20th Fiscal Period

Report on Performance andManagement Status (Semiannual Report)
March 1, 2014 to August 31, 2014

Fukuoka REIT
Corporation

1-2-25 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 their continued support of
Fukuoka REIT Corporation (FRC).
We are pleased to report on the performance results and management status of FRC for the
20th fiscal period (March 1, 2014 to August 31, 2014).
FRC started as Japan's first REIT specializing in regional properties. Its mission is to raise
capital for the Fukuoka and Kyushu areas from Japanese and overseas prime investors by
incorporating high quality properties into its portfolio, and thus contribute to the vitalization andenhancement of the attractiveness of the urban landscape of the areas. Since our listing in June
2005, we have exhibited steady growth and achieved stable performance through the support ofour unitholders and sponsor companies.
Etsuo Matsuyuki
During the 20th fiscal period, the Japanese economy remained on course for a modest recovery
CEO & Representative Director
despite the impact of a decrease in demand in reaction to the rush demand accompanying the
Fukuoka REIT Corporation
increase in the consumption tax rate. In the Fukuoka and Kyushu area, the core investment target
area for FRC, the economy also continued to recover modestly as a whole, as the decrease in demand in reaction to theincrease in the consumption tax rate was gradually decelerating. The fundraising environment was also favorable, keeping thefinancing costs of companies at a low level, and the lending attitude of financial institutions, viewed from companies in terms offunds supply, continued to show an improvement trend.

As for the land price trend, the national average was still decreasing but the rate of decrease continued to shrink over thetwelve months from July 2013, according to the government’s Prefectural Land Price Survey 2014 announced in July 2014. In
contrast, the increase in land price accelerated in Fukuoka City, the central area of FRC’s investment targets, as commercial
land prices and residential land prices both increased, respectively, rising for the second consecutive year.
Under such circumstances, sales remained strong at FRC’s major retail facilities such as Canal City Hakata, its flagshipproperty, and Park Place Oita, which underwent large-scale floor expansion and renewal construction work in April 2014.
Other existing properties also operated steadily under our management. These achievements brought the average occupancy
rate of all properties owned by FRC to 99.3% as of the end of the fiscal period under review. Moreover, on March 28, 2014,
FRC acquired its first logistics facility (located in Tosu, Saga Prefecture) for 1,250 million yen. With this acquisition, FRC’s
assets under management, which totaled 73.5 billion yen upon listing in 2005, have expanded to 164.6 billion yen (based on
acquisition price), more than double the initial size.
As a result of these endeavors on management, net income for the 20th fiscal period surpassed the forecast, and dividend
per unit came to 3,278 yen (Note).
Going forward, FRC will continue to exert its strengths as a REIT specializing in regional properties and quickly respond tomarket changes, while receiving support and cooperation from powerful sponsors who are leaders in the Kyushu businessworld. As we do so, we will strive to achieve stable growth of our portfolio in the medium to long term and secure stableearnings through steady asset management. We at FRC are also resolved to pursue our mission of maximizing investor
interests based on the investment corporation’s management philosophy of "Act Local, Think Global."
We greatly appreciate your continued support and cooperation.
(Note) FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date.

CONTENTS
I.

Overview of Fukuoka REIT Corporation
To Our Unitholders
Financial Summary
ProfileIncrease in the Size of Assets under Management
Fukuoka REIT Going Forward

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 20th Fiscal Period (ended August 2014)
Dividend per unit came to 3,278 yen, surpassing the forecast by 58 yen.
Category(unit)

16th fiscal period

17th fiscal period

18th fiscal period

19th fiscal period

20th fiscal period(March 1, 2012 toAugust 31, 2012)(September 1, 2012 toFebruary 28, 2013)(March 1, 2013 toAugust 31, 2013)(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)

Operating revenues

mm yen

7,094

7,200

7,565

7,574

7,779

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

mm yen

4,372

4,444

4,751

4,732

4,800

mm yen

1,242

1,268

1,343

1,354

1,387

mm yen

2,595

2,622

2,848

2,801

2,824

Ordinary income

mm yen

2,005

2,005

2,272

2,239

2,263

Net income

mm yen

1,992

2,004

2,271

2,238

2,262

yen

16,193

16,28916,458

16,219

3,278

units

123,050

123,050

138,000

138,000

690,000

Total assets (at end of period)

mm yen159,601

160,574

167,857

167,492

167,824

Total net assets (at end of period)

mm yen71,17071,182

81,712

81,67981,703days
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

19

20

23

23

24

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

701

751

886

868

894

Total leasable floor space (at end of period)

m2

445,001.37

448,867.34

466,824.38

466,087.01

475,682.05

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

%

97.0

99.3

98.8

98.1

99.3

(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 21st and 22nd Fiscal Periods
20th fiscal period

21st fiscal period

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

Results

Forecast

Forecast

Operating revenues

mm yen

7,779

7,739

7,745

Leasing NOI (Note 1)

mm yen

4,800

4,781

4,809

Depreciation and amortization
expenses

mm yen

1,387

1,385

1,404

Operating income

mm yen

2,824

2,815

2,830

Ordinary income

mm yen

2,263

2,312

2,319

Net income

mm yen

2,262

2,311

2,318

Dividend per unit (Note 2)yen (1)

3,278

-

-

Latest dividend forecast per unit (Note 2)yen (2)

3,220

3,350

3,360

Difference from forecast

yen (1)-(2)

+58

-

-

690,000

690,000

690,000

Category

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

units(Note 1) “Leasing NOI” is calculated using "Leasing business revenues - Expenses related to leasing business + Depreciation and amortization expenses".
(Note 2) Concerning the total number of investment units, FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date.

FUKUOKA REIT CORPORATION

2

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%
The Bank of Fukuoka, Ltd.

5%

5%

5%

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

50%
Fukuoka Jisho Co., Ltd. (Note)

Outsidedirector

10%

Outsidedirector

Fukuoka Realty Co., Ltd.

Saibu Gas Co., Ltd.

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

5%

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

Kyushu Railway Company

Royal Holdings Co., Ltd.

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

Financial Highlights
Total assets

167.8 bn yen (as of August 31, 2014)

Total debt

71.1 bn yen (as of August 31, 2014)

LTV (Total debt / Total assets)

S&P
Credit ratings

42.4% (as of August 31, 2014)

A−(Stable)R&I

A＋(Stable)JCR

AA−(Stable)Investment Unit Price
Investment unit price

199,000 yen(as of August 31, 2014)

Total number of investment units outstanding

690,000 units(as of August 31, 2014)

Market capitalization

137.3 bn yen(Unit price × Units outstanding)(as of August 31, 2014)

Net assets per unit

118,410 yen(as of August 31, 2014)

Market net assets per unit (Note)

134,493 yen(as of August 31, 2014)

FUKUOKA REIT CORPORATION(Note) Market net assets per unit = {(Total appraisal value at end of
period based on appraisal reports of real estate held at end of
period − Total value on balance sheets of real estate held at
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 Performance20th fiscal period end

August 31, 2014

20th fiscal period dividend

3,278 yen per unit

(semiannual periods ending every February and August)20th fiscal period days

184 days

Dividend yield

3.3% {(Dividend / Days × 365) / Unit price (as of August 31, 2014)}(Note) Unit price is as of August 31, 2014.

(yen)
4,000

3,802 3,687 3,726

3,672 3,699 3,674 3,609

3,468

3,475 3,479 3,356

3,293 3,384 3,324 3,238 3,257 3,291 3,243 3,278

10th

13th

3,000

2,000

1,000

0

2nd

3rd

4th

5th

6th

7th

8th

9th

11th

12th

14th

15th

16th

17th

18th

19th

20th

(Note) FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. In accordance with this, the dividend per unit up to February 25, 2014 in the table above indicates theper investment unit figures after 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

98.8

99.1

99.0

98.6

99.6

98.1

95

99.3

98.8

17th

18th

97.0

98.1

99.3

90

85

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

19th

20th

(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

29.5%

62.8%
Investment area (based on acquisition price)

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

TEL:

Office buildings

RetailFukuoka metropolitan area

76.4%

Total leasable floor space2

Capital:200,000,000 yen(Note) Figures are based on properties owned as of August 31, 2014.

FUKUOKA REIT CORPORATION

4

Other
Kyushu areas

23.6%

Occupancy rate at end of period
99.3%

475,682.05m

Others 7.8%

I. Overview of Fukuoka REIT Corporation

Increase in the Size of Assets under Management
Assets have grown to more than double the size upon listing, and property types have become increasingly diversified.
Retail (total acquisition price, left axis)

Office buildings (total acquisition price, left axis)

Others (total acquisition price, left axis)

23

Number of properties (right axis)(mm of yen)
200,000

150,000

0

5

3,171

3,171

3,171

3,171

43,10043,1003,171

37,20037,20037,20043,10043,10043,10043,10037,20062,03367,44371,07374,62374,62374,62374,62374,62374,623

5th

6th

7th

8th

9th

10th

11th

12th

13th

10

6

3,171

3,171

2,060

50,000

3,171

3,171

100,000
30,200

16

15

2,060

25,800

17

16

15

14

37,20017
16

37,200

11

7,251

7,251

43,10045,70024(Properties)
20

20

19
16

23

11,581

11,581

12,831

15
48,50048,50048,50010

754,33354,33354,333

2nd

3rd

4th

103,323

103,323

103,323

103,323

103,323

103,323

103,323

14th

15th

16th

17th

18th

19th

20th

5

0

(Note) Kominedai Community Mall, acquired in the 3rd fiscal period and sold in the 6th fiscal period, was omitted from the acquired assets presented above.

Fukuoka REIT Going Forward
Growth Strategy
Assets under management have surpassed 160 billion yen,achieving our initial target. Going forward, we will endeavor to
expand our assets in a steady manner while discerning theirprofitability.

Reduction of Fundraising Costs
Fukuoka REIT refinanced 14,000 million yen out of the 14,375
million yen in debt that matured in the 20th fiscal period. Dueto the refinancing, we anticipate a period-on-period cost
reduction of around 42 million yen in the 21st fiscal period.
We will continue our efforts to reduce financing costs, whileworking to maintain a sound financial standing throughextending the durations to debt maturity and shifting to fixedinterest rate borrowings.

Growth Potential of Fukuoka andKyushu Areas (Fukuoka City Selected as
National Strategic Special Zone / Higashi
Kyushu Expressway Scheduled to Open)In May 2014, Fukuoka City was selected as the National
Strategic Special Zone for Global Startups & Job Creation.
Aiming to establish itself as the “startup city,” the city is
preparing an environment to foster industry-academia-

government-private sector networks and support thefounding of businesses. Promoting business startups in thecity is also anticipated to be favorable for existing companies
through an increase in new transactions and expansion
in business opportunities to penetrate into new areasand cultivate overseas markets, etc. This has led to highexpectations for the economic vitalization of Fukuoka.
Moreover, the section between Oita and Miyazaki of theHigashi Kyushu Expressway is scheduled to be fully serviced
by the end of fiscal 2014. This will, for example, reduce thedrive between Nobeoka City and Oita City to approximately
one and a half hours, and allows expectations for an
increased number of visitors to Park Place Oita from Miyazaki.

Policy for the Future
It has been ten years since Fukuoka REIT was established.
For the eleventh year and beyond, we willcontinue to exert our strengths as a REIT
specializing in regional properties andquickly respond to market changes,
while striving to achieve stable growthof our portfolio in the medium
to long term and secure stableearnings through steady asset
management.

FUKUOKA REIT CORPORATION

5

II. Semiannual Report
Overview of Asset Management
1. Changes in operating results and financial position
16th fiscal period

17th fiscal period

18th fiscal period

19th fiscal period

20th fiscal period

mm yen7,094[7,094]
4,498[3,964]
2,595
2,005
1,992
159,601[2.4]
71,170[(0.1)]
69,177

7,200[7,200]
4,578[4,025]
2,622
2,005
2,004
160,574[0.6]
71,182[0.0]
69,177

7,565[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

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, 2012 toAugust 31, 2012)(September 1, 2012 toFebruary 28, 2013)(March 1, 2013 toAugust 31, 2013)(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)

units

123,050

123,050

138,000

138,000

690,000

Net assets per unit

(c)/(d)(Note 3)yen

578,384

578,480

592,119

118,376

118,410

Total dividend
Dividend per unit(e)

mm yen(e)/(d)yen

2,004
16,289[16,289][–]

2,271
16,458[16,458][–]

2,238
16,219[16,219]
[–]

2,261
3,278
[3,278][–](d)[Earnings dividend per unit]

yen[Dividend in excess of earnings per unit]

yen

1,992
16,193[16,193][–](Note 4)%

1.3 [2.5]

1.3 [2.5]

1.4 [2.7]

1.3 [2.7]

1.3 [2.7](Note 4)%

2.8 [5.6]

2.8 [5.7]

3.0 [5.9]

2.7 [5.5]

2.8 [5.5](c)/(b)

%

44.6

44.3

48.7

48.8

48.7

%
(e)/(a)%[(1.1)]
100.0[(0.3)]
100.0

[4.4]
100.0

[0.1]
100.0

[(0.1)]
100.0

19

20

23

23

24

445,001.37

448,867.34

466,824.38

466,087.01

475,682.05

97.0

99.3

98.8

98.1

99.3

1,242

1,268

1,343

1,354

1,387

1,285
4,372
184

431
4,444
181

612
4,751
184

848
4,732
181

740
4,800
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 tototal 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 listedon the Tokyo Stock Exchange, 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 turning regionality, characteristics in the real estate industry, into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retail in Canal
City Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common space), a commercial complex
where specialty shops, cinema complex, theaters, amusement facilities, hotels and offices are integrally developed (hereinafter“Canal City Hakata”). As of the end of the 20th fiscal period (August 31, 2014), FRC manages a total of 24 properties
comprising ten Retail, seven Office buildings and seven Others.
Furthermore, FRC implemented a 5-for-1 split of its investment units with February 28, 2014 and March 1, 2014 as therecord date and the effective date, respectively. The purpose of the split of investment units is to establish an environment
where investors can invest with ease as well as to further widen FRC’s investors base and increase the liquidity of FRC’s
investment units by decreasing the per price of investment units in light of the introduction of the Japanese version of the
Individual Saving Account (NISA) on January 1, 2014.

(2) Investment environment and portfolio performance
During the 20th fiscal period, the Japanese economy remained on course for a modest recovery despite the impact of adecrease in demand in reaction to the rush demand accompanying the increase in the consumption tax rate. The fundraising
environment was also favorable, keeping the financing costs of companies at a low level, and the lending attitude of financial
institutions viewed from companies in terms of funds supply continued to show an improvement trend. Looking ahead, theeconomy is expected to achieve a further recovery, with various political measures proving effective and producing results. In
the Fukuoka and Kyushu area, the core investment target area for FRC, the economy also continued to recover modestly as
a whole, as the decrease in demand in reaction to the rush demand accompanying the increase in the consumption tax rate
was gradually decelerating. Moreover, on top of public investment and housing investment, capital investment by companies
started to become activated as a new driver of the economy.
As for the land price trend, the national average was still decreasing but the rate of decrease continued to shrink over thetwelve months from July 2013, according to the government’s Prefectural Land Price Survey 2014. In contrast, the increasein the land price accelerated in Fukuoka City, the central area of FRC’s investment targets, as commercial land prices andresidential land prices both increased by 3.4% and 1.8% year-on-year, respectively, rising for two consecutive years.
Under such circumstances, FRC focused on stringently selective investment in accordance with its investment policy. This
led to the acquisition of Tosu Logistics Center (acquisition price: 1,250 million yen) on March 28, 2014. For existing properties,
FRC continued its efforts to reinforce competitive advantages and customer drawing ability at Canal City Hakata and othermajor 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 all properties FRC owns was 99.3% at the end of the 20th fiscal period.
When analyzing FRC’s portfolio (on an acquisition price basis) by investment target area, the investment ratio in the Fukuoka
urban area accounted for 76.4%; when analyzing by property type, Retail, Office buildings, and Others accounted for 62.8%,
29.5% and 7.8%, respectively.

(3) Summary of fundraising
In the 20th fiscal period, FRC refinanced 10,300 million yen in long-term debt that matured in July 2014 by borrowing 10,000
million yen in total (a decrease of 300 million yen) comprising 3,700 million yen in debt of five years and 6,300 million yen indebt of seven years. It also refinanced 4,000 million yen in long-term debt that matured in August 2014 for the same amountFUKUOKA REIT CORPORATION

7

II. Semiannual Report

Overview of Asset Management
in debt of eight years. As a result, the balance of interest-bearing debt (including the investment corporation bonds) at theend of the 20th fiscal period totaled 71,150 million yen, with the loan-to-value ratio (ratio of interest-bearing debt (including
the investment corporation bonds) to total assets) at 42.4%. With regard to the commitment lines FRC has established as a
backup for fund procurement, a commitment line with credit limit of 6,000 million yen expired in July 2014 and FRC renewed
it with the same credit limit. 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 byshifting to fixed-interest rate borrowings and through other measures.
Moreover, the credit ratings assigned to FRC as of the end of the 20th fiscal period are as follows:
Credit Rating Agency
Standard & Poor's Ratings Japan K.K. (S&P)

Rating Type

RatingRating Outlook

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

StableIssuer Rating

A+

StableLong-term Senior Debts Rating

AA−

StableRating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)(4) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 7,779 million yen and operating income after excluding
operating expenses, such as expenses related to leasing business and asset management fees, totaled 2,824 million yen.
Ordinary income was 2,263 million yen and net income was 2,262 million yen.
Management decided to make a dividend of 3,278 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 20th 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
Date

Item

Unitholders’ capital(mm of yen)

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

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441

Remarks(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(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.

FUKUOKA REIT CORPORATION

8

II. Semiannual Report

Overview of Asset Management[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, on which FRC’s investment certificates are listed, in each fiscal period are as follows:
Fiscal period

16th fiscal period

17th fiscal period

18th fiscal period

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

19th fiscal period

20th fiscal period

599,000 yen
525,000 yen

769,000 yen
536,000 yen

893,000 yen
704,000 yen

868,000 yen
708,000 yen

171,400 yen
171,000 yen

199,000 yen
157,100 yen

HighestLowest(March 1, 2012 toAugust 31, 2012)(September 1, 2012 toFebruary 28, 2013)(March 1, 2013 toAugust 31, 2013)(Note 2)
(March 1, 2014 toAugust 31, 2014)(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.
(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.

4. Results of dividend, etc.
With respect to the dividend for the 20th 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 3,278 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]

16th fiscal period

17th fiscal period(March 1, 2012 toAugust 31, 2012)

18th fiscal period(September 1, 2012 toFebruary 28, 2013)

1,992,637
89
1,992,548[16,193 yen]
1,992,548[16,193 yen]–[–]

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

2,004,391
29
2,004,361[16,289 yen]
2,004,361[16,289 yen]

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

–

–

[–]

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

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 operation of theproperties 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 20th fiscal period
No relevant items.

FUKUOKA REIT CORPORATION

9

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

17th fiscal period

18th fiscal period

2,000,000 units

2,000,000 units

123,050 units
8,290

16th fiscal period
as of August 31, 2012

19th fiscal period

20th fiscal period

2,000,000 units

2,000,000 units

10,000,000 units

123,050 units

138,000 units

138,000 units

690,000 units

7,495

8,470

7,156

7,386

as of February 28, 2013

as of August 31, 2013

as of February 28, 2014

as of August 31, 2014

2. Matters related to investment units
The following table sets forth the major unitholders of FRC as of August 31, 2014.
Investment units held (units)

NameJapan Trustee Service Bank, Ltd. (Investment trust account)
Fukuoka Jisho Co., Ltd.
Trust & Custody Service Bank, Ltd. (Securities investment trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
MetLife, Inc.
NOMURA BANK (LUXEMBOURG) S.A.
Kazuhiko Enomoto
Shikoku Railway Company
Joyo Bank, Ltd.
Total

217,12264,77540,33836,11529,70017,045
12,66011,9859,130
8,570
447,440

Percentage of total number ofinvestment units outstanding (%) (Note)
31.46
9.38
5.84
5.23
4.30
2.47
1.83
1.73
1.32
1.24
64.84

(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 20th fiscal period are
as follows:
Title

Name of directors, etc.

Major concurrent assignments

Total fee for each title forthe 20th fiscal period(thousands of yen) (Note 3)

Masayasu Saki
CEO and Representative Director
Supervisory Directors
Independent Auditor

Etsuo Matsuyuki
Takashi Shinohara
Hiroyasu Shindo
PricewaterhouseCoopers Aarata

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

–

3,000
3,000
3,600
8,700

(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) Appointments of CEO & Representative Director and Supervisory Directors of FRC due to the expiration of their terms of office were made at the Sixth General Meeting of Unitholders held on May 22,
2014. Etsuo Matsuyuki (new appointment) took office as CEO & Representative Director as of May 29, 2014 in accordance with the resignation of Masayasu Saki from the post due to expiration ofterm of office as of May 28, 2014, and the posts of Supervisory Directors were taken by Takashi Shinohara and Hiroyasu Shindo (both reappointments).
(Note 3) The fees for the CEO and Representative Director and Supervisory Directors are the amounts paid to them in the 20th fiscal period, and the fee to the Independent Auditor is the amount payable to it(estimate) for audits pertaining to the 20th fiscal period.

(2) Policy on deciding to dismiss and not to reappoint the Independent Auditor
FRC will review at its Board of Directors meetings regarding the dismissal of the Independent Auditor in accordance withthe 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.

FUKUOKA REIT CORPORATION

10

II. Semiannual Report

Overview of the Investment Corporation
4. Names of asset management company, asset custodian and generaladministrators as of the end of the 20th fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as ofAugust 31, 2014.
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
19th fiscal period

Type of asset

Area

Use

20th fiscal period

as of February 28, 2014

Total value of
properties held

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

as of August 31, 2014

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

66,15039.5

65,853

39.2

Other Kyushu areas

35,60321.3

36,183

21.6

Fukuoka urban area

44,98626.9

44,622

26.6

Other Kyushu areas

–

–

–

–

Fukuoka urban area

9,748

5.8

9,679

5.8

Other Kyushu areas

1,518

0.9

2,791

1.7

Deposits and other assets

9,484

5.7

8,695

5.2

Total amount of assets (Note 4)

167,492[158,491]

100.0[94.6]

167,824[159,128]100.0[94.8]

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 area” 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 sheet (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.

FUKUOKA REIT CORPORATION

11

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, 2014.
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

30,98546,483.22

46,483.22

100.0

15.8

RetailCanal City Hakata･B

28,47868,805.88

68,526.79

99.6

20.7

RetailPark Place Oita

17,731

109,603.80

109,603.80

100.0

15.7

RetailSunLive City Kokura

6,054

61,450.22

61,450.22

100.0

3.8

RetailSquare Mall Kagoshima Usuki

4,750

14,602.59

14,602.59

100.0

3.3

RetailKumamoto Intercommunity SC

2,139

6,968.66

6,968.66

100.0

1.2

RetailAEON Hara Shopping Center

5,338

27,313.53

27,313.53

100.0

2.7

RetailHanahata SC

1,050

2,801.15

2,801.15

100.0

0.5

RetailKurume Higashi Kushiwara SC

2,249

6,467.80

6,467.80

100.0

1.1

RetailK’s Denki Kagoshima

3,257

7,296.17

7,296.17

100.0

1.4

Retail

102,036

351,793.02

351,513.93

99.9

66.2

Canal City Business Center Building

13,72423,030.44

23,030.44

100.0

7.8

Office building

Gofukumachi Business Center

9,660

19,905.34

18,871.33

94.8

6.2

Office building

Sanix Hakata Building

4,097

6,293.76

6,034.22

95.9

2.6

Office building

Taihaku Street Business Center

6,566

14,677.27

14,443.93

98.4

3.9

Office building

Higashi Hie Business Center

5,087

13,695.51

13,518.89

98.7

4.3

Office building

Tenjin Nishi-Dori Center Building

2,686

3,339.32

3,339.32

100.0

1.1

Office building

Tenjin North Front Building

2,798

5,233.92

5,233.92

100.0

1.7

Office building

44,622

86,175.56

84,472.05

98.0

27.6

Amex Akasakamon Tower

1,846

4,821.25

4,445.75

92.2

0.8

OthersCity House Keyaki Dori

1,009

2,710.86

2,652.46

97.8

0.5

OthersAqualia Kego

2,730

7,415.36

6,867.80

92.6

1.4

OthersAqualia Chihaya

1,249

5,619.69

5,559.96

98.9

0.7

Others

D-Wing Tower

2,842

7,187.58

6,866.39

95.5

1.5

OthersHotel FORZA Oita

1,499

5,785.44

5,785.44

100.0

0.8

OthersTosu Logistics Center

1,291

4,173.29

4,173.29

100.0

0.5

OthersOthers subtotal:

12,47037,713.47

36,351.09

96.4

6.3

Total

159,128475,682.05

472,337.07

99.3

100.0

Retail subtotal:

Office buildings subtotal:(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%.

FUKUOKA REIT CORPORATION

12

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, 2014.

Real estate property name

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

Form ofownership

Location
2-22, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka City
2-1, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka City1, 2-Chome, Koen Dori Nishi,
Oita City
14-1, 2-Chome, Kami Kuzuhara,
Kokura Minami Ward, Kitakyushu
City, Fukuoka
2-18, 2-Chome, Usuki,
Kagoshima City, Kagoshima
1-5, 1-Chome, Kozono HigashiWard, Kumamoto City
27-52, 6-Chome, Hara, Sawara
Ward, Fukuoka City
9-12, 4-Chome Hanahata,
Minami Ward, Fukuoka City
370-3 Higashi Kushiwara,
Kurume City, Fukuoka
4-12, Tokai-cho, Kagoshima
City, Kagoshima

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

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 Chuo Ward,
Tenjin North Front Building
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,Hotel FORZA Oita
Oita City
1607 Momota, Himekata-cho
Tosu Logistics Center
Aza, Tosu City
Others subtotal:
Total

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

32,20030,98568,805.88

28,90028,478109,603.80

18,036

17,731

Japan Real Estate Institute61,450.22

7,640

6,054

Japan Real Estate Institute14,602.59

4,980

4,750

Japan Real Estate Institute6,968.66

2,530

2,139

Japan Real Estate Institute27,313.53

4,560

5,338

Japan Real Estate Institute2,801.15

1,140

1,050

6,467.80

2,580

2,249

7,296.17

3,440

3,257

351,793.02

106,006

102,036

23,030.44

14,40013,724

19,905.34

12,6009,660

6,293.76

4,790

4,097

Japan Real Estate Institute

14,677.27

6,790

6,566

Japan Real Estate Institute13,695.51

6,210

5,087

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

2,790

2,686

Japan Real Estate Institute

5,233.92

3,010

2,798

Japan Real Estate Institute86,175.56

50,59044,622

4,821.25

1,790

1,846

2,710.86

1,000

1,009

7,415.36

3,390

2,730

Japan Real Estate Institute

5,619.69

1,480

1,249

Japan Real Estate Institute7,187.58

3,110

2,842

Tanizawa Sogo Appraisal
Co., Ltd.

5,785.44

1,590

1,499

Japan Real Estate Institute4,173.29

1,270

1,291

Japan Real Estate Institute37,713.47
475,682.05

13,630170,226

12,470159,128

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.

(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.

FUKUOKA REIT CORPORATION

13

II. Semiannual Report

Status of FRC’s Assets under Management

20th fiscal period

19th fiscal period

September 1, 2013 to February 28, 2014

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
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(%) (Note 3)

March 1, 2014 to August 31, 2014

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
revenueduring period
revenue(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)

1 [48]
1 [47]
1 [93]
1
12
2
1
2
1
1
23 [208]

99.9
98.5
97.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,167
1,602
1,128
282
253
90
212
40
88
111

15.4
21.2
14.9
3.7
3.3
1.2
2.8
0.5
1.2
1.5

98.9

4,976

65.7

1 [58]
31
19
1 [63]
1 [22]
1
11
65 [205]

96.2
90.1
100.0
96.8
100.0
100.0
100.0

613
489
197
298
334
86
129

8.1
6.5
2.6
3.9
4.4
1.1
1.7

96.2

2,150

28.4

1 [63]
1 [38]
1 [119]1 [102]
1 [132]
1

94.1
89.6
90.9
96.8
96.1
100.0

63
37
115
56
112
63

0.8
0.5
1.5
0.7
1.5
0.8

(Note 2)

(Note 2)(mm of yen)(%) (Note 4)

1 [48]
1 [48]
1 [106]
1
12
2
1
2
1
1
23 [222]

100.0
99.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,228
1,608
1,218
292
256
90
212
40
88
111

15.8
20.7
15.7
3.8
3.3
1.2
2.7
0.5
1.1
1.4

99.9

5,149

66.2

1 [61]
33
18
1 [67]
1 [22]
1
11
66 [213]

100.0
94.8
95.9
98.4
98.7
100.0
100.0

607
485
201
300
333
86
130

7.8
6.2
2.6
3.9
4.3
1.1
1.7

98.0

2,143

27.6

92.2
97.8
92.6
98.9
95.5
100.0
100.0

64
38
111
57
115
63
36

0.8
0.5
1.4
0.7
1.5
0.8
0.5

96.4

486

6.3

99.3

7,779

100.0

(Note 2)

(Note 2)–––Others subtotal:

6 [455](Note 2)

94.9

447

5.9

1 [61]
1 [41]
1 [121]
1 [104]
1 [130]1
1
7 [459]

Total

[868]
94 (Note
2)

98.1

7,574

100.0

[894]
96 (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 55 for the residence in the 20th fiscal period (12 for the office building and 51 for the residence in the 19th 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 masterleasing 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%.

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, 2014.
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)18,00018,000(50)

18,00018,000(50)(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 20th fiscal period.

7. Status of owned assets by country and region
As of the end of the 20th 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 August 2014 to August
2015

147

22

–

Canal City Hakata･B

Hakata Ward,
Fukuoka City

Common area repairs and improvements

From August 2014 to August
2015

687

44

–

Park Place Oita

Oita City, Oita

Environmental beautification

December 2014

27

–

–

Common area repairs and improvements

April 2015

33

–

–

Canal City BusinessCenter Building

Hakata Ward,
Fukuoka City

Common area repairs and improvements

May 2015

10––

Gofukumachi Business Hakata Ward,
CenterFukuoka City

Common area repairs and improvements

From November 2014 to
February 2015

29

–

–

Tenjin Nishi-Dori
Center Building

Common area repairs and improvements

November 2014

18

–

–

Chuo Ward,
Fukuoka CityFUKUOKA REIT CORPORATION

15

II. Semiannual Report

Capital Expenditures for Owned Real Estate
2. Capital expenditures during the 20th fiscal period
The following table provides an overview of major construction work that was completed in the 20th fiscal period out of thecapital expenditures totaling 740 million yen. Furthermore, FRC conducted construction of 911 million yen in total in the 20th
fiscal period, combined with the 156 million yen in repair and maintenance expenses that were classified as expenses inaccounting and 14 million yen in expenses for restoration to former state.
Real estate property name
Canal City Hakata

Location

PurposeHakata Ward, Fukuoka City

Canal City Hakata･B

Park Place Oita

Hakata Ward, Fukuoka City

(mm of yen)

Common area repairs and improvements

May 2014

13

Renovation work

March 201415

Common area repairs and improvements

From May 2014 to July
2014

55

Common area repairs and improvements

From March 2014 toAugust 2014

68

Floor expansion at Magnolia Court

From August 2013 toApril 2014359

Common area repairs and improvements

From March 2014 toApril 201435

Oita City, Oita

Canal City Business Center Building Hakata Ward, Fukuoka City

Construction cost

Period

3. Reserves for long-term repair and maintenance plans
FRC has deposited the following amounts from the cash flows generated during the 20th 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
Balance of deposits at beginning of period

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

1,116

17th fiscal period(September 1, 2012 toFebruary 28, 2013)

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)

838

350

700

700

Deposits during the period

351

350

350

–

100

Amounts used from deposits during the period

630

838

–

–

–

Deposits carried forward to the next period

838

350

700

700

800

FUKUOKA REIT CORPORATION

16

II. Semiannual Report

Expenses and Liabilities
1. Details of expenses related to asset management(thousands of yen)
19th fiscal period

Item
(a)
(b)
(c)
(d)
(e)

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

Asset management fees
Asset custody fees
Administrative service fees
Directors’ compensations
Other operating expenses
Total(March 1, 2014 toAugust 31, 2014)

446,921
6,242
48,8639,600
64,188575,817456,040
6,332
51,1739,600
65,200588,346(Note) Aside from the amounts of the asset management fees shown above, 6,250 thousand yen has been paid for asset management related to the acquisition of Tosu Logistics Center during the 20th fiscal
period. The amount has been included in the acquisition cost of the property.

2. Status of debt
As of the end of the 20th fiscal period (August 31, 2014), FRC has the following debt from respective financial institutions.
Category
LenderThe Bank of Fukuoka (Note 2)
Resona Bank (Note 2)
The Nishi-Nippon City Bank
Short-term
debt

Drawdown
date

Balance asof August 31,
2014

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds

Description

–
–

166
33

0.496

September 25, Lump-sum
upon maturity
2014

Refinance
fund

No collateral/
No guarantee

–

214

–
–
–
–
–
2,600
4,000
1,400
800
500
500
300
200

30
21
21
12
500
–
–
–
–
–
–
–
–

0.496

September 25, Lump-sum
upon maturity
2014

Refinance
fund

No collateral/
No guarantee

1.410

July 31, 2014

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

4,000

–

300

300

–

4,000

–

1,200

–

1,000

August 29,
Lump-sum
2014
upon maturity
September 30, Lump-sum
1.325
2014
upon maturity
August 31,
Lump-sum
1.950
2015
upon maturity
Lump-sum
1.113 June 30, 2015
upon maturity
Lump-sum1.041 July 31, 2015
upon maturity

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

14,600

6,500

2,325

2,250

4,000

–

1.950

4,000

4,000

2.170

1,200

–

1.113

1,500

1,500

0.663

2,000

2,000

0.661

Refinance
fund
Refinance
fund
Refinance
fund
Refinance
fund
Refinancefund
Acquisition
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(mm of yen)August 25,
2014(Note 2)

Resona Bank (Note 2)
August 25,
The Bank of Nagasaki (Note 2)
2014
Oita Bank (Note 2)
The Bank of Saga (Note 2)
SubtotalMizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu Bank
July 30,
2010
The Iyo Bank
The Bank of Saga
The Higo BankThe Shinwa Bank
Current
August 31,
maturities Development Bank of2009
of long-term Japan
September 30,
debt
Resona Bank
2010
Development Bank ofAugust 31,
Japan
2009
Sumitomo Mitsui Banking
June 30, 2010
Corporation
Sumitomo Mitsui Trust
July 29, 2011
Bank
Subtotal
Development Bank ofJune 30, 2009
Japan
August 31,
Development Bank of
Japan
2009
Development Bank ofAugust 31,
2009
Long-term Japan
debt
Sumitomo Mitsui Banking
June 30, 2010
Corporation
December 30,
The Bank of Fukuoka
2010
The Bank of Fukuoka

Balance asof March 1,
2014

March 1, 2011

(mm of yen)

(Note 1)1.710

2.200 June 30, 2017

FUKUOKA REIT CORPORATION

17

August 31,
2015
August 31,
2016(Note 3)Lump-sumupon maturity
Lump-sumupon maturity
Lump-sum
June 30, 2015
upon maturity
December 30, Lump-sum
2016
upon maturity
February 29,
Lump-sum
2016
upon maturity

II. Semiannual Report

Expenses and Liabilities
Balance asof March 1,
2014

Balance asof August 31,
2014

Averageinterest
rate (%)

The Nishi-Nippon City Bank March 1, 2011

2,000

2,000

0.774

Development Bank ofJapan

March 1, 2011

2,000

2,000

0.811

The Bank of Fukuoka

July 29, 2011

2,000

2,000

1.305

July 31, 2017

The Nishi-Nippon City Bank July 29, 2011

2,000

2,000

1.305

July 31, 2017

The Dai-Ichi Life Insurance
July 29, 2011
Company

1,000

1,000

1.800

July 31, 2018

Shinsei Bank

July 29, 2011

1,000

1,000

1.208

July 29, 2016

Sumitomo Mitsui Trust
Bank

July 29, 2011

1,000

–

1.041

July 31, 2015

1,500

1,500

0.813

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

500

500

1.117

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

600

600

0.613

2,000

2,000

1.033

2,500

2,500

0.711

1,900

1,900

0.711

1,700

1,700

0.711

Category
LenderThe Bank of Fukuoka
The Hiroshima Bank
Oita BankThe Eighteenth BankThe Shinwa Bank
The Kitakyushu Bank
The Kagoshima Bank
Resona Bank
Long-term
debt

Sumitomo Mitsui Banking
Corporation
Mizuho Bank
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation
Resona Bank
The Higo Bank

Drawdown
date(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
February 29,
2012
March 1,
2012
March 30,
2012
March 30,
2012
March 30,
2012

The Bank of Fukuoka
The Nishi-Nippon City Bank
Oita Bank
The Miyazaki BankThe Shinwa Bank
June 29, 2012
The Iyo Bank
The Bank of Saga
The Eighteenth Bank
The Kitakyushu Bank
Sumitomo Mitsui Trust
SeptemberBank28, 2012
SeptemberResona Bank28, 2012
February 1,
The Nishi-Nippon City Bank
2013
February 28,
The Nishi-Nippon City Bank
2013
February 28,
Mizuho Bank2013

(mm of yen)

Repayment
date

Repayment
methodUse offunds

February 29,
2016
February 29,
2016

Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee
Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee

Description(Note 1)

December 30,
2017
December 30,
2016
December 30,
2016
December 30,
2016
December 30,
2016
December 30,
2016
January 31,
2017
January 31,
2017
January 31,
2019
February 29,
2016
March 31,2017
March 31,2017
March 31,2017
March 31,2017

0.858 June 30, 2017

FUKUOKA REIT CORPORATION

18

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

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee

Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guarantee
Lump-sum
Refinance No collateral/
upon maturity
fund
No guaranteeII. Semiannual Report

Expenses and Liabilities
Category

Drawdown
dateLenderBalance asof August 31,
2014

Averageinterest
rate (%)

1,100

1,100

0.761

1,500

1,500

0.561

600

600

0.561

600

600

0.563

1,000

1,000

0.613

–
–
–
–
–
–
–
–
–

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

–

4,000

54,42569,02562,15069,150(mm of yen)

Sumitomo Mitsui TrustBank
Mitsubishi UFJ Trust andBanking Corporation
Aozora Bank
Mitsubishi UFJ Trust andBanking Corporation
Aozora Bank
Long-term
debt

Balance asof March 1,
2014

February 28,
2013
February 28,
2013
February 28,
2013
March 29,2013
June 28,
2013

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

July 31,
2014

July 31,2014

Development Bank of Japan

August 29,
2014

Subtotal
Total(mm of yen)

Repayment
date

Repayment
methodUse offunds

Description

Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sumupon maturity
Lump-sum
June 30, 2020
upon maturity

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(Note 1)February 28,
2018
February 28,
2018
February 28,
2018
March 30,
2018

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

1.010

August 31,
2022

Lump-sumupon maturity

Refinance
fund

No collateral/
No guarantee(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest rate of debt for which FRC conductedinterest 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 debts were 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 in 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, 2014, FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Balance as of
Balance as
Decrease during
March 1,of August 31,
the fiscal period
2014
2014
(mm of yen)
(mm of yen)First Series ofDecember 30,
Unsecured Bonds
2013

2,000

CouponMaturitydate

Maturity
methodUse

Description

1.32

December 29,
2023

Lump-sumupon maturity

Repaymentof debt

No collateral/
No guarantee(%)(mm of yen)

–

2,000

(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.

Acquisitions and Sales during the 20th Fiscal Period
1. Acquisition and sale of real estate and asset-backed securities, etc.
Acquisition
Asset type
Real estate in trust

Name of real estate
Tosu Logistics Center

Sale

Acquisition date

Acquisition priceMarch 28, 2014

1,250

(mm of yen)Transfer date–

Gain or loss on
saleBook value

Sale price(mm of yen)

(mm of yen)–

(mm of yen)––

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

FUKUOKA REIT CORPORATION

19

II. Semiannual Report

Acquisitions and Sales during the 20th Fiscal Period
2. Acquisition and sale of other assets
No relevant items.

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

Property name

Asset typeTransaction
dateReal estate
Acquisition priceappraisal value
or sale price(Note 1)(mm of yen)

Tosu Logistics Center Real estate in Trust March 28, 2014

(Note 2)(mm of yen)

Real estate appraiser

1,250 Japan Real Estate Institute

1,250

Appraisal date
January 1, 2014

(Note 1) The acquisition price refers to the amount (purchasing price shown on the purchasing contract) not including expenses for the acquisition of the relevant property (transaction brokerage fees and taxes
and other 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 of Article
201 of the Investment Trusts Act other than the transactions described in (1) above, two interest rate swap transactions were
subject to the review for the 20th fiscal period and FRC received a review report from PricewaterhouseCoopers Aarata.

4. Transactions with interested parties and major shareholders(1) Transaction status
No relevant items.

(2) Amount of fees paid, etc.
FRC paid the following fees to the interested parties, etc. and major shareholders during the 20th fiscal period.
Category
Property Sales brokerage fees (Note 2)
Property leasing brokerage fees (Note 3)
Property management fees (Note 4)
Outsourcing fees (Note 3) (Note 6)

Other operating expenses (Note 3)

Total paid fees Breakdown of transactions with interested parties, etc. and major shareholders(A)
Paid amount (B)Paid party(thousands of yen)(thousands of yen)
37,500 Fukuoka Jisho Co., Ltd.
Fukuoka Jisho Co., Ltd.
26,531
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
289,624
Park Place Oita Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,291,050 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,180,803 Park Place Oita Co., Ltd.
Sunlife Co., Ltd.

37,50010,7805,660
172,335
106,190
896,812233,62956,366
157,272
227,319
3,997(B)/(A)
(%)

100.0
40.6
21.3
59.5
36.7
69.5
18.1
4.4
13.3
19.3
0.3

(Note 1) Interested parties, etc. and major shareholders refer to the interested parties, etc. of the asset management company who has concluded an asset management agreement with FRC, as designatedin Article 123 of the Enforcement Order of the Act on Investment Trusts and Investment Corporations, and major shareholders of the asset management company as defined in Article 29-4-2 of the
Financial Instruments and Exchange Act. Of these interested parties, etc. and major shareholders, the above table indicates the paid parties to which FRC paid fees during the 20th fiscal period.
Fukuoka Jisho Co., Ltd. is an interested party, etc. as well as a major shareholder, while Park Place Oita Co., Ltd. and Sunlife Co., Ltd. are interested parties, etc.
(Note 2) The property sale brokerage fees paid upon real estate acquisition are included in the acquisition cost of the relevant real estate.
(Note 3) 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 4) 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.
8,093 thousand yen
Park Place Oita Co., Ltd.
5,859 thousand yen(Note 5) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 20th fiscal period. The amounts include construction
work fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd.
325,342 thousand yen
Park Place Oita Co., Ltd.
210,187 thousand yen
Sunlife Co., Ltd.
20,687 thousand yen(Note 6) 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.

FUKUOKA REIT CORPORATION

20

II. Semiannual Report

Acquisitions and Sales during the 20th Fiscal Period
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 20th 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 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)
20th fiscal period

19th fiscal period

Account(as of February 28, 2014)(as of August 31, 2014)

AssetsCurrent assets
Cash and deposits

3,687,020

2,694,272

Cash and deposits in trust

4,185,847

4,639,900

Operating accounts receivable

267,760

402,318

Prepaid expenses

259,075

300,402

Deferred tax assets

43

27

6,507

4,606

8,406,255

8,041,528

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

76,360,548(15,709,714)

Structures in trust

1,187,244

Accumulated depreciation(413,896)

Machinery and equipment in trust

565,696

Accumulated depreciation(199,688)

Vehicles and transport equipment in trust

747

Accumulated depreciation(55)

Tools and fixtures in trust

1,225,444

Accumulated depreciation(787,134)

Lands in trust*1

60,650,833

78,108,929(16,980,269)

61,128,659

1,302,682
773,347(448,860)

853,822584,075
366,007(220,194)363,880

747
691

(103)

643

1,211,618
438,309
93,998,578*1(833,434)

378,183*1

94,622,667

483,356–

156,711,124

157,347,858

1,765,318

1,765,318

14,681

15,661

1,779,999

1,780,979

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

100,000

100,000

Long-term prepaid expenses

443,574

508,992

Total investment and other assets

553,574

618,992

159,044,698

159,747,830

Investment corporation bond issuance expenses

19,322

18,340Investment unit issuance expenses

22,16916,627

Total deferred assets

41,492

34,967

167,492,446

167,824,326

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

Total noncurrent assets
Deferred assets

Total assets

FUKUOKA REIT CORPORATION

23

IV. Balance Sheets(thousands of yen)Account

20th fiscal period

19th fiscal period

as of February 28, 2014

as of August 31, 2014

Liabilities
Current liabilities
Operating accounts payable

497,966

Short-term debt payable

411,578–

500,000

14,750,000

6,650,000

Accounts payable - other

28,621

18,555

Accrued expenses

321,216

332,545

Income taxes payable

1,402

1,162

Accrued consumption taxes

159,101

115,105

Advances received

854,397924,259

Deposits received

641,086

1,042,954

17,253,792

9,996,162

Investment corporation bonds

2,000,000

2,000,000

Long-term debt payable

54,275,000

62,000,000

Current maturities of long-term debt

Total current liabilities
Noncurrent liabilities

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

325,105*1

Total noncurrent liabilities

11,959,023

316,668*1

11,808,124

68,559,128

76,124,793

85,812,921

86,120,955

79,441,236

79,441,236

Unappropriated surplus

2,238,288

2,262,134

Total surplus

2,238,288

2,262,134

Total liabilities
Net assets
Unitholders' equity
Unitholders’ capital
Surplus

Total unitholders’ equity
Total net assets

81,679,524*3

Total liabilities and net assets

81,679,524
167,492,446

FUKUOKA REIT CORPORATION

24

81,703,371*381,703,371
167,824,326

V. Statements of Income(thousands of yen)
19th fiscal period

Account

20th fiscal period(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)

Operating revenues
Leasing revenues - real estate*1

7,085,436*1

7,285,942

Other leasing revenues - real estate*1489,353

7,574,790 *1

494,039*1, *2

4,197,450

7,779,981

Operating expenses
Expenses related to leasing business
Asset management fees

*1, *2446,921

4,366,790
456,040

Asset custody fees

6,242

6,332

Administrative service fees

48,86351,173

Director’s compensations

9,600

9,600

Other operating expenses

64,188Operating income

4,773,267

65,2002,801,522

4,955,136
2,824,845

Non-operating revenues
Interest received
Others

725

696

1,638

2,364

370

1,067

Non-operating expenses
Interest expenses

427,174

419,763Interest expenses on investment corporation bonds

4,412

13,265

Amortization of investment corporation bond issuance
expenses327

982

Amortization of investment unit issuance expenses

10,021

5,542

Financing related expenses

122,163

122,956

Others–564,09815

562,526

Ordinary income

2,239,788

2,263,386

Net income before income taxes

2,239,788

2,263,386

Income taxes - current

1,548

Income taxes - deferred(25)

Net income

1,301
1,522

15

1,317

2,238,265

2,262,068

Surplus brought forward

22

66

Unappropriated surplus

2,238,288

2,262,134

FUKUOKA REIT CORPORATION

25

VI. Statements of Changes in Net Assets
19th fiscal period (September 1, 2013 to February 28, 2014)
Item
Balance as of September 1, 2013
Changes in the current fiscal period
Dividend of surplus
Net income
Total of changes in the current fiscal period
Balance as of February 28, 2014

(thousands of yen)
Total unitholders’ equity

79,441,236

Unitholders’ equity
Surplus
Unappropriated surplus
2,271,226

81,712,463

81,712,463–
79,441,236(2,271,204)
2,238,265(32,938)
2,238,288(2,271,204)
2,238,265(32,938)
81,679,524(2,271,204)
2,238,265(32,938)
81,679,524

Unitholders’ capital

20th fiscal period (March 1, 2014 to August 31, 2014)

Item
Balance as of March 1, 2014
Changes in the current fiscal period
Dividend of surplus
Net income
Total of changes in the current fiscal period
Balance as of August 31, 2014

Total net assets(thousands of yen)
Total unitholders’ equity

79,441,236

Unitholders’ equity
Surplus
Unappropriated surplus
2,238,288

81,679,524

81,679,524–
79,441,236(2,238,222)
2,262,068
23,8462,262,134(2,238,222)
2,262,068
23,84681,703,371(2,238,222)
2,262,068
23,84681,703,371

Unitholders’ capital

FUKUOKA REIT CORPORATION

26

Total net assets

VII. Cash Flow Statements(thousands of yen)
19th fiscal period

Account

20th fiscal period(September 1, 2013 to
February 28, 2014)(March 1, 2014 toAugust 31, 2014)

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

2,239,788

2,263,386

Depreciation and amortization expenses

1,354,793

1,387,232

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

327

982

10,021

5,542

Interest received

(725)

(696)

Interest expenses

431,586

433,029

Decrease (increase) in operating account receivables

83,080(134,557)

Decrease (increase) in consumption taxes receivable

74,887–

Increase (decrease) in accrued consumption taxes

159,101(43,995)

Increase (decrease) in operating accounts payable(55,099)

47,858

Increase (decrease) in accounts payable - other

5,855(7,758)825

12,717

Increase (decrease) in accrued expenses
Increase (decrease) in advances received(42,223)

69,862

Increase (decrease) in deposits expenses(263,690)

377,724

Decrease (increase) in prepaid expenses

74,302(41,327)

Decrease (increase) in long-term prepaid expenses

19,810(65,418)

Others, net

44,16921,465

Subtotal

4,136,811

4,326,046

725

696

(436,965)(434,417)(1,031)(1,542)

3,699,539

3,890,783

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investment activities
Purchase of property, plant and equipment in trust(887,097)(2,174,806)

Purchase of intangible assets in trust(1,280)(4,322)

Proceeds from tenant leasehold and security deposits

3,765

5,098

Repayments of tenant leasehold and security deposits(30)(13,534)

Proceeds from tenant leasehold and security deposits in trust

121,652

272,627

Repayments of tenant leasehold and security deposits in trust(147,707)(399,382)

Proceeds from restricted trust deposits

6,373

8,018

Payments for restricted trust deposits(11,907)(6,419)Net cash provided by (used in) investment activities(916,231)(2,312,721)

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

3,000,000

Repayments of short-term debt payable–(2,500,000)

Proceeds from long-term debt payable–

14,000,000

Repayments of long-term debt payable(2,075,000)(14,375,000)

Proceeds from issuance of investment corporation bonds

2,000,000–

Dividends paid

(2,268,893)(2,240,158)(16,062)–

Net cash provided by (used in) financial activities(2,359,955)(2,115,158)

Net increase (decrease) in cash and cash equivalents

423,353(537,096)

Payments of investment corporation bond issuance expenses

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

7,387,455
7,810,809*1

FUKUOKA REIT CORPORATION

27

7,810,809*1

7,273,713

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 4,938 thousand yen for the fiscal period ended August 31, 2014.

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 Cashflows statements

The funds (cash and cash equivalents) in the cash flows statements consist of cash on hand and cashin trust; 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 in 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)
19th fiscal period

20th fiscal period

as of February 28, 2014

as of August 31, 2014

Buildings in trust

5,714,468

6,414,216

Lands in trust

11,618,595

11,618,595

17,333,064

18,032,812

Total
Secured liabilities are as follows:(thousands of yen)
19th fiscal period

20th fiscal period

as of February 28, 2014

Tenant leasehold and security deposits
received in trust

as of August 31, 2014

2,107,231

1,970,029*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)
19th fiscal period

20th fiscal period

as of February 28, 2014

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of August 31, 2014

6,000,000–

6,000,000
200,000

6,000,000

5,800,000[Committed line of credit agreement 2](thousands of yen)
19th fiscal period

20th fiscal period

as of February 28, 2014

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of August 31, 2014

7,000,000–

7,000,000
300,000

7,000,000

6,700,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
(thousands of yen)
19th fiscal period

20th fiscal period

as of February 28, 2014

as of August 31, 2014

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)
19th fiscal period

20th fiscal period

5,621,912
1,036,864
426,660

5,799,993
1,049,298
436,650(September 1, 2013 to
February 28, 2014)

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, 2014 toAugust 31, 2014)

7,085,436

406,133
83,219454,086
39,953

489,353
7,574,790

1,532,114
157,179
551,344
51,949386,833
1,354,793
163,235

1,580,675
156,850
588,777
54,077440,926
1,387,232
158,249

4,197,450
4,197,450
3,377,339*2. Transactions with affiliated companies.

(thousands of yen)
19th fiscal period

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

Expenses related to real estate leasing business(March 1, 2014 toAugust 31, 2014)

1,192,756

1,320,399(Notes to statements of changes in net assets)
Total number of authorized investment units and total number of investment units issued.
19th fiscal period

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

Total number of authorized investment units
Total number of investment units issued(March 1, 2014 toAugust 31, 2014)

2,000,000 units
138,000 units

10,000,000 units
690,000 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)
19th fiscal period

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

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents(March 1, 2014 toAugust 31, 2014)

3,687,020
4,185,847(62,059)
7,810,809

2,694,272
4,639,900(60,459)
7,273,713(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

7,285,942

494,039
7,779,981

4,366,790
4,366,790
3,413,191

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

19th fiscal period

20th fiscal period

as of February 28, 2014

Due within 1 year
Due after 1 year
Total

as of August 31, 2014

6,209,527
27,934,690
34,144,218

6,392,191
26,265,684
32,657,876(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 safety.
		 FRC conducts derivative transactions only for the purpose of hedging the risk of future interest rate fluctuation, andnot for the purpose of speculation.
(2) Description of financial instruments and associated risks, and risk management structure
Short-term debt, long-term debt and investment corporation bonds are funds procured primarily for acquiring real estate
trust beneficiary interests and refinancing 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 sponsors 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 risk 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 may 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 sheet, the corresponding
fair values and the difference between these amounts as of February 28, 2014. 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 sheet
3,687,020
4,185,847
7,872,868

Fair value

Difference(Note 1)

–

–

–
–
–
–

14,750,000
2,000,000
54,275,000
1,494,657
72,519,657

14,865,713
2,023,312
54,941,203
1,467,867
73,298,095

115,713
23,312666,203(26,790)
778,438

–
–

–
–

–
–

3,687,020
4,185,847
7,872,868

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding
fair values and the difference between these amounts as of August 31, 2014. 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 sheet
2,694,272
4,639,900
7,334,173
500,000
6,650,000
2,000,000
62,000,000
1,339,123
72,489,123−−

Fair value(Note 1)

2,694,272
4,639,900
7,334,173
500,000
6,750,816
2,038,783
62,422,741
1,320,120
73,032,461−−

Difference−−−−
100,816
38,783422,741(19,003)543,338−−(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
calculated on the method of calculating by 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 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.
(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)
19th fiscal period

20th fiscal period

as of February 28, 2014

Tenant leasehold and security deposits
received in trust

as of August 31, 2014

10,464,365

10,469,001

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 the fair 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 of cancellation, renewal and reexecution of lease contracts by lessees, even if the contract terms are fixed and because the past rate of tenants moving out of the properties 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, 2014).

(thousands of yen)Due in 1 year or less
Cash and deposits
Cash and deposits in trust
Total

3,687,020
4,185,847
7,872,868

Amount of redemption of monetary claims scheduled to be due after closing of accounts (August 31, 2014).

(thousands of yen)Due in 1 year or less
Cash and deposits
Cash and deposits in trust
Total

2,694,272
4,639,900
7,334,173(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, 2014).

(thousands of yen)
Long-term debt
Investment corporation bonds

Due in 1 year or less
14,750,000－

1 to 2 years
12,850,000－

2 to 3 years
10,250,000－

3 to 4 years
23,875,000－

4 to 5 years
2,100,000－

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

4 to 5 years
4,200,000－

Due after 5 years
15,500,000
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, 2014).

(thousands of yen)Due in 1 year or lessLong-term debt
6,650,000
Investment corporation bonds－

1 to 2 years
11,650,000－

2 to 3 years
20,450,000－

FUKUOKA REIT CORPORATION

3 to 4 years
10,200,000－

33

VIII. Notes to Financial Statements(Notes to derivative transactions)
1. Derivatives to which hedge accounting is not applied
19th fiscal period (as of February 28, 2014)
Not applicable.

20th fiscal period (as of August 31, 2014)
Not applicable.

2. Derivatives to which hedge accounting is applied
19th fiscal period (as of February 28, 2014)
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

Type of derivative transactions, etc.

Main hedged
item

Special accounting for interest rate swaps

Interest rate swap transaction
Payable fixed; Receivable floating

Long-term debt

Contract amount, etc.
Of which,exceeding 1year
18,300,000

Calculation
Fair value method for thefair value(38,297)

8,000,000(Note 2)

(Note 1)

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

20th fiscal period (as of August 31, 2014)
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

Type of derivative transactions, etc.

Main hedged
item

Special accounting for interest rate swaps

Interest rate swap transaction
Payable fixed; Receivable floating

Long-term debt

Contract amount, etc.
Of which,exceeding 1year
18,000,000

18,000,000

Calculation
Fair value method for thefair value(50,958)(Note 2)

(Note 1)

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

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

19th fiscal period

20th fiscal period

as of February 28, 2014

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, 2014

43
43
43

27
27
27

2. Breakdown of significant components that caused difference between effective statutory income tax rate and effective income tax rate after application of tax effectaccounting.
(%)
19th fiscal period

20th fiscal period

as of February 28, 2014

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, 201436.38
(36.36)
0.04
0.07
34

36.38
(36.36)0.03
0.06

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.
The Act on Partial Revision for the Income Tax Act, etc. (Act No. 10 of 2014), promulgated on March 31, 2014, stipulates that special corporate tax for reconstruction
will not be levied for the business year starting on April 1, 2014 and thereafter. Accordingly, with regard to the temporary differences that are anticipated to be reversedin the business year starting on September 1, 2014, the effective statutory income tax rate used in the calculation of deferred tax assets and deferred tax liabilities will
be changed from the previous 36.38% to 33.96%. 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
19th fiscal period (from September 1, 2013 to February 28, 2014)(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.

Description of Transaction
Categorytransaction
amountBalanceat end ofperiodConsignment
Consignment
Operatingof real estate 1,192,756 accountsof real estate
management,(Note 3)management, etc. etc. (Note 1)
payable36,997

Description ofrelationship[or ownership ofsuch in FRC]

Ownership in
FRC
Direct[10.11%]

Indirect(Note 3)[0.39%](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.

20th fiscal period (from March 1, 2014 to August 31, 2014)(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.

Description of Transaction
Categorytransaction
amountBalanceat end ofperiodConsignment
Consignment
Operatingof real estate 1,320,399 accountsof real estate
management,(Note 3)management, etc. etc. (Note 1)
payable92,951

Description ofrelationship[or ownership ofsuch in FRC]

Ownership in
FRC
Direct[9.39%]

Indirect(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.

(2) Affiliated companies, etc.
19th fiscal period (September 1, 2013 to February 28, 2014)
Not applicable.

20th fiscal period (March 1, 2014 to August 31, 2014)
Not applicable.

FUKUOKA REIT CORPORATION

35

VIII. Notes to Financial Statements(3) Sister companies
19th fiscal period (from September 1, 2013 to February 28, 2014)(thousands of yen)Classification

Name

Location

CapitalBusiness
description

Subsidiaries
of otheraffiliates

Park Place
Oita Co., Ltd Oita City, Oita

400,000

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,
Ltd.

Asset
management
200,000of FRCand otherbusinesses(Note 2)

Hakata Ward,
Fukuoka City

Real estatebusiness

FRC’s share of
voting rights,
etc.

Description ofrelationship[or ownership ofsuch in FRC]

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

569,649－

Asset
management
Paymentof assetof FRC, etc.
and concurrent management
service of officer fees (Note 4)

446,921(Note 5)(Note 5)

Balanceat end ofperiodOperatingaccounts
payable166,359

Accruedexpenses

207,066(Note 5)(Note 5)(Note 3)(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) Masayasu Saki, CEO & Representative Director of FRC, concurrently serves as a Director of Fukuoka Realty Co., Ltd. Furthermore, Etsuo Matsuyuki was appointed as CEO & Representative Director of
FRC at the General Meeting of Unitholders held on May 22, 2014 and concurrently serves as a Director of Fukuoka Realty Co., Ltd. as of the date of this document.
(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.

20th fiscal period (from March 1, 2014 to August 31, 2014)(thousands of yen)Classification

Name

Location

CapitalBusiness
description

Subsidiaries
of otheraffiliates

Park Place
Oita Co., Ltd Oita City, Oita

400,000

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,
Ltd.

Asset
management
200,000of FRCand otherbusinesses(Note 2)

Hakata Ward,
Fukuoka City

Real estatebusiness

FRC’s share of
voting rights,
etc.

Description ofrelationship[or ownership ofsuch in FRC]

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

603,344－

Asset
management
Paymentof assetof FRC, etc.
and concurrent management
service of officer fees (Note 4)

456,040(Note 5)(Note 5)

Balanceat end ofperiodOperatingaccounts
payable141,905

Accruedexpenses

217,934(Note 5)(Note 5)(Note 3)(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
19th fiscal period (September 1, 2013 to February 28, 2014)
Not applicable.

20th fiscal period (March 1, 2014 to August 31, 2014)
Not applicable.

FUKUOKA REIT CORPORATION

36

VIII. Notes to Financial Statements

2. Parent company and major affiliated companies
19th fiscal period (September 1, 2013 to February 28, 2014)
Not applicable.

20th fiscal period (March 1, 2014 to August 31, 2014)
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)
19th fiscal period

Use

RetailOffice buildings

Others

Total(September 1, 2013 to
February 28, 2014)

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
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

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

102,329,978(92,207)102,237,770
104,185,000

102,237,770(201,616)
102,036,154
106,006,000

45,363,618(376,737)
44,986,880
50,730,000

44,986,880(364,527)
44,622,353
50,590,000

11,349,683(83,211)
11,266,472
12,230,000

11,266,472
1,203,857
12,470,329
13,630,000

159,043,280(552,156)
158,491,123
167,145,000

158,491,123
637,714
159,128,838
170,226,000(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 19th fiscal period, the amount of increase is primarily attributable to capital expenditures (848 million yen), and the amount of decrease is primarily attributable todepreciation and amortization expenses (1,354 million yen). Of the amount of change during the 20th fiscal period, the amount of increase is primarily attributable to the acquisition of Tosu Logistics
Center (1,304 million yen) and capital expenditures (740 million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,387 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)
19th fiscal period

Use

RetailOffice buildings

Others

Total(September 1, 2013 to
February 28, 2014)

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 business20th fiscal period(March 1, 2014 toAugust 31, 2014)

4,976,604
2,913,431
2,063,172

5,149,379
2,971,880
2,177,499

2,150,298
1,097,542
1,052,756

2,143,997
1,170,923
973,074

447,887
186,475
261,411486,604
223,986
262,617

7,574,790
4,197,450
3,377,339

7,779,981
4,366,790
3,413,191(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]

19th fiscal period (from September 1, 2013 to February 28, 2014)(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 in the balance sheet.
(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.

20th fiscal period (from March 1, 2014 to August 31, 2014)(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.
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 in the balance sheet.
(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)
19th fiscal period(September 1, 2013 to February 28, 2014)

Net assets per unit (yen)Net income per unit (yen)20th fiscal period(March 1, 2014 to August 31, 2014)

118,376
3,243

118,4103,278(Note 1) FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. Accordingly, net assets per unit and net income per unit have been calculated on the assumption thatthe split of investment units was conducted at the beginning of the 19th fiscal period.
(Note 2) Net income per unit was calculated based on the following data:

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

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) (Note 3)

20th fiscal period(March 1, 2014 to August 31, 2014)

2,238,265－
2,238,265
690,000

2,262,068－
2,262,068
690,000(Note 3) FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. Accordingly, the average number of units during the fiscal period has been calculated on theassumption that the split of investment units was conducted at the beginning of the 19th fiscal period.

(Notes to cash distributions)(thousands of yen)Account

19th fiscal period

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

I. Unappropriated surplus
II. Total dividend[Dividend per unit](March 1, 2014 toAugust 31, 2014)

2,238,288

2,262,134

2,238,222[16,219 yen]

2,261,820[3,278 yen]

III. Surplus brought forward

Method for calculating dividends

66

314

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 distribute2,238,222 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 distribute2,261,820 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.

(Note 1) Amounts other than the amounts of dividend per unit are rounded down to the nearest thousand yen.
(Note 2) FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date.

(Notes to significant subsequent events)
No relevant items.

FUKUOKA REIT CORPORATION

39

VIII. Notes to Financial Statements(Schedule of property, plant and equipment, and intangible assets)(thousands of yen)Type of asset

Balance as ofMarch 1,
2014

Increase

Decrease

Buildings in trust

76,360,548

1,750,576

2,195

78,108,929

16,980,269

1,272,352

61,128,659(Note 1)

1,187,244

115,438－

1,302,682

448,860

34,964

853,822(Note 1)565,696

18,379－584,075

220,194

20,505363,880(Note 1)

747

－

－

747

103

47

643

1,225,444

15,431

29,2571,211,618

833,434

56,019378,183(Note 1)

Land in trust
93,998,578
Construction in progress in
483,356
trust
Subtotal
173,821,614

624,088－

94,622,667－－

94,622,667(Note 1)－

483,356

－

－

－

－

(Note 2)

Structures in trust
Machinery and equipmentin trust
Total property, Vehicles and transport
plant and equipment in trust
equipment Tools and fixtures in trust

Total
intangible
assetsLeasehold right in trust
Other intangible assets intrust
Subtotal
Total

Balance as of
Net property
Accumulated Depreciation
August 31,
andDescription
depreciation for the period
2014
equipment

2,523,915

514,809

175,830,720

18,482,861

1,765,318－－

1,765,318－

1,383,889 157,347,858－

1,765,318

29,103

4,322－

33,426

17,764

3,342

15,661

1,794,421

4,322

－

1,798,744

17,764

3,342

1,780,979

175,616,036

2,528,237

514,809

177,629,464

18,500,626

1,387,232 159,128,838(Note 1) Increase is primarily due to acquisition of Tosu Logistics Center.
(Note 2) The main decreases occurred due to the completion of floor expansion work at Park Place Oita.

(Notes to status of debt)
Category
LenderDrawdown
date(thousands of yen)

The Bank of Fukuoka(Note 2)

Resona Bank (Note 2)
The Kumamoto Bank
(Note 2)

August 25,
2014

The Shinwa Bank

(Note 2)The Bank of Fukuoka(Note 2)

Short-term
debt

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

Oita Bank (Note 2)
The Bank of Saga (Note 2)
The Nishi-Nippon City
Bank (Note 2)
Resona Bank (Note 2)
The Bank of Nagasaki(Note 2)Current
maturitiesoflong-term
debt

Balance asof March 1,
2014

August 25,
2014

August 25,
2014

August 25,
2014

Oita Bank (Note 2)
The Bank of Saga (Note 2)
SubtotalMizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu Bank
July 30,
2010
The Iyo Bank
The Bank of Saga
The Higo BankThe Shinwa Bank
Development Bank ofAugust 31,
Japan
2009
September
30,
Resona Bank
2010

Balance as Averageof August 31, interest Repayment Repayment Use of Description(thousands of yen) (thousands of yen)datemethod
funds
2014
rate
Increase

Decrease(thousands of yen) (%) (Note 1)－

700,000

700,000－－

166,666

166,666－－

66,666

66,666－－

66,666

66,666－－

166,666－

166,666－

33,333－33,333－

1,071,428

1,071,428－－

150,000

150,000－－

107,142

107,142－－－

107,142
64,285

107,142
64,285－－－214,285－

214,285－

30,000－30,000－21,428－21,428－－－2,600,000
4,000,000
1,400,000
800,000
500,000
500,000
300,000
200,000

21,42812,8573,000,000
－
－
－
－
－
－
－
－

－
－
2,500,000
2,600,000
4,000,000
1,400,000
800,000
500,000
500,000
300,000
200,000

21,42812,857500,000
－
－
－
－
－
－
－
－

4,000,000－

4,000,000

－

1.710

300,000－－

300,000

1.325

FUKUOKA REIT CORPORATION

40

0.496

0.496

0.496

August 25,
2014

Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee

September 25, Lump-sum Refinance No collateral/
2014
upon maturity fundNo guarantee

August 25,
2014

Lump-sum Acquisition No collateral/
upon maturity
fund
No guarantee

0.496

September 25, Lump-sum Refinance No collateral/
2014
upon maturity fundNo guarantee

1.410

Lump-sum Refinance No collateral/
July 31, 2014 uponmaturity fundNo guarantee

August 29,
Lump-sum Refinance No collateral/
2014
upon maturity fundNo guarantee
September 30, Lump-sum Refinance No collateral/
2014
upon maturity fundNo guarantee

VIII. Notes to Financial Statements

Category
LenderCurrent
maturitiesoflong-term
debt

Drawdown
date(thousands of yen)

Development Bank ofAugust 31,
Japan
2009
Sumitomo MitsuiJune
30, 2010
Banking Corporation
Sumitomo Mitsui
July 29, 2011
Trust Bank
Subtotal
Development Bank of June 30, 2009
Japan
Development Bank ofAugust 31,
Japan
2009
Development Bank ofAugust 31,
Japan
2009
Sumitomo MitsuiJune
30, 2010
Banking Corporation
30,
The Bank of Fukuoka December
2010
The Bank of Fukuoka March 1, 2011
The Nishi-Nippon City March 1, 2011
Bank
Development Bank of March 1, 2011Japan
The Bank of Fukuoka

July 29, 2011

The Nishi-Nippon City July 29, 2011Bank
The Dai-Ichi Life
July 29, 2011
Insurance Company

Long-term
debt

Balance asof March 1,
2014

Balance as Averageof August 31, interest Repayment Repayment Use of Description(thousands of yen) (thousands of yen)datemethod
funds
2014
rate
Increase

Decrease(thousands of yen) (%) (Note 1)－

4,000,000－

4,000,000

1.950

－

1,200,000－

1,200,000

1.113

－

1,000,000－

1,000,000

1.041

14,600,000

6,200,000

14,300,000

6,500,000

2,325,000－

75,0002,250,000

2.200

4,000,000－

4,000,000

－

1.950

4,000,000－－

4,000,000

2.170

1,200,000－

1,200,000

－

1.113

1,500,000－－

1,500,000

0.663

2,000,000－－

2,000,000

0.661

2,000,000－－

2,000,000

0.774

2,000,000－－

2,000,000

0.811

2,000,000－－

2,000,000

1.305

2,000,000－－

2,000,000

1.305

1,000,000－－

1,000,000

1.800

Shinsei Bank

July 29, 2011

1,000,000－－

1,000,000

1.208

Sumitomo Mitsui
Trust Bank

July 29, 2011

1,000,000－

1,000,000

－

1.041

1,500,000－－

1,500,000

0.813

500,000－－

500,000

1.182

500,000－－

500,000

1.182

500,000－－

500,000

1.182

500,000－－

500,000

1.182

500,000－－

500,000

1.182

100,000－－

100,000

1.168

400,000－－

400,000

1.218

500,000－－

500,000

1.338

500,000－－

500,000

1.117

2,000,000－－

2,000,000

1.170

500,000－－

500,000

1.203

600,000－－

600,000

1.253

300,000－－

300,000

1.203

30,
The Bank of Fukuoka December
201130,
The Hiroshima Bank December
2011
December 30,
Oita Bank
201130,
The Eighteenth Bank December
2011
December 30,
The Shinwa Bank
201130,
The Kitakyushu Bank December
2011
31,
The Kagoshima Bank January
2012
January 31,
Resona Bank
2012
Sumitomo Mitsui
January 31,
Banking Corporation2012
February 29,
Mizuho Bank
2012
Mitsubishi UFJ
Trust and Banking
March 1, 2012
Corporation
Sumitomo Mitsui
March 30,
Banking Corporation
2012
March 30,
Resona Bank
2012
March 30,
The Higo Bank
2012
The Bank of Fukuoka
The Nishi-Nippon City
Bank
Oita Bank
The Miyazaki Bank
June 29, 2012
The Shinwa BankThe Iyo Bank
The Bank of Saga
The Eighteenth Bank
The Kitakyushu Bank
Sumitomo Mitsui
September 28,
Trust Bank
2012
September 28,
Resona Bank2012

1,000,000－－

1,000,000

1,000,000－－

1,000,000

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

－
－
－
－
－
－
－

－
－
－
－
－
－
－

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

600,000－－

600,000

0.613

2,000,000－－

2,000,000

1.033

FUKUOKA REIT CORPORATION

41

0.858

August 31,
2015

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
June 30, 2015 uponmaturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2015 uponmaturity fundNo guarantee
Refinance No collateral/fund
No guarantee
August 31,
Lump-sum Refinance No collateral/
2015
upon maturity fundNo guarantee
August 31,
Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
June 30, 2015 uponmaturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity fundNo guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity fundNo guarantee
February 29, Lump-sum Acquisition No collateral/
2016
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2017 uponmaturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2017 uponmaturity fundNo guarantee
Lump-sum Refinance No collateral/
July 31, 2018 uponmaturity fundNo guarantee
Lump-sum Refinance No collateral/
July 29, 2016 uponmaturity fundNo guarantee
Lump-sum
Refinance
No collateral/
July 31, 2015 upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
December 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
January 31,
Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee
January 31,
Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee
January 31,
Lump-sum Refinance No collateral/
2019
upon maturity fundNo guarantee
February 29, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee(Note 3)(Note 3)

March 31,2017

Lump-sum Acquisition No collateral/
upon maturity fundNo guarantee

March 31,2017
March 31,2017
March 31,2017

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

Lump-sum Refinance No collateral/
June 30, 2017 uponmaturity fundNo guarantee

September 30, Lump-sum Refinance No collateral/
2016
upon maturity fundNo guarantee
September 29, Lump-sum Refinance No collateral/
2017
upon maturity fundNo guarantee

VIII. Notes to Financial Statements

Category
Lender
The Nishi-Nippon CityBank
The Nishi-Nippon CityBank
Mizuho Bank
Sumitomo Mitsui
Trust Bank
Mitsubishi UFJ
Trust and Banking
Corporation
Aozora Bank

Drawdown
date

Balance asof March 1,
2014(thousands of yen)February 1,
2013
February 28,
2013
February 28,
2013
February 28,
2013

Balance as Averageof August 31, interest Repayment Repayment Use of Description(thousands of yen) (thousands of yen)datemethod
funds
2014
rate
Increase

Decrease(thousands of yen) (%) (Note 1)

February 29,
2020
February 28,
2018
February 29,
2020
February 28,
2018

Lump-sum Acquisition No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
upon maturity fundNo guarantee
Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

2,500,000－－

2,500,000

0.711

1,900,000－－

1,900,000

0.711

1,700,000－－

1,700,000

0.711

1,100,000－－

1,100,000

0.761

February 28,
2013

1,500,000－－

1,500,000

0.561

February 28, Lump-sum Refinance No collateral/
2018
upon maturity fundNo guarantee

February 28,
2013

600,000－－

600,000

0.561

February 28, Lump-sum Refinance No collateral/
2018
upon maturity fundNo guarantee

March 29,2013

600,000－－

600,000

0.563

March 30,
2018

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

June 28,2013

1,000,000－－

1,000,000

0.613

June 30, 2020

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

－
－
－
－
－
－
－
－
－

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

0.538

July 31, 2019

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

0.835

July 30, 2021

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee－

4,000,000－

4,000,000

1.010

August 31,
2022

Lump-sum Refinance No collateral/
upon maturity fundNo guarantee

54,425,000

14,000,000

6,275,000

62,150,000

69,025,000

23,200,000

23,075,000

69,150,000

Mitsubishi UFJ
Trust and Banking

Long-term Corporation
debt
Aozora Bank

Mizuho Bank
July 31,
The Norinchukin Bank
2014
The Bank of Saga
Mizuho Bank
The Norinchukin Bank
The Hiroshima Bank
July 31,2014
The Kitakyushu BankThe Iyo Bank
The Higo Bank
Development Bank ofAugust 29,
Japan
2014
Subtotal

Total(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 in 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
11,650,000

2 to 3 years
20,450,000

3 to 4 years
10,200,000

4 to 5 years
4,200,000(Notes to status of investment corporation bonds)
As of August 31, 2014, FRC has the following investment corporation bonds outstanding.
Issue

Issue date

Balance asof March 1,
2014

Decrease during
the fiscal period

2,000,000－(thousands of yen)First Series ofUnsecured
Bonds

December 30,
2013(thousands of yen)

Balance as ofAugust 31,
2014

CouponMaturity date

Maturity
methodUse

Description

2,000,000

1.32

December 29,
2023

Lump-sumupon maturity

Repaymentof debt

No collateral/
No guarantee(%)(thousands of yen)

(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

42(Note 2)