Fukuoka REIT Corporation
Q&A Summary for the 34th Fiscal Period (Period Ended August 2021)
Earnings Briefing Session for Institutional Investors/Analysts
Date: October 18, 2021 (Mon.), 3:30 PM – 4:23 PM (web conference)
Q1

You said you intend to promote property acquisitions centering on office buildings andlogistics facilities. At present, retail properties occupy more than half of the portfolio.
What are the proportions of the portfolio by property type you envision for the future?

A1

We will work on external growth by acquiring non-retail properties, with a focus on
office buildings and logistics facilities. This should result in a lower proportion of retailproperties, and that is what we aim to achieve. A possible target in our mind is for theproportion of retail properties to be less than 50% through acquisition of non-retailproperties equivalent to approximately 13 billion yen as a guide.

Q2

Under what conditions and at around what time do you expect the dividends will
surpass the level achieved in the 31st fiscal period (ended February 2020) and earlier?
Can you also tell me by what proportion internal growth and external growth willcontribute to the recovery of dividends, respectively?

A2

As for internal growth, if the sales situation of Canal City Hakata returns to the level
before the COVID-19 pandemic (excluding sales for foreign tourists), we believe thatinternal growth alone will be enough for the DPU to return to the level of the 31st fiscal
period (ended February 2020) and earlier. However, it is difficult to assume when thatwill happen. In principle, therefore, we will work to expand the asset size throughexternal growth so that the DPU will return to around 3,600 yen as early as possible.
For now, we set 3,500 yen as the lower limit we aim to achieve.

Q3

What impact is the opening of LaLaport Fukuoka in the spring of 2022 likely to have(such as outflow of your major tenants)? To counter it, what strategy are you
considering implementing (such as review of tenant composition, attracting duty-free
shops and tenant replacement from goods-selling tenants to service-related tenants)?

A3

We anticipate being affected at the time of opening and have factored in the impact inour forecast. We hear that tenants to be housed in LaLaport Fukuoka have almost been
determined and understand that there will be no outflow of our major tenants atpresent. We have launched a project team to study what countermeasures we can take.
We presume there will be a certain impact at the time of opening, but subsequently,
the impact will remain limited because 1) Canal City Hakata is an urban merchandisingfacility, in contrast to LaLaport Hakata which targets family household customers; 2) anew subway station is about to open near Canal City Hakata; and 3) investigations arebeing made to reinforce Canal City Hakataʼs attractiveness, including enhancement of
its entertainment factors.
Q4

With regard to the positive rent gap of Hakata Chikushi-Dori Center Building, how long
do you anticipate it will take for the gap to be addressed upon such occasions as rent
revision and tenant replacement?

A4

We would like to fill the gap as early as possible through negotiation for upward revisionof rent upon contract renewal with respective tenants once every two years and rent
increase upon tenant replacement, etc.

Q5

With regard to external growth, do you plan to focus on expanding the asset size going
forward? Do you also intend to conduct asset replacement? When it is done, what asset
types will be subject to disposition among your properties?

A5

We will focus on expanding the asset size. Since there are no properties that haveunrealized losses for the moment, we do not assume proactively conducting asset
replacement.

Q6

For rent reduction or exemption, do I understand correctly that your assumptions forthe 35th and 36th fiscal periods are fairly conservative, although it may depend on theCOVID-19 situation?

A6

With regard to rent reduction or exemption, we have factored in what we assume atpresent, and our assumptions are not conservative.

Q7

Compared with other regional cities, Fukuoka is fairly energetic, with Hakata Connected
and Tenjin Big Bang underway. They are re-development projects, and Fukuoka Jisho,
one of your sponsors, is involved in them. How do you see the prospect of acquiringsuch re-development properties in the future?

A7

Fukuoka Jisho, our major sponsor, is engaged in several re-development projects for
Hakata Connected and Tenjin Big Bang. FRC is always positively investigating suchacquisitions, and we plan to continuously discuss with the sponsor in a proactive manner.

Q8

For active retail properties, which are provided on page 11 of the briefing material,rather than increasing rent for existing tenants, you appear to be more focused on theoccupancy rate when conducting tenant replacement. How are you going to negotiate
for rent increase in the future? Also, how do you view the timing of when rent can beincreased?

A8

For active retail properties, we will work to improve overall sales rather than raise rent,
as percentage-of-sales rent linked to sales have been set for them. Such improvement
should result in an increase in rent. That is what we have in mind. Therefore, we do
not consider working to raise rent through negotiation for higher rent and othermeasures.

*This material contains statements on future business performance, plans, management targets, and strategies, etc. These forwardlooking statements are based on the latest judgments made by Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd., and the actual
results of Fukuoka REIT Corporation may differ materially from those in the forward-looking statements due to various factors.
Therefore, Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. do not guarantee their respective future performances described inthis material or explanations based on this material. Although Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. have preparedthis material based on information that is believed to be reliable, no guarantee is made as to the accuracy, rationality, or completenessof the content. Please note that all the descriptions of this material are effective as of the date when this material was prepared, andmay be subject to change without prior notice. This material is solely for the purpose of providing information to investors, and is notintended for soliciting investment or other activities. When making a final decision on investment, investors are kindly requested to doso based on their own judgment and responsibility, fully recognizing and understanding the investment-related risks including adecrease in investment value.