Corporate Profile / Characteristics

Introduction

Taking advantage of our strength in knowing the local
characteristics of real estate, which is a very regional-specificbusiness, to invest in the wider Kyushu region with a focus
on Fukuoka, on June 21, 2005, Fukuoka REIT Corporation(FRC) was listed as the first region-specific REIT in Japan.
FRC believes that attracting excellent domestic and foreign
investment funds to regional financial markets will stimulate
community development of the Fukuoka and Kyushu areas.
Moreover, we believe that possibilities in regional growth throughurban development will provide FRC with a continuous streamof investment opportunities as well as income from assets underownership for FRC while at the same time delivering profitable
returns to unitholders.

Corporate Profile
Name

Fukuoka REIT Corporation

Securities code

8968

Listed dateJune 21, 2005 FRC listed on Tokyo Stock Exchange and Fukuoka
Stock Exchange

Accounting periods

February, August

Asset management company

Fukuoka Realty Co., Ltd.

Sponsors

Fukuoka Jisho Co., Ltd.
Kyushu Electric Power Co., Inc.
Nishi-Nippon Railroad Co., Ltd.
ROYAL HOLDINGS Co., Ltd.
THE BANK OF FUKUOKA, LTD.
THE NISHI-NIPPON CITY BANK, LTD.
SAIBU GAS CO., LTD.
Kyudenko Corporation
Kyushu Railway Company
Development Bank of Japan Inc.

FRCʼs Characteristics

Japanʼs First Region-Specific REIT

1

Contents
01

01

28

Corporate Profile / Characteristics

Foundation Underpinning Management
28

Sustainability Policy and Materiality

02 Relationship with Fukuoka Realty Co., Ltd.

30 Environmental Issues

04 Macroeconomic Environment around Fukuoka City

34 Social Issues

08 J-REIT Mechanism and Fukuoka REIT Corporationʼs
Business Model

37

10

16

Editorial Policy

Introduction

History and Business Performance

12

Overview of Properties Owned

14

Financial/Non-Financial Highlights (5-Year Graph)

Value-Creation Activities
16

CEOʼs Message

20

Strategies of Each Department

24

Risks and Opportunities

26

Financial Strategies and TSR (Total Shareholder Return)40

Organizational Issues

Data Section
40

Financial/Non-Financial Highlights (11-Year/22-Period Summary)

42

Glossary

With the aim of conveying details of the Investment
Corporationʼs value creation process in an easy-tounderstand manner, we have issued this Integrated
Report since FY2019. In editing this report, the editors
adopt clear and accessible language, with reference tothe International Integrated Reporting Framework of theInternational Integrated Reporting Council (IIRC) and the
Guidance for Collaborative Value Creation of Japanʼs
Ministry of Economy, Trade and Industry (METI). We
consider that this and subsequent reports will lead toactive dialogue with investors and other stakeholders.

Taking advantage of our strength in knowing the local characteristics of real estate, which is a very
regional-specific business, we invest in real estate for rent in the Fukuoka and Kyushu areas, where
growth potential exists. By appropriately managing the invested real estate, we continue to securestable earnings over the medium- to long-term while providing stable dividends.

Excellent Portfolio

2

In order to build its portfolio, FRC selectively invests in a variety of investment property types,
including retail facilities, office buildings, and logistics properties etc., with a focus on the Fukuoka
metropolitan area, which maintains significant growth potential.

Support Structure Comprises Sponsor Companies

34Powerful companies that lead the business world in Fukuoka and Kyushu, and accept our wayof thinking, participate as shareholders of Fukuoka Realty Co., Ltd. FRC proactively utilizes the
support from its sponsor companies while aiming to steadily expand its asset scale.

Stable Financial Base
We are reducing refinancing risk (by the conservative control of LTV and extending debt duration).
We also maintain good relationships with financial institutions, including our three sponsor banks.

Payment of Stable Dividends Continuing Since Listing

5

Utilizing its sponsor pipeline and other advantages, FRC continues to distribute stable dividends
per unit through the acquisition of carefully selected excellent properties and effective asset
management in the Fukuoka and Kyushu area.

Fukuoka REIT Corporation 2020

01

FRCʼs Basic Policy

Corporate Profile of Fukuoka Realty Co., Ltd.

【Our Mission】
Taking advantage of our strength in knowing the local
characteristics of real estate, which is a very regional-specificbusiness, we invest in real estate for rent in the Fukuoka andKyushu areas. By appropriately managing the invested realestate, we will achieve stable earnings over the medium- to longterm while making efforts to keep providing stable dividends forthe future.
【Act Local】
We - FRC and Fukuoka Realty – are the only listed real estate
investment corporation and asset management company
registered outside the Tokyo metropolitan and Kansai areas.
As a region-specific REIT, FRC also seeks differentiation in theselection of investment target properties and the managementof owned assets through the enhancement of its informationgathering ability and ability to discern the profitability ofproperties by utilizing its speed and depth of information basedon knowledge of local land and broad network centering on thelocal government and business world.
【Think Global】
Regarding real estate and financial markets, FRC will keep closely
tracking movements occurring across the whole of Japan and theentire world, taking into consideration the logic of capital markets
with global ideas, and appropriately reflecting such in our asset
management. We will also keep diligently pursuing dialogue
with investors, focusing on fulfilling our accountability, andutilizing Fukuoka Realtyʼs fund management skills for investors
under a strict compliance policy. We will proactively engage in
IR activities to fulfill our accountability to global capital markets.
In conjunction, we will take heed of Fukuoka Realtyʼs corporate
governance and compliance.

Comprising employees with various experiences in real estate,finance, and other fields, Fukuoka Realty Co., Ltd. possesses ahigh level of expertise and makes full use of local knowledge andknow-how to manage FRCʼs assets.

Introduction

Introduction

Relationship with Fukuoka Realty Co., Ltd.

Real Estate Investment Trust

Fukuoka REIT Corporation

Real Estate

Investors［ Securities code : 8968 ］
Holdings

Investments

Rents, etc.

Dividends

Company
entrusted withasset
management

Asset management company

Contribution to Regional Revitalization and Development of Attractive Communities
FRC believes that attracting domestic and foreign excellent
investment funds to regional real estate financial markets will
stimulate community development of the Fukuoka and Kyushu
areas. Although we are not directly involved in community
development or real estate development, we expect that ouracquisition of properties will lead to new funds passing to sellers
and part of those funds being directed to new development,
etc. With funds injected into FRC from Japan and abroad, newinvestment funds will flow to the Fukuoka and Kyushu areas

Fukuoka Realty Co., Ltd.

as a whole. Based on this perspective, we believe that we cancontribute to regional revitalization and community developmentin the Fukuoka and Kyushu areas.
Funds will be returned to unitholders by distributing theearnings from owned assets.
Through the promotion of community development and therevitalization of regional economies in the Fukuoka and Kyushu
areas, we will aim for FRC earnings stability.

Investment Policy

Act Local
Real estate is a local business・Distinctive capability for gathering
qualitative information of real estatemarket (speed, in-depth information)
・Specialization in local properties
・Solid network among the local
government and business world

Our Mission
Region-Specific REIT
Featuring our expertise on
local real estate markets,
Fukuoka and Kyushu, maximize
profits of investors

Think Global
Capital market theory
・A ccountability and transparent
dialogue with investors
・Decent policy to comply
・Fund management skills

Investment target areas

Investment typeFukuoka
metropolitan area

Retail60-90%
Other Kyushu areas(including Okinawa andYamaguchi prefectures)

10-30%
Others0-10%

02

Fukuoka REIT Corporation 2020

40-70%

Leading companies in the Fukuoka and Kyushu region who arein agreement with FRCʼs concept participate as shareholders(sponsors) of Fukuoka Realty Co., Ltd. FRC aims to achievesustainable growth as a REIT through the expanded scale ofits assets through the contribution of excellent properties fromamong our sponsors and by actively leveraging the support,
including provision of relevant information and staffing to asset
management companies. With regard to the properties owned
and developed by the sponsor companies, Fukuoka Jisho Co.,
Ltd., FRC and Fukuoka Realty Co., Ltd. have concluded a pipeline
support memorandum of understanding (MOU) to seek stable
and continuous acquisition opportunities.

5%

5%

5%

5%

THE BANK OFFUKUOKA, LTD.

THE NISHI-NIPPONCITY BANK, LTD.

Development
Bank of Japan Inc.

SAIBU GASCO., LTD.

50%
Fukuoka Jisho
Co., Ltd. ＊Directors

Fukuoka Realty Co., Ltd.

Outsidedirectors

10%
Kyushu ElectricPower Co., Inc.

(Asset Manager)

Fukuoka Jisho overview : See p.23

Office buildings

20-50%

5%

5%

5%

5%

Others

Kyudenko
Corporation

Nishi-Nippon
Railroad Co., Ltd.

Kyushu Railway
CompanyROYAL
HOLDINGS Co., Ltd.

(hotels, residences,logistics, etc.)* Concluded MOU with FRC and Fukuoka Realty Co., Ltd. concerning pipeline support.

0-30%

Fukuoka REIT Corporation 202003

SeoulBusan

Shanghai

Osaka

Tokyo

Fukuoka
500km

TaipeiHong Kong

1,000km
1,500km

Fukuoka with a Large Youth Population

The total population of Fukuoka City has increased consistently
since 1985, and as of May 1, 2020, the current estimatedpopulation exceeds 1.60 million. This total population makes thecity the fifth most populous among the government-designatedcities, following upon Yokohama, Osaka, Nagoya, and Sapporo.
According to estimates from the National Institute of Populationand Social Security Research, the population of Fukuoka City is
expected to continue growing until 2035.

Compared with other cities, the population composition of
Fukuoka City is characterized by a higher proportion of young
people. Of the cities listed in the chart below, the ratio of young
people in Fukuoka City (the proportion of a cityʼs total populationaccounted for by people between the ages of 15 and 29) ranks
first at 17.4%. Fukuoka Cityʼs working-age population ratio (theproportion of the cityʼs total population made up of people
between the ages of 15 and 64) ranks third at 64.8%.

■ Total Population and Population Growth Ratio of Fukuoka City■ National and Major Citiesʼ Young People and Working Age Population Ratios〈2015〉

Total population of Fukuoka City（%）

(Thousands)
1,650
1.12

0.89

1,550

0.89
0.78

［Fukuoka Startup Consortium］（1）Initiatives for encouraging the creation of a startup ecosystem（2）Support for the creation and growth of startup companies
through industry-academia-government collaboration（3）Broadcast information to the world as a means of attracting
startup companies, companies, investors, sponsors, andhuman resources, etc.
（4）Initiatives for proof-of-concepts and social implementationsof new technologies and services（5）Initiatives that contribute to the goals of the Consortium, etc.

1,454

1,450
1,400

1,404

1,417

1,430

1,466

0.99 1,556 1,570
0.89

0.82

1,500 0.83

Fukuoka City applied for the Startup Ecosystem Hub City Creation
Project involved in the "Beyond Limits. Unlock Our Potential.:
Strategies for creation of startup ecosystem to compete with theworld top ecosystems" organized by the Cabinet Office of Japan.
This program began accepting applications on January 28, 2019, andFukuoka City was selected as a Global Hub City on July 14, 2020.
The Fukuoka Startup Consortium was established for the
purpose of creating a Startup Ecosystem Hub City that willproduce new value and give rise to startups that serve as engines
for sustainable urban growth and vitality through the exploration ofcollaborations between corporations, universities, and government.

1.02

0.99

0.99

Cabinet Office Startup Ecosystem Hub Creation Strategy: Fukuoka as a Global Hub City

1,482

1,497

1,541

1,512 1,526

1,582

1,595

1,603

0.90

1.2
1.0

0.84

0.95

0.77
0.8
0.6

1,441

0.4

SendaiOsaka

Kumamoto

16.0

Hiroshima

15.0

Tokyo
Metropolitan
area

Sagamihara

NagoyaSaitama
Yokohama

SapporoNiigata

Kobe
Sakai

Nationwide

Chiba

Hamamatsu

0* Total population for 2020 indicates the population as of September 1, and therefore does not reflect
the population growth rate.
Source: Prepared by Fukuoka Realty Co., Ltd. based on data from Fukuoka City Estimated Population
and Fukuoka City Registered Population, published by Fukuoka City

KawasakiOkayama

14.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fukuoka

Kyoto

17.0

Kitakyusyu

・Youth population
14.5%
・Working-age population 60.0%

Shizuoka

0.2

1,350

0

・Youth population
17.4% (1st)・Working-age population 64.8% (3rd)

18.0

1.4

1,600

Hot Topics（%）

Population growth ratio

Youth population

Beijing

Blessed with a history and culture nurtured by the sea, anabundant natural environment, extensive urban functions, diverse
human resources, and various other assets, Fukuoka City isrecognized around the world as a livable city.
Under the “Fukuoka City Comprehensive Plan,” the basic
strategy for city management focuses on creating a virtuous
cycle of “urban growth” and “greater quality of life.” In aiming tobecome a “leading Asian city in which people, the environment,
and urban vitality are harmonized,” Fukuoka City is advancing
urban planning that recognizes its presence within Asia as acompact, sustainable city that balances economic growth with asafe, secure, high quality of life.

Population Continues to Grow in Fukuoka City

(Percentage of city population aged 15 to 29)

Fukuoka Cityʼs Standing: From Regional City to an Asian Economic Metropolis

Introduction

Introduction

Macroeconomic Environment around Fukuoka City

0

57.0

58.0

59.0

60.0

61.0

62.0

63.0

64.0

65.0

66.0 （%）

Working-age population(Percentage of city population aged 15 to 64)

Source: Prepared by Fukuoka Realty Co., Ltd. based on data from the Ministry of Internal Affairs andCommunications, Statistics Bureau Population Census of Japan.

Fukuoka as a Compact CityTEAM FUKUOKA established to attract international financial functions

Fukuoka as a Continuously Growing, Balanced City

The Japanese government aims to expand acceptance of foreign
financial institutions and overseas financial talents. In response,
TEAM FUKUOKA, a promotion organization of industryacademia-government collaboration throughout Fukuoka, wasestablished on September 29, 2020, so that a variety of entities
involved in attracting international financial functions to Fukuoka
will mutually share and exchange information and work by taking
advantage of respective features.

According to “Japan Power Cities: Profiling Urban Attractiveness
2020,” a survey conducted by the Mori Memorial Foundation thatanalyzes the urban vitality of 109 cities in Japan from a relativeand multifaceted perspective, Fukuoka City stands out in termsof economics and business, and has consistently received highmarks for “business vitality” and “business climate.” Fukuoka City
also received high marks for “access from outside the city” interms of transportation and access, and attracts many people andbusinesses as a city that aims to become a hub of exchange in Asia.
■ Category Rankings/Standard Deviation
Figures in parenthesis indicate
last yearʼs rankings

Economics/Business2nd 73.7
3rd 76.5

Transportation/Access(3rd)

As a compact city, the air, sea, and land transportation accesspoints of Hakata Station, the Port of Hakata, and Fukuoka Airport
are located within a three-kilometer radius of Tenjin, Fukuoka
Cityʼs central business district.
Currently, the city is working to improve the transport
infrastructure and enhance the transport functions to further

Fukuoka City
Island City

3
LegendJR（Conventional lines）
Shinkansen
Nishi-Nippon Railroad
Fukuoka Municipal Subway
Fukuoka Urban Expressway
Nishi Kyushu Expressway

Port of Hakata

4 Fukuoka Urban Expressway 3 extension (Airport Route)(scheduled for completion in FY2024)
4

(6th)

5th 72.6(63rd)(5th)
Culture/Exchange

Environment

2020 Standard Deviation by Category
50-point standard deviation line
* The shape of the graph expresses the standard deviation

Photo provided by the Fukuoka Keizai editorial department

04

Fukuoka REIT Corporation 2020

Source: Prepared by Fukuoka Realty Co., Ltd. based on data from
“Japan Power Cities: Profiling Urban Attractiveness 2020,”
a survey conducted by the Mori Memorial Foundation.

1 Planned extension of the Fukuoka City Nanakuma subway line
(scheduled for completion in FY2022)
2 Fukuoka Airport runway expansion(scheduled for completion in FY2024)5

5th 80.3
91st 42.4

Fukuoka City Infrastructure Enhancements

3 Fukuoka Urban Expressway 6 (Island City Route)(scheduled for completion in FY2020)

Research/
Development(3rd)increase convenience. Moreover, Fukuoka Cityʼs ratio of greeneryand water within a 10-kilometer radius of the city center, ameasure of the abundance of local nature, rivals that of cities
around the world recognized for their high “quality of life,"
including Melbourne and Seattle.

Tenjin1

Hakata Station

Fukuoka Airport

2

5 Waterfront zone redevelopment
Cruise ship terminal (completed in FY2015)
Port of Hakata Chuo Port extension construction(completed in FY2018)

6th 67.4(12th)
Lifestyle/Residence

Fukuoka REIT Corporation 202005

【Residential Land】
According to the official land price annual fluctuation rates (as of January
1 each year) for 2020 announced by the Ministry of Land, Infrastructure,
Transport and Tourism, the national average for residential land increased
0.8% year on year. Amid the ongoing improvement in the employment
and income environment, the continued low interest rate environment andhousing acquisition support measures underpinning demand for housing
have led demand to remain strong, primarily in highly convenient areas.
In Fukuoka City, land prices began to rise in 2013 due to strong housing
demand brought about by population inflow, and the rate of land priceincrease has risen every year up until 2020. Since the first quarter of 2020
land price trends have been impacted by the spread of COVID-19.

Redevelopment Trends in Fukuoka City

Nanakuma Subway
Line Extension(scheduled to start its
operation in the FY2022)

Nishitetsu Fukuoka(Tenjin) Station

Mid Station(tentative name)

Canal City Hakata

JR Hakata Station■ Average Year-on-Year Rates of Changes in Publicly Announced Price for Residential Land
Nationwide

Fukuoka

Tokyo Metropolitan area (23 wards)

Osaka

Nagoya（%）
8

Introduction

Introduction

Macroeconomic Environment around Fukuoka City

4
0
（4）
（8）

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Note: The publicly announced price indicates the land price disclosed by the Ministry of Land,
Infrastructure, Transport and Tourism as of January 1 of each year.
Source: Prepared by Fukuoka Realty Co., Ltd. based on data from Ministry of Land, Infrastructure,
Transport and Tourism Land Price Survey 2010-2020.

Fukuoka Office Market / Fukuoka Business District■ Vacancy Rates and Supply and DemandCompleted floor space (total floor space)■ Average Asking Rents（Y2005=100）（Tsubo）（%）
15.38

40,000

As of Sept. 2020

14.72

Sendai

13.23

35,000

11.98
10.86
10.99

25,000Having received special authorization to relax Civil Aeronautics Act-related buildingheight restrictions following the designation of the Fukuoka City Tenjin Region as a“National Strategic Special Zone for Global Startups & Job Creation,” Fukuoka City has
been advancing the “Tenjin Big Bang” project to create new spaces and employment.
This move includes implementing original policies to deregulate floor area ratios andworking to significantly improve urban functions. As the first stage of Tenjin Big Bang,
Fukuoka Jisho Co., Ltd., the main sponsor of FRC, is advancing development of “Tenjin
Business Center,” which is equipped with Fukuokaʼs first large-scale seismic isolation
structure, the highest level of BCP performance in Japan, and high-quality officespecifications, while also incorporating measures to address such infectious diseases
as COVID-19. This project is scheduled for completion during September 2021.
In aims of becoming the first city in the world designed to control infection, Fukuoka
City extended the completion deadline from 2024 to 2026 for buildings implementing
infection controls under development plans leveraging Tenjin Big Bang incentives.
This move is intended to induce new building initiatives, including those for securing
ventilation, non-contact operations, physical distancing, and telecommunications
environment enhancements.

In January 2019, Fukuoka City launched the “Hakata
Connected” project to better link the vitality andprosperity of Hakata Station to the surrounding area.
As the overland gateway to the Kyushu region, thearea surrounding Hakata Station, which is expected
to experience further development, will see transport
infrastructure enhancements, including an extension
to the Nanakuma subway line and redevelopment of
Hakata Ekimae Street. The project will also encouragereconstruction of older buildings into highly earthquakeresistant, high-tech buildings through floor area ratio
deregulation as a means of improving urban functions.
Along with THE NISHI-NIPPON CITY BANK, LTD.,
Fukuoka Jisho Co., Ltd., the main sponsor of FRC, will
also engage in a series of redevelopments of the Bankʼs
aging main branch, main branch annex, and head officebuildings to serve as a trigger for “Hakata Connected”.

【Commercial Land】
According to the official land price annual fluctuation rates (asof January 1 each year) for 2020 announced by the Ministry ofLand, Infrastructure, Transport and Tourism, the national averagefor commercial land increased 3.1% year on year, making for a fifth
consecutive year of positive growth. In Fukuoka City, land prices
began to rise in 2013 ahead of other cities. In addition to the increasein domestic and foreign tourists and the firm office market, progressin redevelopment projects has led the rate of increase to exceed thatof other cities since 2018. Since the first quarter of 2020 land pricetrends have been impacted by the spread of COVID-19.

06

Fukuoka REIT Corporation 2020

■ Average Year-on-Year Rates of Changes in Publicly Announced Prices for Commercial Land
Nationwide（%）

Fukuoka

Tokyo Metropolitan area (23 wards)

Osaka

Nagoya20

3.15%

NagoyaOsaka
Sapporo

3.05%
2.96%
2.25%

10

6

4.26
3.07

3.15

5,000
0

4

2.09

2.04

2
0

Impact of vacating large-scale buildings prior
to closures coinciding with redevelopment.

（5,000）Tenjin Business Center
Completed floor area (total floor area) includes thefloor area for common spaces, etc., and therefore
differs from the leasable floor area.

（10,000）
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Osaka

As of Sept. 2020
Fukuoka

11,018 yen

Central Tokyo (5 wards) 22,733 yen
Osaka11,944 yen(Yen/tsubo)

120
12

6.30

10,000Central Tokyo (5 wards)

14

8

15,000Land Price Trends in Fukuoka City

Fukuoka

Fukuoka

（%）
130

5.18%

7.70

20,000■ Hakata Connected

16Central Tokyo (5 wards) 3.43%

30,000■ Tenjin Big Bang

The average asking rent of the Fukuoka business district rose 6.1% in the 12 months from September 2019 to September 2020

Vacancy rate

Net absorption (absorption demand)

110
100
90
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0Note: The figures from 2005 to 2019 are based on the figures as of December.
Source: Prepared by Fukuoka Realty Co., Ltd. based on data from Miki Shoji Co., Ltd. Office Market Data.

■ Trends in Leasable Floor Space and Occupancy Floor Space
Leasable Floor space

Occupancy floor space（Tsubo）
800,000
600,000

2021(Planned) (Planned)

400,000

Note: Vacancy rates from 2008 to 2019 are based on the figures as of December 31.
Note: Office building-related data for each city is data for areas and buildings included in surveys
conducted by Miki Shoji Co., Ltd.
Note: Net absorption (absorption demand) shows the change in the occupied floor space during a specificperiod. It is calculated by subtracting the occupied floor space on December 31 of the previous year
from the occupied floor space on December 31 of the applicable year.
Completed floor space (total floor space) figures for 2020 and 2021 have not been finalized, and thefloor space and expected completion dates are subject to change.
Source: Prepared by Fukuoka Realty Co., Ltd. based on data from Miki Shoji Co., Ltd. Office Market Data.

Note: The figures from 2005 to 2019 are based on the figures as of December.
Source: Prepared by Fukuoka Realty Co., Ltd. based on data from Miki Shoji Co., Ltd. Office Market Data.

Fukuoka City Commercial Climate

Northern Kyushu Logistics Facility Supply and Demand Trends■ Year-on-Year Sales Fluctuation Rate Trends■ Logistics Facility Supply/Demand and Vacancy Rates

Nationwide

Fukuoka

Government-Designated Cities

Kyushu and Okinawa

200,000
0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

New supply

New demand

Vacancy rate（%）

（Tsubo）（%）

6

60,00012

450,00010

240,0008

030,000

6（2）

20,0004

10,000

2

15
10
5
0
（5）
（10）
（15）

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Note: The publicly announced price indicates the land price disclosed by the Ministry of Land,
Infrastructure, Transport and Tourism as of January 1 of each year.
Source: Prepared by Fukuoka Realty Co., Ltd. based on data from Ministry of Land, Infrastructure,
Transport and Tourism Land Price Survey 2010-2020.

2020

（4）
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: Prepared by Fukuoka Realty Co., Ltd. based on the Japan Council of Shopping Centers “Annual
Report of Sales Statistical Research.”

0

2015

2016

2017

2018

2019

0

Note: The figures are covered total floor spaces (more than 5,000m²) which owned by real estate
investment company and real estate development company in Fukuoka and Saga.
Source: Prepared by Fukuoka Realty Co., Ltd. based on data of CBRE.

Fukuoka REIT Corporation 202007

Introduction

To contribute to the revitalization of Fukuoka and Kyushu and attractive urban

J-REIT Characteristics

development, FRC selects and procures funds for investment by utilizing local
government and business networks as well as its information-gathering ability

J-REIT Mechanism① Enables efficient diversified investment
in real estate

and know-how.
We aim to maximize the profits of investors by providing them with stable② Relatively stable high yields

earnings over the medium- to long-term.

③ Corporate taxes highly advantageous due
to conduit status

In addition, we place the utmost emphasis on dialogue with stakeholders and④ Enables daily trading on stock exchanges

promote sustainable management that takes into account economic, social⑤ Full and ample information disclosureand environmental concerns by incorporating ESG issues into our investment
management process as a part of our business model.

Real estate properties

F

Investment corporation
Fund procurement(debt)

Borrowings/bonds

Asset warehousing company
Company entrusted withbusiness

Management ofassetsOwned real estate for
rent

Payments ofprincipal and interest

Financial institutions
Bond investors

Investment

CapitalDividends

Commissioned
remuneration
Entrustment of asset
management services

Real estate managementcompany

Main Management Resources (Inputs)

Investments

Rental income

Property management

Introduction

J-REIT Mechanism and Fukuoka REIT Corporationʼs Business Model

Investors

Commissioned
remuneration

Asset management company

Investment

Sponsor companies

Financial
Strategy

cial Strategy
inan

Total 31 properties

See p.22

Created Value (Outcomes)

See pp.12-13* As of August 31, 2020

Our Mission

Act Local
Think GlobaloprIntellectual capital

cu

re
m

en

t (fi

n an

I nf

ce)

or

ti o
ma

n

Residences 5 properties

08

Fukuoka REIT Corporation 2020

37,648 million yen
0.8×

Human resource capital• Number of IR interviews during the year In Japan 147, Abroad 40 (including
telephone conferences)• Track record of winning awards
IR Excellent Company Encouragement Award <2014> /Nikko Best IR Website Award <2018>

Social relationship capital

Sustainability Policy

Logistics 4 properties

See p.28

Environmental Issues

Social Issues

Organizational Issues

See p.30

See p.34

See p.37

Natural capital• Land in properties held in the Fukuoka and Kyushu area (57.3ha)• Energy, water, air, and other natural resources used in the operation of properties owned• Natural environment and biodiversity in the areas around properties owned• Unrealized gain
• P/NAVIntellectual capitaldiResponse to
ESG issues

Social relationship capital

5,307 million yen
5.3%

ec

Sales

• A varied skill set formed through human resource training• Experience and knowledge of IR activities based on long years of practical implementation• Gathering of information deeply rooted in local communities• Co-creative and trusting relationships with tenants• Cooperative framework with property management (PM) companies• Coordination with local society, local communities• Maintenance of good relationships of trust with sponsors

Valuation

Annual rate 6.7%
0.69%
3,250 yen
4.7%
JCR: AA- (stable), R&I: A+ (stable)• Number of qualification holders: Real estate brokers 26 /ARES Certified Masters 23 / Certified building administrators 5• Average paid leave acquisition rate (FY2019) 70.9%omResearchnd• Number of officers and employees 41• Number of qualification holders:
Real estate appraisers 2 / Attorney 1 /First-class registered architects 2 / MBA 1• Proportion of female employees 51.2%

Fu• Excellent human resources withspecialized skills• Support framework for flexible working
styles• Support system for career development

Office buildings 9 propertiesmu

Human capital• NOI• NOI yieldni c aManagement• TSR for past 10 years• Average interest rate paid
• Dividends• Dividend yield• Credit Ratings

Manufacturing capitalti o n (IR )Contribution to regional
revitalization and developmentof attractive communities

Retail 11 propertiessur• Total leasable area
591,021.51m2• Total acquisition price 201,959 million yen

See p.21

Managementlo

The finding of excellent properties thatcan generate stable cash flow over thelong term

Acquisition

See p.20

a g eme n t S t r a t e g y

Manufacturing capital

Financial capitalManagement
Strategy

Investment
Strategy

Ma n• Total liabilities
97,478 million yen• Net assets
101,525 million yen• Total assets
199,004 million yen• Total debt
82,400 million yen• Average remaining
duration to maturity
5.9 years
• LTV
41.4%

sc

Building of a solid financial base throughconservative control of LTV* As of August 31, 2020

tment Strategy
Inves

Financial capital• Implementation of COVID-19 tenant support measures (rent exemptions andpayment deferrals, hosting of a bento (box lunch) market, etc.)• Participation in local clean-up activities *284 times in total (as of October 15, 2020)• Human resource exchanges with sponsors (4 people dispatched tosponsors, 2 people accepted from sponsors)

Natural capital
Hotels 2 properties• Green building certification rate (total floor space basis) 79.8％• Reduction of electricity usage and water consumption at in properties owned

Fukuoka REIT Corporation 202009

Introduction

Introduction

History and Business Performance

Carefully selecting and investing in properties that can generate stable cash flow over the years, FRC is working tocontinuously expand the scale of its assets. In addition to retail and office buildings, we are diversifying investment types by
expanding the scope of investment into such properties as residences, hotels and logistics facilities.
■ Retail■ Office buildings■ Residences■ Logistics■ Hotels

Granfore Yakuin Minami

Number of properties
Tosu Logistics Center(Acquired properties)
Canal City Hakata
Canal City Business Center Building
Park Place Oita
Gofukumachi Business Center

32,00014,60015,700
11,200SunLive City Kokura

D-Wing Tower
Hotel FORZA Oita
Tenjin North Front Building

6,633

Tenjin Nishi-Dori Center Building

Sanix Hakata Building
4,400
Kominedai Community Mall
740
Acquisition Price(Millions of yen)

1,100

LOGICITY Minato Kashii
8,150
Marinoa City Fukuoka (Marina Side Building) 5,250
Park Place Oita (adjacent land)
590

1,250
2,800
1,530
2,800

2,600

Aqualia Kego
2,800
Aqualia Chihaya 1,280

Taihaku Street Business Center

Higashi Hie Business Center III
LOGICITY Wakamiya
Park Place Oita (Home Plaza Nafco)

Konoha Mall Hashimoto
10,000Higashi Hie Business Center II 4,230
Park Place Oita (adjacent land)
860
Park Place Oita (Sports Club NAS) 1,470
Aeon Hara Shopping Center (sold) (5,410)
Aqualia Kego (sold)(2,800)

7,000

Tissage Hotel Naha

3,290
1,700
990

（Number of properties）

2,835

200,000

40
Amex Akasakamon Tower
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC

LOGICITY Hisayama

2,060
5,300
2,400

Canal City Hakata・B

5,050

28,700

Aeon Hara Shopping Center
5,410
Kominedai Community Mall (Sold) (740)Hanahata SC
City House Keyaki Dori
Kurume Higashi Kushiwara SC
150,000

1,130
1,111
2,500

Kʼs Denki Kagoshima

31

30

3,550

29

Higashi Hie Business Center

5,900

27

29

28

27

27

29

25

26

26

25

24
23

23

20

100,000

20

19
17

17
16
15

14

16

16

16

15

11

11

50,000

10
8
7
5
4

0

Listed

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

19th

20th

21st

22nd

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Jun. 2005

Aug. 2005

Feb. 2006

Aug. 2006

Feb. 2007

Aug. 2007

Feb. 2008

Aug. 2008

Feb. 2009

Aug. 2009

Feb. 2010

Aug. 2010

Feb. 2011

Aug. 2011

Feb. 2012

Aug. 2012

Feb. 2013

Aug. 2013

Feb. 2014

Aug. 2014

Feb. 2015

Aug. 2015

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

Fukuoka REIT
Corporation andFukuoka Realty Co.,
Ltd. events• 1st Public Offering (Sept.)
Number of investment units: 15,000 (before 5:1 unit split)
Offer price (per unit): 766,360 yen (before 5:1 unit split)
Total issue price: 11,096 million yen• Canal City Hakata South Building renovation• 2 nd Public Offering (Mar.)
Number of investment units: 16,000 (before 5:1 unit split)
Offer price (per unit): 576,083 yen (before 5:1 unit split)
Total issue price: 8,913 million yen• Facebook launched (Mar.)• CSR study groups begin (Apr.)• Volunteer support for disaster-affected areas (July)• IR Kyushu subcommittee established (Nov.)• F ukuoka Urban Growth Strategy Project established (Apr.)•C anal City Hakata communal area environment renewal (treeplanting, additional benches, etc.)10

Fukuoka REIT Corporation 2020

• F irst course donated to Fukuoka
University held (Sept.)• 3rd Public Offering (Mar.)
Number of investment units: 14,950 (before 5:1 unit split)
Offer price (per unit): 710,580 yen (before 5:1 unit split)
Total issue price: 10,263 million yen• 4th Public Offering (Apr.)
Number of investment units: 57,000
Offer price (per unit): 212,257 yen
Total issue price: 11,701 million yen• Second issue of investment
corporation bonds (July)• 15th anniversary of

FRCʼs listing• 9th General Meeting of• First issue of investment corporation bonds (Dec.)• 5:1 investment unit split implemented (Mar.)• Integrated Report issued

0• Canal City Hakata 20th anniversary• Japan’s largest 3D projection mapping and new Aqua

• 5th Public Offering (Mar.)
Number of investment units: 49,000
Offer price (per unit): 164,414 yen
Total issue price: 7,795 million yen

Unitholders• f-JOY app released for use

at four retail facilities of the
Fukuoka Jisho Group

Panorama fountain installed at Canal City Hakata• Third issue of investment corporation bonds (July)• IR briefing held for Platinum WOMAN individual investors (Aug.)• Incorporated into the FTSE EPRA/NAREIT Global Real Estate Index (Sept.)• Receives the IR Excellent Company Encouragement Award (Dec.)• Fukuoka International House opens (Apr.)• Second course donated to Fukuoka University held (Aug.)• Fukuoka Realty Co., Ltd. 10th anniversary (Dec.)• 10th anniversary of FRC’s listing• T ax exemption procedure counter and free Wi-Fi set up for inboundcustomers at Canal City Hakata• Canal City Hakata inbound continues to perform well, sets new visitor records (17.02 million in fiscal 2017)• Formulation of sustainability policy (Jan.)• Park Place Oita 15th anniversary renovation

Fukuoka REIT Corporation 2020

11

FRC carefully selects and invests in properties with the potential to generate stable cash flow over the long term. To diversify
risk within a given area, we own properties with widely divergent uses, with a focus in particular on retail and office buildings.

Introduction

Introduction

Overview of Properties Owned■ Other properties (Hotels, Residences, Logistics): 11
21

22

23

24

25

26

Amex Akasakamon Tower (Residences)
1/9/2006/2,060

City House Keyaki Dori (Residences)
20/12/2007/1,111

Aqualia Chihaya (Residences)
1/3/2012/1,280

D-Wing Tower (Residences)
1/3/2013/2,800

Granfore Yakuin Minami (Residences)
4/11/2014/1,100

Hotel FORZA Oita (Hotels)
1/3/2013/1,530

27

28

29

30

31

Tissage Hotel Naha (Hotels)
7/12/2018/2,835

Tosu Logistics Center (Logistics facility)
28/3/2014/1,250

LOGICITY Minato Kashii (Logistics facility)
27/3/2015/8,150

LOGICITY Hisayama (Logistics facility)
1/6/2017/5,050

LOGICITY Wakamiya (Logistics facility)
30/6/2020/1,700

Asset Ratio (As of August 31, 2020)■ Investment Target Areas (Acquisition price basis)■ Investment Type (Acquisition price basis)
RetailOffice buildings

OthersFukuoka metropolitan area

Other Kyushu area

58.0%

27.7%

14.3%

76.6%

23.4%

Number of properties owned:

31

Total acquisition price:

201,959 million yen* Acquisition price data is rounded
down to the nearest million yen.

Property name / acquisition date / acquisition price (million yen)

■ Retail: 11
1

2

3

4

5

Sta.

6
Sta.

Sta.

Canal City Hakata
9/11/2004/32,000

Canal City Hakata・B
2/3/2011/28,700

Park Place Oita
9/11/2004/19,610

SunLiveCity Kokura
1/7/2005/6,633

Konoha Mall Hashimoto
1/3/2018/10,000

7

8

9

10

11

Square Mall Kagoshima Usuki
28/9/2006/5,300

Across Kyushu

Sta.

FUKUOKA
PayPay DOME

Sta.

Sta.

Sta.
Sta.

Sta.

Sta.

Sta.

BEST DENKI
Stadium

Sta.
Sta.

Sta.
Sta.
Sta.

Kumamoto Intercommunity SC
30/11/2006/2,400

Hanahata SC
3/9/2007/1,130

Kurume Higashi Kushiwara SC
1/2/2008/2,500

Kʼs Denki Kagoshima
27/3/2008/3,550

Sta.

Marinoa City Fukuoka (Marina Side Building)
1/5/2015/5,250
Sta.

Fukuoka City

■ Office buildings: 9
12

13

14

15

16

17

■ Trends in Appraisal Value
Period-end book value (note)

Unrealized gain = (Period-end appraisal value – Period-end book value (note))millions of yen
250,000
Canal City Business Center Building
9/11/2004/14,600
18

Gofukumachi Business Center
9/11/2004/11,200
19

Sanix Hakata Building
30/9/2005/4,400
20

Taihaku Street Business Center
16/3/2006/7,000

Higashi Hie Business Center13/3/2009/5,900

Tenjin Nishi-Dori Center Building
1/2/2013/2,600

16,777 19,830 24,255 21,152 22,878 25,541

200,000
150,000
100,000

18,742

20,7996,498

21,07012,465

9,300

8,953

9,394

5,543

6,006

6,989 146,621 146,246 150,603

13,955120,299 119,486 118,686 118,411
1,893 7,894
112,001 115,560 115,195
103,025 107,338（411）
86,777 93,556
81,771

6,522

8,243

9,138

11,097 14,434

152,422 158,851 158,007 159,128 159,246

172,406 171,555 168,902

164,527 169,031 168,138

36,923 37,648
29,467 31,804 34,087
182,352 184,715 183,532 182,336 187,891

50,0000Tenjin North Front Building
28/3/2013/2,800

12

Fukuoka REIT Corporation 2020

Higashi Hie Business Center II
1/3/2018/4,230

Higashi Hie Business Center III
29/5/2020/3,290

2nd

3rd

4th

5th

6th

7th

8th

9th

10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd

Aug.
2005

Feb.
2006

Aug.
2006

Feb.
2007

Aug.
2007

Feb.
2008

Aug.
2008

Feb.
2009

Aug.
2009

Feb.
2010

Aug.
2010

Feb.
2011

Aug.
2011

Feb.
2012

Aug.
2012

Feb.
2013

Aug.
2013

Feb.
2014

Aug.
2014

Feb.
2015

Aug.
2015

Feb.
2016

Aug.
2016

Feb.
2017

Aug.
2017

Feb.
2018

Aug.
2018

Feb.
2019

Aug.
2019

Feb.
2020

Aug.
2020

(Note) Period-end book value does not include trust construction in progress. Renovation work at LOGICITY Wakamiya had not been completed as of the end of the 32nd fiscal period. Accordingly, the estimated renovation
amount has been added to the period-end book value.

Fukuoka REIT Corporation 202013

Financial Highlights

Non-Financial Highlights

Total Operating Revenues(Millions of yen)

9,730 (Note 1)

10,000
8,343

8,234

Introduction

Introduction

Financial/Non-Financial Highlights (5-Year Graph)

9,178

8,122

9,242

Profit
9,231

9,162

8,000

Percentage of Female Employees (Note 4)(Millions of yen)（People）

(%)

5,000

５0

60

8,518

8,194

Number Officers and Employees (Note 3)

4,198 (Note 1)

41

４０

4,000

6,000

3,000

4,000

2,000

2,000

1,000

39

2,669

2,556

2,623

2,860

2,934

2,939

2,899

2,586

40

38

38

41

39

42

41

48.7

41

45.0

43.9

44.7

44.7

46.2

46.3

46.3

47.6

51.2

45

30
30

0

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020020
938 (Note 1)

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

NOI

5,237

5,493
5,010

4,998

5,591

5,633

5,596

5,079

5,307

4,500

3,574

3,479

3,398

3,422

3,512

3,593

3,687

3,693

3,642

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

0

26th

27th

28th

29th

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019(Meetings)

7.7
6.5

6.9

7.11

7.10

8.10

8.6

30th

31st

32nd

Aug. 2019 Feb. 2020 Aug. 2020

Number of IR Meetings in Japan and Abroad (Note 6)
200

6.2

1,000

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

0

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

8.10

169

160

6.11

120

4

80

2

40

149

148

147
126

6

0

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

Power Consumption (Note 7)

LTV

0

106

133

129
116

(Millions of yen)

(%)

（Mwh）

（m3）

50

80,000600,000

1,471

1,470

1,455

1,474

1,500

1,602

1,622

1,651

1,660

1,686

39.9

40.1

40

38.1

39.3

38.9

39.1

39.7

39.7

39.8

68,11441.4

66,584533,920519,60960,000450,000

40,000300,000

30

20
500

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

Fukuoka REIT Corporation 20200

150,000

20,000

10

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

0

28th・29th

March 2018February 2019

30th・31st

March 2019February 2020

54

23rd

24th

25th

26th

27th

28th

29th

30th

31st

32nd

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Aug. 2019Feb. 2020

Aug. 2020

Water Consumption (Note 7)

2,000

1,000

14

25th
Feb. 2017(Years/Months)

8

Depreciation and Amortization Expenses

0

24thAug. 2016

2,000

1,500

1,500

23rd
Feb. 2016

10
3,250

3,000

3,000

0

4,000

23rd
Feb. 2016

Average Number of Years of Employment (Note 5)

(Yen)
5,164

0

Dividend per Unit (Note 2)(Millions of yen)

6,000

15

10

28th・29th

March 2018February 2019

30th・31st

March 2019February 2020

0(Note 1) Due to differences in accounting and tax treatment, the gain and loss on sale of AEON Hara
Shopping Center and Aqualia Kego transferred in the 25th fiscal period were handled as follows:(1) The amount of impairment loss for AEON Hara Shopping Center recorded in the profit and loss
statement for the 24th fiscal period was recorded as reserve for temporary difference adjustments.
(2) The gain on sale of Aqualia Kego was recorded in the income statement for the 25th fiscal period.
(3) Reversal of reserve for temporary difference adjustment was recorded in the statement on cash
dividend for the 25th fiscal period.
(Note 2) Dividends per unit for the 24th and 25th periods were calculated as follows:
Dividend for the 24th term: Profit + Reserve for temporary difference adjustments – Surplus brought forward
Dividend for the 25th term: Profit - Reversal of the reserve for temporary difference adjustments – Surplus brought forward(Note 3) The number of officers and employees indicates the total number of directors and auditors,
permanent employees, contract employees, temporary employees, secondees, etc. who areemployed on a full-time basis at Fukuoka Realty Co., Ltd.
(Note 4) The percentage of female employees are calculated as the ratio of women to the number of
directors, auditors and employees(Note 5) Average number of years of employment is calculated as the average service years of permanentand contract employees of Fukuoka Realty Co., Ltd.
(Note 6) The number of IR meetings in Japan and abroad shows the total number of IR meetings withinstitutional investors and analysts through interviews and telephone conferences.
(Note 7) Total value of five properties: Canal City Hakata, Canal City Hakata•B, Canal City Business Center
Building, Park Place Oita, and Konoha Mall Hashimoto

Fukuoka REIT Corporation 202015