (Kitakyushu City)AISIN SEIKI

Expanded the line of its subsidiary toincrease the car part production capacity
by 50% (Jonan Town, Kumamoto
Prefecture)

TOYOTA BOSHOKU

Built a new plant for interior materials ofdoors, etc. and began operating it insummer 2005. The investment was about
4 billion yen (Miyawaka City, Fukuoka
Prefecture)

TOYODA GOSEI

Opened a new plant that produces air bag
modules, etc. in September 2005
(Kitakyushu City)

KOITO
MANUFACTURING

Building a new plant for lighting equipment
to open in October 2006 (plan) (Saga City)

FUTABA
INDUSTRIAL

To open a new press component plant by
the end of this year (Nogata City, Fukuoka
Prefecture)

SHIROKI

Expanded plant for producing window
regulators (Kitakyushu City)TOYOTA IRON
WORKS

Opened new press welded parts, etc. plantin September 2005 (Miyawaka City,
Fukuoka Prefecture)

ROHM Fukuoka(Yukuhashi City, Fukuoka Prefecture)

Power Device Division,
Mitsubishi Electronic(Fukuoka City)

Daihatsu Auto Body
(Nakatsu City, Oita Prefecture)
Oita Canon(Kunisaki City, Oita Prefecture)

Tokyo Electron Kyushu(Tosu City, Saga Prefecture)

Toshiba, Oita Plant(Oita Prefecture)

Nagasaki Technology Center,Sony Semiconductor Kyushu(Isahaya City, Nagasaki Prefecture)
Aishin Kyushu(Jonan Town,
Kumamoto Prefecture)

NEC Kyushu(Kumamoto Prefecture)

Honda Motor,
Kumamoto Plant

Asahi Kasei
Microsystems Kyushu(Nobeoka City,
Miyazaki Prefecture)

Fuji Photo Film
(Kikyuyo Town,
Kumamoto Prefecture)
Fujitsu Integrated
Microtechnology, Kyushu Plant(Satsuma-Sendai City, Kagoshima
Prefecture)

Miyazaki Oki Electric(Kiyotake Town, Miyazaki Prefecture)
KYOCERA Corporation Kagoshima
Kokubu Plant(Kirishima City, Kagoshima Prefecture)

Automobile
IT

12Rich in Human Resources and Blessed by Nature,
Kyushu Has a Huge Connection of Semiconductor and Automotive Plants

Concept

Hometown

Portfolio

Strategy

AppendixHometown: Land Price Trends

Highest Land Prices in Commercial Areas:
Year-on-Year Variation

Year-on-year Fluctuation of Highest Land
Prices in Commercial Areas(yen per ㎡）（％）
30

30,000,000

25,000,000

20,000,000

Tokyo
NagoyaOsaka
SapporoSendai
Hiroshima
FukuokaTokyo

NagoyaOsaka

20

FukuokaTokyo

10
Sendai
SapporoHiroshima

0
15,000,000-10
10,000,000

5,000,000

Osaka
NagoyaFukuokaTokyo
NagoyaOsaka
SapporoSendai
Hiroshima
Fukuoka-20-30
SapporoSendai-0.4

01996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

1997

1998

1999

2000

2001

Source : Official Announcement of Land Price by the Ministry of Land, Infrastructure and transport

13

Fukuoka Land Prices Are Following the Path of Tokyo

2002

2003

2004

2005

2006

Concept

Hometown

Portfolio

Strategy

AppendixHometown: Land Price Trends
Fukuoka City (2004-2005)
Year-on-year variation (%)

Source: the Ministry of Land, Infrastructure and Transport

14

Concept

Hometown

Portfolio

Strategy

AppendixHometown: Land Price Trends
Fukuoka City (2005-2006)
Year-on-year variation (%)

Source: the Ministry of Land, Infrastructure and Transport

15

Portfolio: : :V i b r a n t ,

N e w

a n d

L a r g e

: : :Concept

Hometown

Portfolio

Strategy

Appendix

Portfolio: Portfolio Table
Property

Use

Investment
Rate

Age

Acquisition

AppraisalValue(mm yen)

Price

(%)
(Note1)(mm yen)(as of 2/28/2006)（％）

Tenants(Note2)

Floor
Area
（㎡）
(Note3)

Total
LeasableArea（㎡）
47,909.65

Lease
Area
（㎡）

Occupancy（％）

47,300.24

98.7

100,418.98

99.8

61,450.22

100.0Canal City Hakata

Retail9y 10m37.5

32,00032,6006.0

2451,482.82

Park Place Oita

Retail3y 10m18.4

15,70017,1006.5

80

75,500.03

SunLiveCity Kokura

Retail

11m

7.8

6,633

6,770

6.6

1

58,642.38

Retail33y 8m

0.9

740

750

7.1

4

3,041.92

3,743.12

3,743.12

100.0

Kominedai
Community Mall
Retail property total

100,664.98(Note4)61,450.22(Note4)

－

－

64.6

55,07357,220－109

188,667.15

213,767.82

212,912.56

99.6

Canal City BusinessCenter Building

Office9y 10m17.1

14,60015,0006.2

41

32,733.03

23,011.91

21,514.89

93.5

Gofukumachi
Business Center

Office

2y 4ｍ

13.1

11,20011,9006.2

18

27,949.15

19,906.21

19,749.78

99.2

Sanix Hakata Building

Office4y 11m

5.2

4,400

4,550

5.9

13

8,111.25

6,293.67

6,293.67

100.0

Office building total

－

－

35.4

30,20031,450－72

68,793.43

49,211.79

47,558.34

96.6

Portfolio total

－

－

100.0

88,670－181

257,460.58

262,979.61

260,470.90

99.0

Weighted average

－

7y

－

85,273
12,182(Note5)

－

－

－

－

－

－

－

Other Assets
Name

Acquisition
Price

Type of Assets

Estimated ＩＲＲ（％）（mm yen）

CCH Bridge
Senior Equity

Senior Equity

3,400

8.0

(Reference) *Properties newly acquired in March 2006 and after
Property

17

Acquisition Cap

UseTaihaku Street
Business Center

Office“City House Tenjin
Keyaki Street”

Residence

Age

AcquisitionPrice（mm yen）

4y

7,000

Will becompleted on
Nov. 2007

1,111(Note1) Based on acquisition price(Note2) The acquisition cap is arrived at by dividing the appraised DCF net
cash flow at the time of acquisition by the acquisition price(Note3) Entries in registry(Note4) The registered area does not include indoor,unwalled parking lots, and theleasable area does not include parking lots in principle. With Park Place Oita
and SunLiveCity Kokura, however,the leasable area includes some indoor
parking lots that are a part of leasepackages to Major tenants.
(Note5) Simple average(Note6) Entries in certificate of confirmation
Acquisition
CAP（％）(Note2)Tenants

7,150

6.0

65

1,120

5.4

42

AppraisalValue（mm yen)Floor Area（㎡）
(Note3)

Total Leasable
Area
（㎡）

Lease Area（㎡）

Occupancy（％）

20,379.82

14,651.87

14,452.55

98.6

3,531.37(Note6)－－－

Concept

Hometown

Portfolio

Strategy

Appendix

Portfolio: Investment Type Classified Table
Category

RetailDefinitions and Keys

Urban

Key is to be located in popular downtown areas
Street shops, department stores and large specialty shops

Regional

Suburban shopping center that draws customers from a wide area
Key is a size that provides a competitive advantage and the selection of
specialty shop tenantsCommunity

Shopping center linked to daily living
Road side category killers
Neighborhood shopping centers with bookstores, restaurants, etc.
built around a strong supermarket

Class ＡSuperior properties that satisfy unique Class A standards(location, scale, specs, age and other categories and used
to make the acquisition decision)

OfficeCanal City Hakata

Park Place Oita
SunLiveCity Kokura

Kominedai
Community Mall

Sanix Hakata
Building

Canal City BusinessCenter Building

Taihaku Street
Business Center *1

Gofukumachi
Business Center

Leaseback toblue-chip
Sale and leaseback transactions with local blue-tip firms
firms
Residence

Class Ａ

Location, spec, earthquake-resistant Well balanced in supply and demand for tenant type (families)
Residence
1.2%

Other
Kyushu area

*1 Acquired on March 16, 2006
*2 Contract awarded on March 31, 2006

Office24.8%
FukuokaUrban area

75.2%

18

City House Tenjin
Keyaki Street *2

39.8%

Retail59.0%

Concept

Hometown

Portfolio

Strategy

Appendix

Portfolio: Portfolio Summary(as of February 2006)

Top Ten tenants

Variance of the Exp. Date of Rental Period（Based on the lease area）（Based on the lease area）
35%

Others28.2%

30%

SunLive
23.6%

25%
20%

Canal City OPA
2.2%

JUSCO
22.5%

T・Joy
2.2%
Sanyo Shimpan
2.3%
United Cinema
2.8%

15%
10%
5%

Comme Ca Store
3.0%
Sports Authority
3.2%

Washington
Hotel
4.9%

Lease Format（Based on rents）

0%

K's Denki
5.2%

1

2

3

4

6

7

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 (years)

Length of Lease Remaining

Portfolio Share by Property Age（Based on the lease area）（Based on acquisition price）
Over 10 years
0.9%

Variable rent
1.8%

Less than
5 years

19

5

23.3%

Fixed Rent+
Variable Rent

Fixed Rent

42.4%

55.8%

years to less 5than 10 years
10.1%

years 10or more66.6%

Under 5 yrs
39.3%

years to 5
less than 10
years

59.8%

Concept

Hometown

Portfolio

Strategy

Portfolio: Overview of Canal City Hakata
Characteristics• Acquisition of about 40%* of
total 200,000m2 urban mallin the heart of Fukuoka City
*including Canal City Business Center Building• Renowned tourist destinationin Fukuoka with over 10
million visitors a year

• Distinguished design by Jon
Jerde renowned for his workon Las Vegas’ Fremont Malland Tokyo’s Roppongi Hills

Overview•Address•Total leasable area
•Built•Property manager

20

Main Stores
1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City
47,909.65 m2
April 15, 1996
Fukuoka Jisho Co., Ltd.

•Washington Hotel•Comme Ca Store•United Cinema （cinema complex）•OPA （Canal City OPA）
•Sports Authority

Appendix

Concept

Hometown

Portfolio

Strategy

Appendix

Portfolio: Canal City Hakata – One of the Largest Entertainment Retail Properties in Japan
The portion owned by
Fukuoka REIT
Corporation iscomprised of Canal
City Business Center
Building, United
Cinema, Canal City
Fukuoka Washington
Hotel, Club Sega,
Ramen Stadium 2,
Mega Store Building,etc. (indicated in image
to the left).

(million yen)

Gross Sales History at Canal City Hakata

Comparison with Sales Trends at
Department Stores In Fukuoka City

(%)

140

120

100

80

60

40
Dept Store in Fukuoka
Canal City Hakata

20

Ju
ly

Au

Ju
ne

ril

ay
M

Ap

gu
Se
st
pt
em
be
r
O
ct
ob
er
N
ov
em
be
D
r
ec
em
Ja
b
nu
er
ar
y
20
06
Fe
br
ua
ry

M

21

ar
ch

20
05

0

Concept

Hometown

Portfolio

Strategy

Appendix

Portfolio: New Acquisition ～CCH Bridge Senior Equity
As of 2/27/2006• Acquisition Price: JPY3,400 mm• Estimated IRR: 8%

Characteristics*The portion framed in white is that possessed by the Canal City Hakata SPC

22• An option contract to acquire the “Canal City Hakata
SPC Section” of the subject real estate was also
signed simultaneously (Pledge of future transfer at a
price appraised by the Tanizawa Appraisal Office or
the Japan Real Estate Institute, and this call option
only possessed by Fukuoka REIT is the only option
fulfillment right)• Main tenants of the Canal City Hakata SPC Section
・ Top luxury hotel in the region:
Grand Hyatt Fukuoka (370 guest rooms)
・ OPA Shopping Mall
(more than 100 specialty shops)
・ One of the largest MUJI (Mujirushi Ryohin)
Stores in Kyushu
・ Fukuoka City Theater of Shiki TheaterCompany

Concept

Hometown

Portfolio

Portfolio: Overview of Park Place Oita
Characteristics• Part of new town
development next to Oita
Prefectural Sports Park
(World Cup Soccer Stadium)• Near Oita-Mera Interchangewith parking for about 4,000
cars• Designed as an open mall ina forest by Jon Jerde

Overview•Address•Total leasable area
•Built•Property manager

23

Main Stores
2-chome, Koen Dori Nishi, Oita City
100,664.83m2
March 26, 2002; April 17, 2002;
April 28, 2004
FJ Real Estate•Jusco•K’s Denki•T Joy•Sports Authority•Plaza Capcom

Strategy

Appendix(as of March 31, 2006)

Concept

Hometown

Portfolio

Strategy

Portfolio: Overview of Park Place Oita
Gross Sales History at Park Place Oita

(million yen)

3,000

2,000

Home ground of the Oita
Trinita J-League soccer teamPark Place Oita Koen Street Housing
Development

1,000

2005/2
2004/3～
2006/2
2005/3～500

656 lots have been sold.
Development of another604 lots is planned.

March
May
July SeptemberNovember January
April
June
August October December February(Note) Tabulation of monthly sales for respective stores of Park Place Oita（%）

Comparison with Sales Trends at Large-scale
Retail stores in Kyushu

120

100

80

60

40

Large-scale Retail Store in
KyushuPark Place Oita

20

be
r
No
ve
mb
er
De
ce
mb
er
Ja
nu
ary
20
06
Fe
bru
ary

mb
er

Oc
to

ust

Se
p te

Ju
ly

Au
g

Ju
ne

l
Ap
ri

20
05
Ma
rc h

Ma
y

0

24

Oita Big Eye(World Cup Stadium),

1,500

0

(as of March 31, 2006)

Park Place Oita
Mall with about 140 specialty
shops including Jusco and the T
Joy cinema complex

2,500

Appendix

Source: Year-on-year graph of sales at Kyushu’s large retail stores based on
the “Commercial Sales Statistics” issued by the Ministry of Economy, Trade and Industry.

（Note） Some parts differ from today as
the drawing is a plan drawn up by
the Fukuoka Jisho Group uponlaunch of the development.

Concept

Hometown

Portfolio

Strategy

Portfolio: Property Overview

SunLiveCity Kokura

Characteristics
 Lies along National Highway #10 and near the Kokura Higashi
Interchange on the Kyushu Expressway with parking for about
2,000 cars
 Leading regional mall in Kitakyushu region with about 110
specialtytores centering on the SunLive Supermarket
 Core development in the Kami Kuzuhara Rezoning District(about 66,000 m 2), a large commercial zone
Main tenants SunLive

Kominedai Community Mall

Characteristics
 Located along the main thoroughfare National Highway 211 andright in front of the Komine Interchange Exit on Kitakyushu
Urban Expressway No. 4
 The center of the about 8,000m 2 site has a sufficient single levelparking lot
 Comprised of four tenants centering on a community entrenched
fresh food supermarket
Main tenants
 Super Kyowa
 Daiso Gusto Mister Donut

25

Overview• Address: 2-chome, Kami Kuzuhara, Kokura Ward,
Kitakyushu City
• Total leasable area: 61,450.22m 2• Built: March 17, 2005
• Property manager: Fukuoka Jisho Co., Ltd.

Overview
 Address: 1-chome Kominedai, Yahatanishi Ward,
Yawata, Kitakyushu City
 Total leasable area: 3,743.12m 2
 Constructed: June 3, 1972, March 15, 1997, May 12,1997 and June 9, 1997
 Property manager: Fukuoka Jisho Co., Ltd.

Appendix(as of March 31, 2006)

Concept

Hometown

Portfolio

Strategy

Portfolio: Overview of Gofukumachi Buisiness Center
Characteristics
 Excellent location at the corner of
Meiji Dori and Taihaku Dori,directly connected to Gofukumachi
Subway Station
 Designed by Michael Graves,designer of the Museum of New
York Top Quality Specs in Region•1 floor: 620 tsubos•Ceiling height: 2,900mm•Optic fiber cables• Sanyo Shimpan, NTT Marketing
Act, Sony Life Insurance and otherleading firms use the premises asa call center

Overview• Address• Total leasable area
• Built• Property manager

26

Main Tenants
Kami Gofukumachi, Hakata
Ward, Fukuoka City
19,906.21m2
October 16, 2003
Fukuoka Jisho Co., Ltd.

• Sanyo Shimpan• NTT Marketing Act Kyushu• Sony Life Insurance• Suntory• Sunny

Appendix

Concept

Hometown

Portfolio

Strategy

Portfolio: Property Overview(as of March 31, 2006)

Canal City Business Center Building
Characteristics
 Pioneer of multi-use complexes
 Synergy between popularity and name recognition of Canal City
Hakata Used by TOTO Ltd. as Fukuoka office and showroom
Main tenants• TOTO• Bell System 24• USEN Corporation• Aflac Japan• Mitsubishi Electric Building
Techno-Service

Overview• Address: 1-chome, Sumiyoshi, Hakata Ward,
Fukuoka City
• Total leasable area: 23,011.91m 2• Built: April 15, 1996
• Property manager: Fukuoka Jisho Co., Ltd.

Sanix Hakata Building
Characteristics
 Two-minute walk from Hakata Station (Shinkansen), and Fukuoka
Airport is a mere five-minute subway ride away
 The concentration of hotels and government offices surrounding
the building make it an optimal location for business High-quality and flexible specifications:Free access floors / independent air conditioning systems
Each floor can be partitioned / optical fiber cables
Main tenants• Sanix• The Nishi-Nippon City Bank
• ROHM• Idemitsu Kosan

27

Appendix

Overview• Address: 2-chome, Hakataeki Higashi, Hakata
Ward, Fukuoka City
• Total leasable area: 6,293.69㎡• Built: March 31, 2001
• Property manager: Fukuoka Jisho Co., Ltd.

Concept

Hometown

Portfolio

Strategy

Portfolio: Property Overview(as of March 31, 2006)

Taihaku Street Business Center
Characteristics• Superbly located with excellent accessibility / ten-minute walkfrom Hakata Station and a two-minute walk from Subway Station• Leading exemplary functional space for Fukuoka City officebuildings:
The333-tsubo floor can be partitioned / 2.7m ceiling height
Independent air conditioning systems / Optional cables• Luxurious 59-room residential tower
Main tenants• NTT Comware• The Tokio Marine Nichido• Outsourcing Business• Yokogawa Electric• Fujitsu Network solutions• Tokio Marine & Nichido Life

Overview• Address: 3-21 Gokushomachi, Hakata Ward,• Fukuoka City
• Total leasable area: Office Tower: 11,244.49㎡•
Residential Tower:3,427.38㎡• Built: March 7, 2002
• Property manager: Fukuoka Jisho Co., Ltd.

City House Tenjin Keyaki DoriCharacteristics
 Near the Tenjin district with good access New rental condominium in a popular residential area withexcellent living convenience 15-minute walk from the Nishitetsu Fukuoka Station on the
Nishitetsu Tenjin Omuta Line, 9-minute walk from Akasaka
Station on the Municipal Subway Line and 11-minute walkfrom Sakurazaka on the same line
• Planned to have 13 stories above ground (total floor area of
3,531.37m2) and have thirty 2LDK units (about 58m2 per)and twelve 3LDK units (about 75m2 per unit)• Earthquake resistance structure for high safety and security

28

Appendix

Overview
 Address:
Kego 2-chome, Chuo Ward, Fukuoka City
 Total floor area: 3,531.37m2
 Scheduled completion date: November 30, 2007
 Property manager: DMC Co., Ltd. (a member of the Daio
Group, a giant residential managementcompany in the Tenjin area)

Concept

Hometown

Portfolio

Strategy

Appendix

History of Occupancy Rate by Property
Canal City Hakata(%)

Park Place Oita

(%)

98.7％

80

99.8％

80
60

60

40

40

40

20

20

20
0

0
2005.92005.1

2005.112005.122006.1

2005.92006.2

2005.1

2005.112005.122006.1(%)

100

2005.1

2005.112005.122006.1

2006.2

Canal City Business Center Building

100

100.0％

80

80

60

60

40

40

20

20

0
2005.92005.1

2005.112005.122006.1

2005.9(%) Taihaku Street Business Center ※
100

(%)
100

80

80

98.6％

Sanix Hakat Building(%)

100.0％

60

40

40

40

20

20

20

0

※ as of March 2006

2006.32005.112005.122006.1

2006.2

Gofukumachi Business Center
99.2％

80

60

2005.1 2005.11 2005.12 2006.1 2006.2

2005.1

100

60

2005.993.5％

02006.20

29

2005.92006.2

Kominedai Community Mall(%)

100.0％

80

60

0SunLiveCity Kokura

(%)
100

100

100

(as of February 2006)

0
2005.92005.1

2005.112005.122006.1

2006.2

2005.92005.1

2005.112005.122006.1

2006.2

Strategy::: Proactive Sponsorship by Kyushu’s Business Leaders :::Concept

Hometown

Portfolio

Strategy

Strategy: Investment Strategy

31

Focusing on Fukuoka Metropolitan Area & Retail Properties

Appendix

Concept

Hometown

Portfolio

Strategy

Strategy: External Growth Roadmap

32

Plan to Double our Asset Size by the End of 2008

Appendix

Concept

Hometown

Portfolio

Strategy

Appendix

Strategy: Proactive Support by Sponsors(as of April 21, 2006)

Developmentsof the Fukuoka Jisho GroupRiverwalk Kitakyushu

Marinoa City Fukuoka

Tenjin Kirameki-dori Building(New Iwataya Building)

Hakata Ekimae
Business Center

Grand Hyatt Fukuoka

Hyatto Regency Fukuoka

DEODEO
Fukuoka Higashi Store

Nishijin Condominiums◆Kyushu Railway Company• Capital: 16,000 million• Railway business, tourism, hotels, food services, real estate(residence, station buildings) in Kyushu

Nexus Momochi
Residential Tower(The above properties will not necessarily all be incorporated into our portfolio)

33

Leading Integrated Regional Developer + Seven Leading Companies of Kyushu Economy(The above properties will not necessarily all be incorporated into our portfolio)

Concept

Hometown

Portfolio

Strategy

AppendixAcquisition Strategies
Price: JPY
6,600 mm
Acquisition
CAP:“Reasonable Price”“High Quality”

6.6%

Price: JPY
1,100 mm
Acquisition
CAP:

5.4%

SunLiveCity Kokura （as of 7/1/2005）

City House Tenjin Keyaki Street（as of 3/31/2006）

Price: JPY
4,400 mm
Acquisition
CAP:

Price: JPY
7,000 mm
Acquisition
CAP:

5.9%

6.0%

Sanix Hakata Bldg （as of 9/30/2005）

Price: JPY
700 mmAcquisition
CAP:

7.1%
Kominedai Community Mall（as of 12/20/2005）

Taihaku Street Business Center（as of 3/16/2006）

Acquisitions from
Sponsors

Proactive Support by leading
integrated developer +seven leading companies of
Kyushu economy

Newly Developedby Sponsors

Acquire and develop
Mid-Size Community Malls
throughout Kyushu*The acquisition cap is arrived at by dividing the appraised DCF net
cash flow at the time of acquisition by the acquisition price34

Concept

Hometown

Portfolio

Strategy

Appendix

Strategy: Acquisition of Properties Newly Developed by Sponsors

35

Acquire and Develop Mid-Size Community Malls throughout Kyushu

Concept

Hometown

Portfolio

Strategy

Strategy: Revenue Growth by Value Added Renovation

Park Place Oita

Rooftop parking space turned into Kid’s park and 14 retail rental spaces(Construction Overview)
 Construction period: October 2004 - April 2005 (Opened on April 23, 2005)
 Content: Leasable area increased by some 22,000m2 (+2.2%), tenants increased by 14 (+20%)
 Cost: Approximately 400 million yen

36

Strengthening the Differentiation Strategy of the “Park Entertainment” Concept

Appendix

Concept

Hometown

Portfolio

Strategy

Strategy: Revenue Growth by Value Added Renovation

Park Place Oita has increased revenue through creative renovation

37

Appendix

Concept

Hometown

Portfolio

Strategy

Appendix

Borrowings (the 3rd Fiscal period)No.
1

LenderDevelopment Bank of JapanValue(million yen)
12,000(as of February 28, 2006)

Interest Rate

Borrowing
date

Payment
deadline

Payment
method2004.11.9

2009.8.31

BulletPayment

1.39%

Fixed

Yes

2005.6.29

2008.6.23

BulletPayment

0.59%

VariablrYes

2005.6.29

2006.6.23

BulletPayment

0.56%

VariableYes

BulletPayment

0.46%

Variable

Yes

Fixed /
Variable

Collateral【Syndication Loan】

2

Aozora Bank（Agent）

1,000

The Bank of Fukuoka （co/arranger）

1,000

The Nishi-Nippon City Bank （ 〃 ）1,000

The Oita Bank

700

The Iyo Bank

500

The Bank of Saga

500

The Eighteen Bank

500

The Miyazaki Bank

500

The Yamaguchi Bank

500

The Shinwa Bank

300

The Chikuho Bank

100

Syndication Loan Total

6,600

3

The bank of Fukuoka

4,900

4

The Nishi-Nippon City Bank

3,100

5

The Nishi-Nippon City Bank

3,700

2005.9.30

2006.3.31

6

The Nishi-Nippon City Bank

3,400

2006.2.27

2007.2.27

Ceilling 3,000

2005.6.29

2006.6.29

Commitment line
The Bank of Fukuoka※Balance as of 2/28/2006

0
Weighed averageinterest rate

Total

38

33,7000.84%

Concept

Hometown

Portfolio

Strategy

Appendix

Financial Strategy

Term Ratio

-Long
term

55%

-Shortterm

45%

Payment Deadline (100 mm yen)

Variable Ratio

140
120

Fixed

36%

Variable

64%

100
80
60
40
20
0

120

117

66
34

2006

2007

2008

2009

Repayment Period

Policy of the current term◆Secure fund-raising methods with long-term fixed interest rates◆Diversification of fund raising methods•Issuance of Investment Corporation Bonds•New deals with Mega banks, trust banks, and insurance companies

39

Fukuoka REIT Corporation
Long-Term Issuer Rating

Summary“Act Local,
Think Global”“A Leader in Population
Growth”

o Japan’s first region-specific REITo The Fukuoka metropolitan area boasts the top population

growth rate of the four largest metropolitan areas in Japano Vibrant, new and large properties represented by“Vibrant,
New and Large”

Canal City Hakatao Pipeline support by the Fukuoka Jisho Group, Kyushu’s largest“Proactive Sponsorshipby Kyushu’s
Business Leaders”
40

integrated developero Proactive participation by leaders of Kyushu’s business world
including Kyushu Electric PowerAppendix 1(Financial Data)

Concept

Hometown

Portfolio

Strategy

Financial Account Settlement Highlights
for the 3rd Fiscal Period

3rd period results

2nd period results(181 days)
September 1, 2005 –February 28, 2006

(actual management period: 296 days)

Operating revenues

4,050 mm yen

5,857 mm yen

Ordinary profit

1,698 mm yen

1,859 mm yen

Net profit

1,697 mm yen

1,761 mm yen

Total distribution

1,697 mm yen

1,750 mm yen

Distribution per unit

18,438 yen

19,014 yen

Total assets

94,593 mm yen

87,461 mm yen

Net assets

50,865 mm yen

50,918 mm yen

53.8 %

58.2 %

Depreciation

562 mm yen

764 mm yen

Categ
ory

Data

Unitholders’ equity

Finan
cial
Indice
s

ROA

1.9%

Annual conversion

ROE

3.8%
3.3%

Annual conversion

42

September 1, 2004 –August 31, 2005

6.7%

LTV

35.6%

Leasing NOI

2,654 mmyen

Fund from operations

2,259 mmAppendix(as of February 28, 2006)

Distribution per unit
Settlement (above forecast)

18,438 yen↑
Performance revision (February 17, 2006)
18,100 yen↑
Forecast at start of period (October 27, 2005)
16,700 yen

Total assets
・Sanix Hakata Building
・Kominedai Community Mall・Equity interest in silent partnership withownership interest in Canal City Hakata
Portfolio has grown by about 7 billion yen
through aggressive property acquisitions

Remarks (definition of indices)

Ordinary profit/(total assets at period start +total assets at period end)/2
Calculated from the management daysof the 3rd fiscal period
Net profit/(total assets at period start +total assets at period end)/2
Calculated from the management days (181)of the 3rd fiscal period
Interest-bearing debt at period end/
total assets at period end
Real Estate leasing business revenues – realestateleasing business expenses + current
depreciation
Net profit + current depreciation

ROA & ROE
Fukuoka REIT boasts a profitability among
the highest of J-REITs

Concept

Hometown

Portfolio

Strategy

Appendix

Profit and Loss Statement for the 3rd Fiscal Period(million yen)

Category

3rd period results

2nd period results(181 days)(actual management period: 296 days)

September 1, 2005 – February 28, 2006

September 1, 2004 – August 31, 2005

Value (yen)Percentage(%)

Value (yen)Percentage
(%)

4,050

100.0

5,857

100.0

I. Operating profit and losses
1. Operating revenues
Real estate leasing revenues
Other revenue from real estate leasing

3. Operating expenses
Real estate leasing expenses
Asset management fees
Custodian fees
General administration fees
Director compensation
Other operating expenses

Operating profit

3,879

5,632

171
2,299

225
56.8

3,172

1,959

2,765

249

319

7

6

29

26

9

19

44

Interest received

Real Estate Leasing
Expenses

36

1,571

43.2

2,685

45.8

131

3.2

19

0.3

Consumption tax for tax exempt firm, etc.
Other non-operating revenues

128

－

3

19

184

Interest expense

133

273

New investment unit issuance cost－

36

Expenses related to public offering of investment units

－

220

4.5

845

Amortization of establishment cost

5

5

Expenses related to financing

39

261

Other non-operating expenses
Extraordinary loss
Net profit before tax
Income and other taxes
Net profit
Carried forward profit or (loss)
Unappropriated profit
Distribution per unit (yen)Subcontracting costs
886
Repairs and maintenance31
Recovery to former condition costs 24
Public charges
245
Liability insurance premiums
30
Depreciation
562
Other real estate leasing expenses 177
Total
1,959

0

2. Non-operating expenses

Ordinary profit

430Period-on-period (after adjustment for
length) increase of 109 million yen
due to acquisition of the Sanix Hakata
Building and Kominedai Community
Mall and increased revenues fromPark Place Oita

54.2

II Non-operating profit and loss
1. Non-operating revenues

Operating Profit

5

14.3

Consumption Tax
Consumptiontax
acceptanceearnings
generated since Fukuoka REIT was a tax
exempt operator (temporary development
limited to the 3rd period)

46

1,698

41.9

1,859

－
1,69
8
1

－

95

31.8
1.6

Net Profit

41.9

1,764

30.1

・Settlement (above forecast)

1,697

41.9

2
1,761

0

(11)

1,697

1,750

18,438 yen

19,014 yen

30.1

1,697 million yen↑
・Performance forecast revision(February 17, 2006) 1,666 million yen↑
・Forecast at start of period(October 27, 2005) 1,537 million yen

Concept

Hometown

Portfolio

Strategy

Appendix

Balance Sheet for the 3rd Fiscal Period(as of February 28, 2006)(million yen)

Category

3rd period

2nd period(as of February 28,
2006)(as of August 31,
2005)

Value

Share
(%)

Value

Share
(%)

Variation
Value(as of February 28, 2006)

Variation(%)

AssetsI. Current assets
Cash and cash
equivalents
Cash and deposit in trust
Operating receivables

Consumption tax
receivables
Other current assets

Total current assets

817

607

2,585

2,781

(196)

132

181

(49)

1,595

－

75
4,218

154
4.5

5,531

6.3

(1,312)

－

41

133

(91)

Expenses payable

228

228

(0)

1

2

(1)

Rent received inadvance

481

465

15

Deposits held

473

741

(268)

9,834

6,804

18,60018,600

－

107

－

107

8,382

8,109

272

Income taxes payable(23.7)

Structure in trust

210

215

△5

Machinery and equipment in
trust

213

151

61

Tools and fixtures in trust

183

152

30

51,06948,4852,583

38
86,81638－
91.8

81,771

Key money andsecurity deposits on
deposit
Key money andsecurity deposits in
trust

93.5

5,044

3,421

3,421

Guarantees anddeposits
Long term pre-paid
expenses
Total investment andother assets

10

10

－

93

109

(16)

－

27,08928.6

26,709380

Total liabilities

43,72846.2

36,543

7,184

49,16752.0

49,167

－

1,750

(53)

I. Unitholders’ capital

II. Surplus
Retained earnings

3,525

3.7

119

0.2

3,405

－

90,341

95.5

81,891

93.7

8,449

10.3

III. Deferred assets
33

39

17.6

Total fixed liabilities

Unitholders’ capital

Investment securities

16,638Unitholders’ equity

6.2

2. Investment and other assets

44

Accounts payable

Long-term debt

641
1,549

Total assets

50
7,100

II. Fixed liabilities－

Establishment expenses

262

144

32,765

Total deferred assets

Value

8,000

Total current liabilities

144
641

Total fixed assets

Value

313

Short-term debt

(78)

34,315

Temporary account ofconstruction in trust
Total tangible fixed
assetsShare (%)

15,100Accrued business fees

(1,595)

Building in trust

Land in trustValue

I. Current liabilities

1,424

1. Tangible fixed assets

Land

Category

Variation(as of August 31,
2005)

Liabilities

II. Fixed assets

Building(million yen)

2nd period

3rd period

(5)

33

0.0

39

0.0

(5)

(14.3)

94,593100.0

87,461

100.0

7,131

8.2

1,697

Total surplus

1,697

1.8

1,750

(53)

Total unitholders’equity50,86553.8

50,918(53)

Management of tangible fixed assets
Canal City Hakata 32,337
Park Place Oita
16,407
SunLive City Kokura 6,698
Total liabilities andunitholders’ equity

94,593

Canal City Business Center Building 14,692
Gofukumachi Business Center
11,204Sanix Hakata Building
4,650

100.0

87,461

7,131

Concept

Hometown

Portfolio

Strategy

Appendix

Cash Flow Statement for the 3rd Fiscal Period(million yen)(million yen)

I. Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of founding fees
Interest received
Interest paid
Increased/decreased amount of operations receivables
Increased/decreased amount of uncollected consumption tax
Increased/decreased accrued business payments
Increased/decreased unpaid fees
Increased/decreased unpaid expenses
Increased/decreased advanced rents
Increased/decreased deposits held
Increased/decreased advance payments
Increased/decreased long-term advance payments
Other
SubtotalInterest received
Interest paid
Corporation tax payment, etc.
Net cash provided by operating activities
II. Cash flow from investment activities
Expenses from acquiring tangible fixed assets
Expenses from acquiring tangible fixed assets in trust
Income from security deposits and guarantees
Expenses from security deposits and guarantees
Income from security deposits and guarantees in trust
Expenses from security deposits and guarantees in trust
Expenses from acquiring investment securities
Income from withdrawing deposits and deposits in trust with use limitations
Expenses from withdrawing deposits and deposits in trust with use
limitations

45

Net cash used in investment activities
III. Cash flow from financing activities
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from borrowing long-term loans
Proceeds from investment unit issuanceDistribution payment
Net cash provided by financing activities
IV. Increased/decreased cash and cash equivalents
V. Cash and cash equivalents at start of period
VI. Cash and cash equivalents at end of period

3rd period (181 days)

2nd period (actual management period: 296 days)

September 1, 2005 – February 28, 2006

September 1, 2004 – August 31, 2005

1,698
562
5
(0)
133
49
1,595
35
(99)
(33)
15
(268)
40
16
33
3,784
0
(99)
(2)
3,682
(786)
(4,822)
109
(2)
393
(120)
(3,401)－－(8,630)
8,100(1,000)－－(1,740)
5,359
411
3,599
4,010

1,764
764
5
(0)
273
(181)
(1,595)
262
56
184
465
741
(111)
(109)
(87)
2,431

・This cash flow is a result ofstrong property cash flows anda refunded consumption tax last
fiscal period

・This cash flow is a result of
the acquisitions of Sanix
Hakata Building, Kominedai
Community Mall and the silent
partnership equity interest

This cash flow is a result of increases
in short-term borrowings

0
(230)
(0)
2,201
－
(82,466)
－
－
8,212
(102)
－
9,572
(9,572)(74,357)
33,000(25,000)
18,60049,042－75,642
3,487
111
3,599

Concept

Hometown

Portfolio

Strategy

Appendix

Distribution in the 3rd Fiscal Period
The length of the second fiscal period is listed as September 1, 2004 to August 31, 2005, but assets
began being acquired on November 9, 2004, thus the actual management period is 296 days

Category

Forecast for the 4th fiscal
period(184 days)
March 1, 2006
- August 31, 2006

Operating revenues
Operating profit－(181 days)
September 1, 2005
- February 28, 2006

2nd fiscal period results(actual management period: 296 days)

September 1, 2004
- August 31, 2005

4,050

5,857

1,751

2,685

Ordinary profit

1,677

1,698

1,859

Net profit

1,675

1,697

1,761

18,20018,43819,01424,55027,445Distribution perunit (yen)Distribution per
FFO (yen)－＋

External and internal growth
pushed operating revenues
up 404 million yen

ーHowever, accepted profit from consumption
tax was lost and a budget was appropriatedto account for increases in interest rates

→
46

4,454

3rd fiscal period results

Project roughly same outcome aslast fiscal period

・Settlement↑

18,438 yen(+1,738 yen)・Performance revision
18,100 yen↑
・Forecast at start of period
16,700 yen

Reliably Maintain Distribution Among the Highest of J-REITs

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix: Leasing Business Income and Expenditures by property(3rd fiscal Period)(as of February 28, 2006)
Canal City Hakata

Canal City
Business Center
Building

Gofukumachi
Business Center

Sanix
HakataBuilding（注８）

Kominedai
Community
Mall
（注９）

(Fiscal Period）

3rd

2nd

3rd

2nd

3rd

2nd

3rd

2nd

3rd

2nd

3rd

3rd

（Operational
period） (Days)

181

Reference(Note6)181

Reference(Note6）181

Reference(Note７）181

Reference(Note6）181

Reference(Note6）

152

71

Total leasing
business income

1,446

1,436

901

857

262

255

701

684

555

549

170

13

Rent （Note 1）

1,381

1,379

877

842

262

255

695

677

490

490

158

13

Other Incom（Note 2)

64

56

23

14

0

0

5

7

64

59

12

0

Total leasing
business expenses

510

514

396

384

15

12

258

244

182

170

31

1

Tax and other
Public charges

76

76

77

73

0

0

50

50

41

41

0

0

Maintenancecosts（Note 3)

372

368

236

228

7

7

193

184

128

122

28

0

Repair Costs

9

5

13

9

0

0

1

0

6

1

0

0

Insurance
premiums andtrust
compention

10

14

7

8

4

4

6

6

5

5

2

0

Other expenses（Note 4）

41

50

61

65

2

0

6

3

0

0

1

0

935

921

504

473

247

242

442

440

373

378

139

12

ＮＯＩ（Note 5）

Comparison toPrevious fiscal
period47

SunLiveCity
KokuraPark Place Oita

（mm yen）

New marketingstrategy byexternal
consultants

Revenue growthby value added
renovation(Note 1) Includes common fees
(Note 2) Warehouse use fee, sales promotion income, utilities income, etc.
(Note 3) Building management outsourcing fee, utilities expenses, etc.
(Note 4) Sales promotion expenses, etc.
(Note 5) NOI=lease business income-lease business expenses (not including extraordinary losses) + depreciation

－

－

－

－

－

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix: Performance on Pricing(as of April 17, 2006)

History of Investment Unit Price（through April 17, 2006）（円）

History of Relative Stock Prices(June 21, 2005 =100)

900,000

15,000110%

12,000100%

800,000
9,000
Trade Volume
Investment Unit Price

6,000
90%

700,000

REIT Index

3,000

FRC

600,000

0
6/21 7/14

8/9

9/1

9/28 10/24 11/17 12/13 1/11

2/3

2/28 3/24

Current Pricing (as of 4/17/206)
Stock Price
High
Low

48

887,000yen
910,000yen (6/21/2005）
763,000yen (9/15/2005）

4/17

80%
6/21

7/21

8/21

9/21

10/21

11/21

12/21

1/21

2/21

3/21 4/17

Concept

Hometown

Portfolio

Strategy

Analysis of Investor Attributes(Breakdown of Investment Units)

Financial institutions
Securities companies

1.58%
46.85%End of second
fiscal period

26.46%

40.64%

28.11%

Other corporations
Foreign corporations
Individuals

10.88% 14.23%

9.05%

20.95%

1.25%
0%

20%

40%

60%

80%

100%

Distribution of Investors by Region(Breakdown of Investment Units)
1.73%

Hokkaido

1.83%

4.93% 4.06% 1.59%

37.10%

8.92%

TohokuKanto

End of third
fiscal period

29.33%

10.51%

Chugoku
Shikoku

KyushuOverseas32.97%
1.93%
0%

49

1.47%
20%

9.81%

30.89%

6.24% 5.80%
40%

60%

8.99%

1.90%
80%

Rank

100%

Investors

Investment
Units Held

Share

1

Fukuoka Realty Holdings,
Co, Ltd.

20,00021.73%

2

Japan Trustee Services Bank,
Ltd.

5,331

5.79%

3

NikkoCiti Trust andBanking Corporation

5,157

5.6%

4

Trust and Custody Services
Bank, Ltd.

3,641

3.96%

5

The Master Trust Bank ofJapan, Ltd.

2,797

3.04%

6

Luxembourg Offshore JASDIC
Lending Account

2,041

2.22%

7

Bank of New York GCM Client
Accounts EISG

1,851

2.01%

8

Morgan Stanley and Co. Inc.

1,453

1.58%

9

The Fuji Fire and Marine
Insurance Company, Limited

1,150

1.25%

10

The Daisan Bank, Ltd.

1,120

1.22%

Chubu
Kinki

End of second
fiscal period(as of February 28, 2006)

Largest Investors

Distribution by Investor Category

End of third
fiscal period

Appendix

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix:Management Staff Leading the Act Local, Think Global Strategy

Post

Job

President/
Chairman of the Board

50

Name

ResumeMasatoshi
MatsuoEntered Mitsui Fudosan and earned his MBA in Real Estate Finance at Pennsylvania University’s Wharton School; Transferred to
Lehman Brothers where he served as Senior Vice President (real-estate investment, financing, acquisition of real-estate debt, etc.);
Joined Fukuoka Realty; Graduated from the Faculty of Law at the University of Tokyo

Senior Managing
Director/
Investment Manager

CIO

Akira
MatsumotoFirst class architect; Worked in construction at KOKUNE Corporation and Design at NiCK; Involved in the development andmanagement of Canal City Hakata, Riverwalk Kitakyushu and Marinoa City at Fukuoka Jisho and FJ Urban Design & Development;
Former manager of Riverwalk; Graduated from the Environmental Design Section of the Art and Engineering Department at
Kyushu Institute of Design

Senior Managing
Director/
Finance Manager

CFO

Hisashi
Okita

Entered Fukuoka Realty after serving at Central Leasing System and Kyushu Leasing Service (supervised financial planning anddisclosure as executive officer and corporate affairs general manager); Graduated from the School of Economics at Kyushu
University

Managing Director

Hidekazu
TanakaDispatched to Fukuoka Realty from Nippon Credit Bank (presently Aozora Bank); Experienced in advising on syndicated loan
structures and M&A opportunities; Graduated from the Faculty of Business Commerce at Keio University

Director

Tomokazu
OdaharaEntered Kyushu Electric Power and served as general manager of human resources department, Kagoshima Branch Manager anddirector (in charge of human resources, general affairs and secretarial department); Presently Managing Director of Kyushu ElectricPower; Graduated from the School of Law at Kyushu University

Director

Keiji
ShibataFirst class architect; Entered Fukuoka Jisho from Mitsubishi Construction; Presently Fukuoka Jisho Development Division General
Manager (in charge of real estate development and management); Graduated from the Architecture Department of the School ofEngineering at Kyushu University

Auditor

Akio
ImaiEntered Fuji Steel (presently Nippon Steel Corporation); After serving as Tokyo Branch Manager and Director of Fukuoka Jisho,
took his present job as President of Royal Holdings; Graduated from the Faculty of Economics at the University of Tokyo

Advisor

Masayasu
Saki

Entered The Nippon Fudosan Bank (presently Aozora Bank); Served as Executive Officer at Sanyo Shinpan Finance and otherfinancing firms; Served as CEO at Fitch Ratings Japan from 2003; Joined Fukuoka Realty; Graduated from Keio University andearned his MBA at Pennsylvania University’s Wharton School and MPh from the London School of Economics at the University of
LondonComplianceManager

Hiroshi
Shimuta

Registered as lawyer in 2000; Opened Shimuta Law Office in November 2003; Graduated from the Faculty of Law at the Universityof Tokyo

Planning
Manager

IchiroEnomotoEntered Industrial Bank of Japan; Joined Fukuoka Realty after an internship with the Boston Consulting Group; Graduated from theFaculty of Law at the University of Tokyo and earned his MBA at Northwestern University’s Kellogg Graduate School ofManagement

Appendix 2(Others)

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix: Gateway to Asia

Distance from Fukuoka to Major Cities

Flight Time from Fukuoka Airport
to Major Cities〜1 hr
1〜2 hrs

2〜3 hrs

3〜4 hrs

4 hrs or more

52

Busan
Osaka
Tokyo
Seoul
Shanghai
DalianQingdao
SapporoShenyang
Taipei
Beijing
Guangzhou
Hong Kong
ManilaXian
Ho Chi Minh
ChengduBangkok
GuilinFukuoka is Centrally Located between Shanghai and Tokyo

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix: Kyushu’s Industries～Automotives/Semiconductors“Car Island”(10 thousand vehicles)

Number of Passenger Cars Produced in Kyushu

(%)

100

10

80

8

60

6

40

4

20

2

0

0
1999

2000

2001

2002

Passenger Cars Produced

2003

Share in Japan

Source: Outline of Kyushu Economy (Kyushu Economic Research Center)“Silicon Island”(100 million yen)

Integrated Circuits Production Value in Kyushu(%)

16,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

35
30
25
20
15
10
5
0
1999

2000

2001
IC production

2002

2003

Share in Japan

Source: Kyushu Economic and Industrial Data (Kyushu Bureau of Economy, Trade and Industry)

53

Rich in Human Resources and Blessed by Nature,
Kyushu Has a Huge Connection of Semiconductor and Automotive Plants

finished

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix: Office Vacancy Rate

Vacancy Rate (Overall Average)

（%）

50

14

12

10

Vacancy Rate
(New Buildings Less than One Year in Age（%）

FukuokaTokyo
NagoyaOsaka
SapporoSendaiFukuokaTokyo
NagoyaOsaka
SapporoSendai40
SendaiFukuoka
Sapporo

8

30

Osaka
Nagoya

6

20
Tokyo

4

10

Sendai

2

0

0

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Note) There were no new buildings completed in
Sendai in 2000 and Sapporo in 2001.

Source: “Office Building Market Report by Region” issued by Miki Shoji Co., Ltd.

54

Vacancy Rate of New Buildings has Improved

FukuokaTokyo
NagoyaOsaka
SapporoConcept

Hometown

Portfolio

Strategy

Appendix

Appendix: Average Office Rent

（yen/month・tsubo）

Average Rent

（yen/month/tsubo）

Average Rent
New Buildings Less than One year in Age

30,00025,000Tokyo

25,00020,000Tokyo

20,00015,000Osaka
NagoyaFukuoka
Sendai
Sapporo10,0005,000

0FukuokaTokyo
NagoyaOsaka
SapporoSendai1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: “Office Building Market Report by Region” issued by Miki Shoji Co., Ltd.

55

15,000Osaka

10,000Fukuoka
NagoyaSapporoSendai

5,000

FukuokaTokyo
NagoyaOsaka
SapporoSendai01996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Note) There were no new buildings completed in Sendai in 2000 and Sapporo in 2001.

Rent Levels in Fukuoka are Stable at Around Half the Levels of Tokyo

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix: Description of Earthquake Insurance
Content

56

Classifications of Earthquake Insurance

Property
No.

Property

A-1

Canal City
HakataB-1

Canal City
Business
Center Building

A-2

Park Place Oita

B-2

Gofukumachi
Business
CenterA-3

SunLiveCity
KokuraB-3

Sanix Hakata
Building

A-4

Kominedai
CommunityMall

B-4

Taihaku Street
Business
CenterBuilding

Total Building
RepurchasePrice

4７.５３ billion
yen

Portfolio
PML

Insurance
Value

Indemnification
Amount

4.685％

1.5 billion
yen

10 million
yen（Coverage）
1. Damage from fires, cracking and explosions caused by earthquakes or eruptions
2. Damage from collapsing, sinking, etc. resulting from earthquakes or eruptions
3. Damage from tsunamis, floods and other water disasters caused by earthquakes orSource: Overview of Earthquake Insurance on
Ministry of Finance Website

Earthquake insurance policies can be concluded at relatively small
costs since Fukuoka and the Kyushu regions have earthquake
insurance classifications of class 1 or 2

Fukuoka REIT has Taken Out Earthquake Insurance Policies for All of its Properties

Concept

Hometown

Portfolio

Strategy

Appendix

Appendix: J-REIT Structure

Properties

Loan

Investment
corporation

Investment

RentalincomeIssuer of J-REIT investment
securities and owner ofassetsFukuoka REIT Corporation

Advantage of reduced
corporation taxes

Property
management

Property manager
Fukuoka Jisho

Asset
management
Management
instruction

Investment securities
Dividends

Fukuoka Realty

Investment

Investor
Taxationon dividends

Consignment ofmanagement

Sponsors
Fukuoka Jisho,
Kyushu Electric Power, etc.

57

Investment

Consignment of real estate
management

Asset manager

Financial
institutions

Consignment of asset
custodian and generaladministrative affairs

Asset custodian
Provider of generaladministrative affairs
Mitsubishi UFJ Trust and Banking
Sumitomo Trust & Banking

Disclaimer

The contents of this document, including summary notes, quotes, data and other information, are provided solely for
informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or
sell, any specific products.
Please be aware that matters described herein may change or cease to exist without prior notice of any kind. All properties
and performance indications reflect acquisitions through September 2005. Any acquisitions thereafter are not reflected asof issuance of this document. This document contains forward-looking statements and anticipations of future results,
based on current assumptions and beliefs in light of currently available information and resources. Risks and uncertainties,
both known and unknown, including those relating to the future performance of the retail market in Japan, interest rate
fluctuations, competitive scenarios, and changing regulations or taxations, may cause Fukuoka REIT’s actual results,
performance, achievements and financial performance change materially from those explicitly or implicitly expressed in thisdocument.

With respect to any and all terms herein, including without limitation, this document, the information provided is intended tobe thorough. However, no absolute assurance or warranties are given with respect to the accuracy or completeness thereof.
Neither Fukuoka REIT nor Fukuoka Realty shall be liable for any errors, inaccuracies, loss or damage, or for any actions
taken in reliance thereon, or undertake any obligation to publicly update the information contained in this document after
its issuing date (May 10, 2006).

58

Act Local, Think Global
Thank you for this opportunity topresent our REIT

59