Fukuoka REIT Corporation
Q&A Summary for the 38th Fiscal Period (Period Ended August 2023)
Earnings Briefing Session for Institutional Investors/Analysts
Date: October 19, 2023 (Thu.), 15:30 – 16:21 (web conference)－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－Q1

You said you are actively pursuing property acquisition, but for a comprehensive REIT,
retail facilities seem to be limited. Are you prioritizing offices, logistics facilities, hotels,or residences?

A1 Logistics facilities and residences in particular are high priorities, and offices are stillgoing to perform steadily in Fukuoka, so we view these three asset types as the areas
where we should focus our efforts. With hotels recovering from the pandemic, there is
scope to consider acquiring them, but at present, we judge that they are highly volatileand have dropped them to low priority. Regardless of the property type, we will actively
consider acquiring high-quality assets within the area.
－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－
Q2

Renovation of Canal City Hakata is believed to be progressing well. Much is expectedfrom the opening of Alpen FUKUOKA as well. Are you planning other work in the future
following the renovation of the Grand Building that is currently under way?

A2

Alpen FUKUOKA was opened on September 15 as planned and is off to a successfulstart. For the renovation of the restaurant zone on B1F of the Grand Building, although
it is taking some time to consider matters such as the new design, we plan to start thework in 2024 with the aim of opening it around one year later. We view thoroughly
completing B1F of the Grand Building, which will undergo large-scale renovations, as
our first priority. After that, we will complete leasing for sections that are not in
operation and prioritize profit recovery.

－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－
Q3

You are targeting a dividend of 3,800 yen, including gain on sale. Which properties arecandidates for selling?

A3

In terms of measures to achieve our current targets in normal operation, we view theuse of gain on sale as one method among several strategies. As of now, we have notconfirmed any candidates for selling. We will continue to make comprehensive
judgments by taking into account age, cap rate, future repairs and maintenance, gainon sale, etc.
－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－
Q4

What do you anticipate will be the main drivers raising the dividend to the target
dividend in normal operation of 3,800 yen?

A4

As indicated in the specific measures on page 3 of the Analyst Meeting Materials, weideally view robust external growth as the main engine, but now we believe internal
growth at our existing properties alone would be sufficient to reach the target dividendlevel, including obtaining rent revenue with the inbound recovery and renovations at
Canal City and increased revenue due to normal operation at Hakata FD Business Center,as well as renewing office and logistics properties leases with higher rents. We will
flexibly consider other measures as well, including the use of gain on sale and internal
reserves.

－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－
Q5

The LTV upper limit is now 50% rather than the normalized level of 45%. Does thatmean there is little need to lower the LTV?

A5

We intend to manage the LTV level as before, with the normalized level at 35% to 45%
and an upper limit of 50%. With our recent property acquisition, it slightly exceeded
45%, but at present, we donʼt see the level as a problem and consider it to be within arange that we can manage adequately. The ideal level remains 45% or less, so it is not
the case that there is little need to lower it.

－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－
Q6You say you intend to control LTV within a range with an upper limit of 50%. Does that
imply you may raise the level up to the limit with property acquisition? Or are you also
considering lowering it?

A6

Our borrowing capacity until reaching the LTV upper limit of 50% is around 20 billion
yen after acquiring Hakata FD Business Center, but for future property acquisitions, weintend to make comprehensive decisions based on various options, without limiting
ourselves to borrowing.

－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－

Q7For Canal City Hakata, are the costs of the renovation plan for the restaurant zone in
B1F of the Grand Building incorporated into the forecasts up to the fiscal period ending
August 2024? Or will the increase in costs be included in the forecast for the fiscal
period ending February 2025 or afterward, which has not yet been disclosed?

A7 They were mainly incorporated into CAPEX for the fiscal period ending August 2024.
－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－－*This material contains statements on future business performance, plans, management targets, and strategies, etc. These forwardlooking statements are based on the latest judgments made by Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd., and the actual
results of Fukuoka REIT Corporation may differ materially from those in the forward-looking statements due to various factors.
Therefore, Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. do not guarantee their respective future performances described inthis material or explanations based on this material. Although Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. have preparedthis material based on information that is believed to be reliable, no guarantee is made as to the accuracy, rationality, or completenessof the content. Please note that all the descriptions of this material are effective as of the date when this material was prepared, andmay be subject to change without prior notice. This material is solely for the purpose of providing information to investors, and is notintended for soliciting investment or other activities. When making a final decision on investment, investors are kindly requested to doso based on their own judgment and responsibility, fully recognizing and understanding the investment-related risks including adecrease in investment value.