Provisional translation only
October 12, 2010

EARNINGS BRIEFING
FOR THE PERIOD ENDED AUGUST 2010
Real estate investment trust: Fukuoka REIT Corporation (FRC)
Code number: 8968
Representative: Masayasu Saki CEO &Representative
Director

URL: http://www.fukuoka-reit.jp/eng/
Stock listings: Tokyo Stock Exchange, andFukuoka Stock Exchange

Asset manager: Fukuoka Realty Co., Ltd.
Representative: Masayasu Saki CEO & Representative Director
Contact: Yoichi Nishio
Managing Director, and Head of Finance Department
Phone: +81-92-272-3900
Expected date for submitting securities report:
November 24, 2010
Expected commencement date of dividend payments: November 18, 2010
(Figures rounded down to nearest million yen.)

1. PERFORMANCE AND SITUATION OF ASSETS FOR THE PERIOD ENDED AUGUST 2010
(March 1, 2010 to August 31, 2010)(1) Performance
Operating revenues
Millions of%yen
Period ended
August 2010
Period ended
February 2010

Operating income
Millions of%yen(% shows percentage change from previous period.)
Ordinary income
Net income
Millions of%Millions of
%
yen
yen

5,663

0.4

2,412

0.2

1,797

(3.5)

1,796

(3.5)

5,640

0.3

2,408

1.5

1,863

0.1

1,862

0.1

Net income
per unit
Period ended
August 2010
Period ended
February 2010

Ratio ofordinary income to total
assetsReturn on
net assets

Ratio ofordinary income tooperating revenues

16,782 yen

2.9%

1.4%

31.7%

17,397 yen

3.0%

1.4%

33.0%

(2) Dividends
Dividend
per unit(excl. dividendin excess ofearnings)
Period ended
August 2010
Period ended
February 2010

Total
dividend

Dividendin excess ofearnings
per unit

Total
dividendin excess ofearnings

Payoutratio

Ratio ofdividend to
net assets

16,783 yen

1,796 million yen

0 yen

0 million yen

100.0%

2.9%

17,397 yen

1,862 million yen

0 yen

0 million yen

100.0%

3.0%(3) Financial condition
Total assets
Period ended
August 2010
Period ended
February 2010

132,349
million yen
130,705
million yen

Net assets

Ratio ofnet assets to total assets

Net assets per unit

62,061 million yen

46.9%

579,738 yen

62,126 million yen

47.5%

580,352 yen(4) Cash flows condition
Cash flows fromoperatingactivities
Period ended
August 2010
Period ended
February 2010

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of
cash and cash equivalents at
end of period

2,394 million yen(3,398) million yen

56 million yen

5,928 million yen

3,150 million yen(233) million yen(1,928) million yen

6,877 million yen

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

2. FORECAST OF PERFORMANCE FOR THE PERIOD ENDING FEBRUARY 2011
(September 1, 2010 to February 28, 2011) AND THE PERIOD ENDING AUGUST 2011
(March 1, 2011 to August 31, 2011)

Operatingrevenues
Millionsof yenOperatingincome%Millionsof yenOrdinary
income%Millionsof yen%(% shows percentage change from previous period.)
Dividend
Net
Dividend
per unit
incomein excess of(excl. dividend
earnings
Millions
in excess of%
per unitof yenearnings)

Periodending
5,634
(0.5)
2,290
(5.1)
1,724
(4.1)
1,723
(4.1)
February
2011
Periodending
5,640
0.1
2,368
3.4
1,778
3.1
1,777
3.1
August2011(Reference)Forecast net income per unit: Period ending February 2011 16,100 yen
Period ending August 2011 16,600 yen

16,100 yen

0 yen

16,600 yen

0 yen

3. Other(1) Changes in accounting policies(i) Changes due to revisions of accounting standards, etc.:(ii) Changes other than above (i):No
No(2) Number of investment units issued and outstanding(i) Number of investment units issued and outstanding at end of period (including treasury investment units):
107,050 units at end of August 2010
107,050 units at end of February 2010(ii) Treasury investment units at end of period:— units at end of August 2010
— units at end of February 2010
(Note) Regarding the number of investment units, a basis for calculating net income per unit, please refer to “Perunit information,” on page13.

* On the adequate use of performance forecasts and other items warranting special mention
Forecast figures are calculated based on information available on the date of release of the forecast andcontain uncertain factors to a large extent. Actual operating revenues, operating income, ordinary
income, net income, and dividend per unit may differ due to changes in the business environment. The
forecast should not be construed as a guarantee of actual dividend. Concerning details of thepreconditions for the above forecast figures please refer to “2. Portfolio Management Policy andManagement Situation, (2) Management situation – Preconditions for the performance forecast for theperiod ending February 2011 (September 1, 2010 to February 28, 2011) and the period ending August
2011 (March 1, 2011 to August 31, 2011),” on page 6.

2

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

Concerning the contents hereinafter, items that FRC judges that “can be omitted from the disclosure from the standpointof importance” are not shown in conformity with “Guidance for Preparation of Earnings Briefing for Listed Real Estate
Investment Trusts” (August 2009) released by Tokyo Stock Exchange, Inc.

1. Investment Corporation-Related Organizations
The disclosure is omitted, since there are no significant changes from the “Structure of the investment corporation”
disclosed by the latest securities report (submitted on May 26, 2010).

2. Portfolio Management Policy and Management Situation(1) Portfolio management policy
The disclosure is omitted, since there are no significant changes from “Investment policy,” “Investment target” and“Dividend policy” disclosed by the latest securities report (submitted on May 26, 2010).
(2) Management situation(i) Summary of the current fiscal period(a) Brief history of the investment corporation
FRC was established on July 2, 2004 based on the “Investment Trust and Investment Corporation Law ofJapan” (Law No. 198 in 1951 including later revisions, hereinafter the “Investment Trust Law”) and listedon the Tokyo Stock Exchange and Fukuoka Stock Exchange on June 21, 2005 as the nation’s first realestate investment trust specializing in regional properties (code number: 8968). FRC invests in real estatethroughout all of Kyushu (including Okinawa Prefecture), with a central focus on Fukuoka City, and in
Yamaguchi Prefecture 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 ascommercial facilities 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”). FRC
now has a total of 16 properties (excluding anonymous partnership equity interests)—nine commercial
facilities, five office buildings, and two residential properties—in its portfolio as of the end of the current
fiscal period (August 31, 2010).
(b) Investment environment and portfolio performance
In the twelfth fiscal period, the Japanese economy entered a phase of slow recovery in line with anincrease in exports and a pickup in production due to improved overseas economies. However, heavily
dependent on foreign demand and governmental policies, Japan is far from realizing an autonomous
recovery. Although a recovery was also observed in production, trade and capital investment in Kyushu –the prime investment area for FRC – the region’s future prospects remained opaque. In terms of theemployment environment, this was exemplified by the area’s ratio of job openings to applicants remaining
lower than the national average. As for consumption trends in the area, sales of large retail storescontinued to decrease year-on-year.
According to the land price trends indicated by the 2010 Land Price Survey by Prefectural Governments,
land prices declined for 98.5% of sites in Japan. In Fukuoka City, a core investment target area for FRC,
commercial land prices decreased by 6.2% and residential land prices decreased by 2.3% compared to theprevious year, for the second consecutive year of decrease for both commercial and residential land,
although the rate of decrease decelerated from the last survey.
Under such circumstances, FRC conducted strict screening of investment properties based on its
investment policy. Consequently, FRC purchased additional senior anonymous partnership equity interests(acquisition price: 3,000 million yen) in CCH Bridge Y.K., a special purpose company which owns andmanages a section of Canal City Hakata excluding the section FRC already holds (hereafter referred to as
Canal City Hakata SPC Holding Section). This allows FRC to expect dividends in accordance to its
increased preferred investment share in the SPC. Furthermore, FRC and the SPC have a contract to reserveacquisition of the Canal City Hakata SPC Holding Section. FRC considers that the additional investment
will secure ongoing integrated management of Canal City Hakata, which should lead to maintaining andenhancing the attractiveness of the property as a whole including the portion FRC owns, and that theincreased stability of the SPC will allow it to form a flexible exit strategy.
As for existing assets, FRC remained dedicated to enhancing the competitiveness and ability to draw
customers of major commercial facilities such as Canal City Hakata and focused on maintaining andraising the occupancy rate of owned properties. As a result, the occupancy rate of all properties FRC owns
stood at 99.0% on average as of the end of the current fiscal period.
3

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

When analyzing FRC’s portfolio (on an acquisition value basis) by geographic location, properties in the
Fukuoka urban area occupy 70.2% of its portfolio; when analyzing by property type, commercial facilities,
office buildings, and residential properties account for 61.7%, 35.7% and 2.6%, respectively.
(c) Summary of fundraising
In the current fiscal period, FRC procured 2,000 million yen in loans under committed line of credit forpurchasing additional senior anonymous partnership equity interests in Canal City Hakata SPC Holding
Section. Moreover, FRC refinanced a part (4,600 million yen) of its debt under committed line of credit
into long-term debt from the viewpoint of diversification of debt maturities and prolonged residual
maturity of borrowings. For the 10,000 million yen in syndicated loans that matured in July 2010, FRC
conducted refinance of 10,300 million yen with a loan period of 4 years, along with borrowing 300 million
yen in short-term debt under committed line of credit. On top of these, an interest rate swap agreement
was concluded in order to hedge risks of rising interest rates in the future. As a result, the balance of debt
outstanding at the end of the current fiscal period totaled 59,150 million yen, with the loan-to-value ratio
at 44.7%. To reduce refinancing risks, FRC will continue to disperse the debt repayment date and increase
the average length of time until debt maturity.
(d) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 5,663 million yen and operating
income after excluding operating expenses such as real estate rent expenses and asset management fees
totaled 2,412 million yen. Ordinary income was 1,797 million yen and net income was 1,796 million yen.
Management decided to make a dividend of 16,783 yen per investment unit to meet the requirements ofspecial tax measures for an investment corporation (as stipulated in Article 67-15 of the Special Taxation
Measures Law of Japan [Law No. 26 in 1957 including later revisions, hereinafter the “Special Taxation
Measures Law”]). Under this law, an investment corporation is allowed to deduct the maximum amount ofdividends paid to investors from its taxable income.
(ii) Forecast for the next fiscal period(a) Portfolio management policy
FRC will increase management and rent capabilities by cooperating with property management companies
including sponsor companies even in a worsening consumer spending environment and maintain the stable
operation of the properties by making the most use of their advantages.
FRC will invest 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 growth potential markets.” By geographic location, of all of Kyushu and Yamaguchi Prefecture,
FRC invests 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 or properties where FRC cangenerate investment merits from community-oriented viewpoints. FRC will acquire high quality properties
with adequate use of its advantages, such as information gathering ability in the areas, good knowledge ofregional properties and close relations with the local business community and governments, so thatinvestors can continue to invest in FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraisingand try to maintain a solid financial structure.
(b) Performance forecast for the next fiscal period
FRC aims to achieve the following performance goals for the period ending February 2011 (September 1,
2010 to February 28, 2011) and the period ending August 2011 (March 1, 2011 to August 31, 2011).
Concerning preconditions for the forecast, please refer to “Preconditions for the performance forecast forthe period ending February 2011 (September 1, 2010 to February 28, 2011) and the period ending August
2011 (March 1, 2011 to August 31, 2011),” on page 6.
Period ending February 2011
Operating revenues
Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

5,634 million yen
1,724 million yen
1,723 million yen
16,100 yen
0 yen
4Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

Period ending August 2011
Operating revenues
Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

5,640 million yen
1,778 million yen
1,777 million yen
16,600 yen
0 yen(Note) The above forecast figures are calculated based on certain preconditions. The forecast should not
be construed as a guarantee of actual performance since actual operating revenues, ordinary
income, net income, dividend per unit and dividend in excess of earnings per unit may differ due
to changes in the business environment.
(c) Significant facts after the closing of accounts
No relevant items(3) Investment risks
The disclosure is omitted, since there are no significant changes from the “Investment risks” disclosed in the latest
securities report (submitted on May 26, 2010).

5

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

Preconditions for the performance forecast for the period ending February 2011 (September 1, 2010 to February 28,2011) and for the period ending August 2011 (March 1, 2011 to August 31, 2011)
Item
Calculation period
Assets undermanagement

Preconditions
13th fiscal period: from September 1, 2010 to February 28, 2011 (181 days)
14th fiscal period: from March 1, 2011 to August 31, 2011 (184 days)
 It is assumed that there will be the 16 properties and senior anonymous partnership equity
interests FRC owns as of August 31, 2010.
 In practice, they may fluctuate due to changes in assets under management.

Number of It is assumed that there will be no issuance of new investment units until August 31, 2011.
investment units
issued and outstanding The balance of interest-bearing debt outstanding on August 31, 2011 is expected to total
59,000 million yen, a decrease of 150 million yen from the end of the current period(August 31, 2010). The loan-to-value ratio (interest-bearing debt  total assets  100) is
expected to stand at around 44.8% (as of August 31, 2010, the loan-to-value ratio stands at
44.7%).
Interest-bearing debt
 In the period ending February 2011, it is assumed that FRC will refinance short-tem debt
and refinancingof 300 million yen that will mature in September 2010 and long-term debt of 1,500 million
yen that will become due for repayment in December 2010 into long-term debt.
 In the period ending August 2011, it is assumed that FRC will refinance long-term debt of
7,000 million yen that will become due for repayment in July 2011 into long-term debt.
 Of real estate rent revenues, revenues from properties FRC has already acquired are
calculated based on tenancy agreements that are valid as of today by taking into accountthe competitiveness of the properties and the market environment.
Of real estate rent revenues, revenues from percentage lease contracts are calculated basedon past results by taking into account sales fluctuation factors of the relevant tenants.
Operating revenues
 Concerning real estate rent revenues, tenant vacancies are taken into account to a certain
extent. It is assumed that there will be no rent arrears or non-payments by tenants.
 Concerning senior anonymous partnership equity interests, anonymous partnership
distribution is calculated based on the conditions stipulated in each anonymous partnershipcontract.
 When acquiring assets under management, the fixed property tax and city planning tax forthe assets will be proportionally calculated according to the holding period and adjustedwith the former owner. FRC will not write them off since it will include the relevant
adjusted amount in the acquisition cost.
 FRC writes off estimated repair costs for buildings for the calculation periods, the periods
ending February 2011 and August 2011. Actual repair costs may differ significantly fromthe estimated amounts since there is the possibility that repair costs are incurred urgently
Operating expenses
due to damages to buildings caused by unforeseeable factors, repair costs generally differ
largely from period to period, and repair costs are not regularly incurred.
 Concerning outsourcing expenses, FRC anticipates 978 million yen for the period ending
February 2011 and 994 million yen for the period ending August 2011.
 Concerning taxes and other public charges, FRC anticipates 410 million yen for the period
ending February 2011 and 410 million yen for the period ending August 2011.
 Concerning depreciation and amortization expenses, FRC anticipates 965 million yen forthe period ending February 2011 and 983 million yen for the period ending August 2011.
 Concerning interest payment and expenses related to financing, FRC anticipates 568
Non-operating
million yen for the period ending February 2011 and 592 million yen for the period ending
expenses
August 2011.
 Dividend (dividend per unit) is calculated based on the dividend policy stipulated in
FRC’s Articles of Incorporation.
Dividend per unit
 Dividend per unit may fluctuate due to fluctuations in rent revenues caused by changes in
assets under management and tenants or various factors including unexpected occurrencesof repair.
Dividend in excess
 Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned atof earnings per unit
the moment.
 It is assumed that there will be no significant revisions to laws and regulations, the tax
system, and accounting standards that may influence the forecast figures.
Other It is also assumed that there will be no significant unexpected changes in general
economic conditions and the real estate market.

6

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

3. Financial Statements(1) Balance sheets(thousands of yen)Account

11th fiscal period(as of February 28, 2010)

12th fiscal period(as of August 31, 2010)

AssetsCurrent assets
Cash and deposits

2,910,719

1,777,071

Cash and deposits in trust

3,966,739

4,151,899

Operating account receivable

367,673525,677

Prepaid expenses

138,275

243,283

Deferred tax assets

20

19

31,333

13,724

7,414,761

6,711,676

OthersTotal current assets
Noncurrent assets
Property, plant and equipment
Buildings in trust, netAggregate of accumulated depreciation
Structures in trust, netAggregate of accumulated depreciation
Machinery and equipment in trust, netAggregate of accumulated depreciation
Tools and fixtures in trust, netAggregate of accumulated depreciation

54,741,293(7,142,735)

54,837,442
47,598,557

831,659(181,303)

650,355

Lands in trust
Total property, plant and equipment(208,096)

632,750

342,282
250,200

736,664(325,447)

46,832,360

840,847

342,282(92,081)(8,005,082)(102,218)

240,063784,053
411,217(378,562)

405,490

68,810,414

68,810,414

117,720,747

116,921,080

1,765,318

1,765,318

1,765,318

1,765,318

3,421,633

6,437,933

Intangible assets
Leasehold right in trust
Total intangible assets
Investment and other assets
Investments securities
Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

100,000

100,000

Long-term prepaid expense

273,205

403,003

Total investment and other assets

3,804,839

6,950,937

123,290,904

125,637,336

130,705,666

132,349,012

Total noncurrent assets
Total assets

7

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

(thousands of yen)Account

11th fiscal period(as of February 28, 2010)

12th fiscal period(as of August 31, 2010)

Operating accounts payable

431,609247,437

Short-term debt

3,200,000

300,000

Current maturities of long-term debt

11,650,000

8,650,000

Account payable-other

22,571

69,074

Accrued expenses

267,770272,093

Liabilities
Current liabilities

Income taxes payable

701

730

Accrued consumption taxes

168,865

42,880

Advances received

653,952

669,251

Deposits received

535,740775,693

Total current liabilities

16,931,211

11,027,162

42,375,000

50,200,000

331,575

331,455

8,941,128

8,729,372

51,647,703

59,260,827

68,578,914

70,287,989

60,264,380

60,264,380

1,862,371

1,796,642

Total surplus

1,862,371

1,796,642

Total Net Assets

62,126,751

62,061,022

Total net assets

62,126,751

62,061,022

Total liabilities and net assets

130,705,666

132,349,012

Noncurrent liabilities
Long-term loan payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits received intrust
Total noncurrent liabilities
Total liabilities
Net assets
Net Assets
Shareholders’ capital
Surplus
Unappropriated surplus

8

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010(2) Statements of income(thousands of yen)Account

11th fiscal period(September 1, 2009 to
February 28, 2010)

12th fiscal period(March 1, 2010 toAugust 31, 2010)

1. Operating revenues
Rent revenue- real estate

5,318,986

5,282,359

Other rental revenue-real-estate

185,666

172,938

Anonymous partnership distribution

136,000

5,640,652

208,000

5,663,297

2. Operating expenses
Expenses related to rent business

2,761,070

2,771,269

Asset management fees

345,484

349,892

Asset custody fees

11,354

11,530Administrative service fees

38,37238,939Director’s compensations

9,600

9,600

Other operating expenses

66,437

Operating income

3,232,319

69,282

2,408,333

3,250,514
2,412,783

3. Non-operating revenues
Interest received

1,673

Other

2,813

999
4,487

340

1,340

4. Non-operating expenses
Interest payment

472,636

481,861

Financing related expenses

76,70489,278—

Other
Ordinary income

549,341

45,271

1,863,479

Net income before tax

1,797,712

1,863,479

Income taxes-current

1,109

Income taxes-deferred(1)

Net income

616,411

1,797,712
1,092

1,107

0

1,092

1,862,371

1,796,619

Retained earnings brought forward

0

22

Unappropriated retained earnings

1,862,371

1,796,642

9

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010(3) Statement of changes in Net Assets
11th fiscal period (September 1, 2009 to February 28, 2010)(thousands of yen)
Net Assets
Item

Balance as of August 31, 2009

Shareholders’capitalRetained earnings
Unappropriatedretained earnings

Total
Net Assets

Total
net assets

60,246,380

1,860,208

62,124,588

62,124,588

Dividend of retained earnings—(1,860,207)(1,860,207)(1,860,207)

Net income—

1,862,371

1,862,371

1,862,371

—

2,163

2,163

2,163

60,264,380

1,862,371

62,126,751

62,126,751

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of February 28, 2010

12th fiscal period (March 1, 2010 to August 31, 2010)(thousands of yen)
Net Assets
Item

Balance as of February 28, 2010

Shareholders’capitalRetained earnings
Unappropriatedretained earnings

Total
Net Assets

Total
net assets

60,264,380

1,862,371

62,126,751

62,126,751

Dividend of retained earnings—(1,862,348)(1,862,348)(1,862,348)

Net income—

1,796,619

1,796,619

1,796,619—(65,729)(65,729)(65,729)

60,264,380

1,796,642

62,061,022

62,061,022

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of August 31, 201010

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

(4) Dividend statement
11th fiscal period
Account(September 1, 2009 to
February 28, 2010)

12th fiscal period(March 1, 2010 to August 31, 2010)

I. Unappropriated retained earnings

1,862,371 thousand yen

1,796,642 thousand yen

II. Total

1,862,348 thousand yen

1,796,620 thousand yen(17,397 yen)

(16,783 yen)

22 thousand yen

22 thousand yen(Dividend per investment unit)

III. Retained earnings brought forward

The amount of dividends shall be
The amount of dividends shall bedecided in accordance with thedecided in accordance with thedividend policy stipulated in Article dividend policy stipulated in Article
38-1-1 of FRC’s Articles of38-1-1 of FRC’s Articles ofIncorporation and must exceed 90% Incorporation and must exceed 90%
of FRC’s distributable profits asof FRC’s distributable profits as
stipulated in Article 67-15 of the
stipulated in Article 67-15 of theSpecial Taxation Measures Law ofSpecial Taxation Measures Law ofJapan. Following the above policy,
Japan. Following the above policy,
FRC shall decide to distribute
FRC shall decide to distribute
1,796,620 thousand yen, which is
1,862,348 thousand yen, which isalmost the entire amount ofalmost the entire amount of
unappropriated retained earnings, as unappropriated retained earnings, asearnings dividends. Moreover,earnings dividends. Moreover,dividend in excess of earnings as
dividend in excess of earnings as
stipulated in Article 38-2 of FRC’s
stipulated in Article 38-2 of FRC’s
Articles of Incorporation will not be Articles of Incorporation will not beprovided.
provided.
(Note) Concerning amounts other than dividend per investment unit, fractions of 1,000 yen are omitted.
Method for calculating dividends

11

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

(5) Cash flows statements(thousands of yen)
11th fiscal period(September 1, 2009 to
February 28, 2010)

Account

12th fiscal period(March 1, 2010 toAugust 31, 2010)

I. Net cash provided by (used in) operating activities
Net income before taxes
Depreciation expenses
Interest received
Interest payment
Decrease (increase) in operating account receivables
Decrease (increase) in consumption taxed refund receivable

1,863,479
954,958(1,673)472,636
50,709151,714

Increase (decrease) in accrued consumption taxes
Increase (decrease) in operating account payable
Increase (decrease) in account payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advance received
Increase (decrease) in deposits expenses
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest received
Interest payment
Income tax paid
Income tax refund
Net cash provided by (used in)operating activities

168,865
120,360(3,359)1,645(18,587)(240,825)
62,66839,715210
3,622,518
1,673(472,829)(28,168)
27,326
3,150,519

II. Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust
Proceeds from tenant leasehold and security deposits(100,061)
90

Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Repayment of tenant leasehold and security deposits in trust
Payments for purchase of investment securities
Net cash provided by (used in) investment activities—
77,511(211,422)—(233,882)(170,692)—(120)
31,081(242,837)(3,016,300)(3,398,867)

III. Net cash provided by (used in) financing activities
Increase in short-term debt payable
Decrease in short-term debt payable
Proceeds from long-term debt payable
Repayment of long-term debt payable
Dividends paid
Net cash provided by (used in) financing activities

19,200,000(19,800,000)
600,000(75,000)(1,853,388)(1,928,388)

15,000,000(17,900,000)
14,900,000(10,075,000)(1,868,953)
56,046

IV. Net increase (decrease) in cash and cash deposits

988,248(948,487)

V. Balance of cash and cash deposits at beginning of period

5,889,210

6,877,458

VI. Balance of cash and cash deposits at end of period

6,877,458

5,928,970

1,797,712
953,000(999)
481,861(158,004)—(125,985)(167,537)
53,420(244)
15,299239,952(105,007)(129,798)
4,331
2,858,001
999(477,293)(14,500)
27,1262,394,333(6) Notes on the going concern assumption
No relevant items(7) Significant accounting policies
The disclosure is omitted, since there are no significant changes from contents disclosed by the latest securities
report (submitted on May 26, 2010).
(8) Notes to financial statements
12

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

FRC omits the disclosure of notes to balance sheets, statements of income, statements of changes in Net Assets, andcash flows statements, as well as notes on lease transactions, financial instruments, securities, derivativetransactions, related-party transactions, tax-effect accounting, retirement benefits, and rental properties, since itdoes not find substantial need for disclosure in the earnings briefing.
(Per unit information)
11th fiscal period(September 1, 2009 to February 28, 2010)
Net assets per investment unit:
580,352 yen
Net income per investment unit: 17,397 yen

12th fiscal period(March 1, 2010 to August 31, 2010)
Net assets per investment unit:
579,738 yen
Net income per investment unit: 16,782 yen

Net income per investment unit is calculated by dividing
net income by the weighted average number ofinvestment units issued and outstanding during the fiscal
period.

Net income per investment unit is calculated by dividing
net income by the weighted average number ofinvestment units issued and outstanding during the fiscal
period.

Diluted net income per investment unit is not shownsince there are no potential investment units.

Diluted net income per investment unit is not shownsince there are no potential investment units.

(Note) Calculation of net income per investment unit is based on the following.
Account
Net income (thousands of yen)Amount not attributable to common shareholders (thousands of yen)
Net income attributable to common investment units (thousands of yen)
Average number of investment units during the fiscal period (units)

11th fiscal period(September 1, 2009 to
February 28, 2010)

12th fiscal period(March 1, 2010 toAugust 31, 2010)

1,862,371

1,796,619——

1,862,371

1,796,619

107,050

107,050(Significant subsequent events)
11th fiscal period(September 1, 2009 to February 28, 2010)
No relevant items

12th fiscal period(March 1, 2010 to August 31, 2010)Same as on the left

(9) Change in the number of investment units issued and outstanding
No relevant items

13

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

4. Change in Directors(1) Change in directors in FRC
No relevant items(2) Change in directors in Fukuoka Realty Co., Ltd.
(June 17, 2010) Resignation of Takeshi Okuma as Vice President and Director(July 31, 2010) Resignation of Shinya Kato as Senior Managing Director
Directors of Fukuoka Realty Co., Ltd. are as follows as of October 12, 2010.
Title

Name

Career Summary

CEO and
Representative
Director

Masayasu Saki

April 1969

Joined The Nippon Fudosan Bank,
Limited. (later, The Nippon Credit Bank,
Ltd.; currently, Aozora Bank, Ltd.)

June 1992

Member of the Board and Tokyo BranchManager

February 1994

Member of the Board and Director for
Financial Product Development

June 1995

Member of the Board and Director forMarketing Planning Division 2

June 1996

Executive Director

June 1998

Senior Executive Director

November 1999

Director at CSK KK

November 2000

Executive Officer at Sanyo Shinpan
Finance Co., Ltd. (currently, Promise Co.,Ltd.)

July 2003

CEO of Fitch Ratings Japan

April 2006

Advisor of Fukuoka Realty Co., Ltd.

June 2006

CEO of Fukuoka Realty Co., Ltd.
(current position)

July 2006

Number ofshares held0

CEO & Representative Director of
Fukuoka REIT Corporation (current
position)(Note) Masayasu Saki, CEO of Fukuoka Realty Co., Ltd., also serves as CEO & Representative Director of Fukuoka REIT
Corporation. In conformity with Article 13 of the Investment Trust Law (before revision), he obtained approval for
concurrently serving the positions from the Commissioner of the Financial Services Agency as of June 22, 2006.

14

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

Title

Name

Career Summary

SeniorManaging
Director

Yoichi Nishio

April 1985

Joined The Nippon Credit Bank, Ltd.
(currently, Aozora Bank, Ltd.)

September 2005

General Manager, Real Estate Finance
Division

July 2008

Joined as Senior Vice President of New
City Corporation.

January 2009

February 1987

Joined as Senior Managing Director andHead of Finance Department of Fukuoka
Realty Co., Ltd. (current position)
Joined Sunlife Co., Ltd.

October 1993

Joined Fukuoka Jisho Co., Ltd.

October 2005

General Manager, Development Unit

August 2008

Executive Officer (current position)

June 2009

Director of Fukuoka Realty Co., Ltd.
(current position)

August 2009

General Manager, Regional Development
Unit, Fukuoka Jisho Co., Ltd.
(current position)

Director(part-time)

Akira Eto

15

Number ofshares held
00

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

Title

Name

Career Summary

Director(part-time)

Yasumichi
HinagoApril 1968

Joined Kyushu Electric Power Co., Inc.

July 1998

General Manager, Material Procurement
Division

July 2002

General Manager, Material & Fuel
Procurement Division

June 2003

Saga Branch Manager

July 2003

Executive Officer and Saga BranchManagerJune 2005

Director

June 2007

Senior Managing Executive Officer

June 2007

Director of Fukuoka Realty Co., Ltd.
(current position)

June 2009

October 2000

Executive Vice President of Kyushu
Electric Power Co., Inc.
(current position)
Registered as lawyer

April 2004

Joined Fukuoka Realty Co., Ltd.

April 2005

General Manager, Compliance Division

June 2007

Joined Nishimura & Tochiwa (currently,
Nishimura & Asahi) (current position)

June 2007

Director of Fukuoka Realty Co., Ltd.
(current position)
Joined The Fukuoka Sogo Bank, Ltd.
(currently, The Nishi-Nippon City Bank,Ltd.)

Director(part-time)

Auditor(part-time)

Hiroshi
Shimuta

Masanori
TasakaApril 1978

August 2000

Deputy General Manager, Planning
Division

July 2003

General Manager for Planning Division
and Risk Control Manager

October 2004

General Manager, General Planning
Division

April 2005

Loaned to NCB Management Information
Service Co., Ltd., General Manager for
Business Alliance

April 2006

Head of Tasaka Masanori Certified Tax
Accountant Office (current position)

June 2006

Auditor of Fukuoka Realty Co., Ltd.
(current position)

16

Number ofshares held000

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010

5. Reference Information(1) Investment situation(as of August 31, 2010)
Type of asset

Real estate in
Trust

Location(Note 1)

PurposeCommercial
facility
Office building
Residential
property

Total value of
properties held(millions of yen)
(Note 2)

Percentage of
total assets(%)(Note 3)

Fukuoka urban area

37,937

28.7

Other Kyushu areas

36,261

27.4

Fukuoka urban area

41,38831.3

Other Kyushu areas——

Fukuoka urban area

3,099

2.3

Other Kyushu areas——

118,686

89.7

6,437

4.9

Subtotal
Equity interests in anonymous partnership (Note 4)

Deposits and other assets
7,224
5.5
Total amount of assets
132,349100.0(Note 5)(125,124)(94.5)
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 2005 census, which states “the number of workers and students aged 15 years orolder commuting between their homes and places of work or school” conducted by Fukuoka City and the Statistics Bureauof the Ministry of Internal Affairs and Communications.
“Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area) and Yamaguchi Prefecture.
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: “Equity interests in anonymous partnership” are capital contributions to an SPC (CCH Bridge LLC).
Note 5: Figures in parentheses for “Total amount of assets” refer to the value and percentage of real estate held in effect to the total
amount of assets.
(as of August 31, 2010)
Percentage of total amount of assets(%)

Value on balance sheet(millions of yen)
Total amount of liabilities

70,287

53.1

Total amount of net assets

62,061

46.9(2) Investment assets(i) Primary issues of investment securities(as of August 31, 2010)Type

Description

Book value(millions of yen)

Evaluated amount(millions of yen)
(Note)

Percentage of
total assets(%)

Interests inSenior anonymous partnershipanonymous
equity interest to CCH Bridge
6,437
6,400
4.9
partnership
LLC(Note) The evaluated amount is provided by the operator of the anonymous partnership in conformity with rules stipulated by theInvestment Trusts Association, Japan.

17

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010(ii) Real estate investment portfolio(a) Values and investment ratios at end of period are as follows.
(as of August 31, 2010)
Acquisition
value(millions ofyen)(Note 1)

Value onbalancesheet(millions ofyen)

Period-end
appraisal value(millions ofyen)(Note 2)

Investment
ratio
(%)
(Note 3)

Canal City Hakata

32,00031,327

34,700

26.5

Tanizawa Sogo Appraisal
Co., Ltd.

Park Place Oita

15,70016,743

17,60013.0

Japan Real Estate Institute

SunLive City Kokura

6,633

6,303

7,410

5.5

Japan Real Estate Institute

5,300

5,001

4,970

4.4

Japan Real Estate Institute

2,400

2,284

2,420

2.0

Japan Real Estate InstituteHara SATY

5,410

5,503

5,210

4.5

Japan Real Estate InstituteHanahata SC

1,130

1,106

1,160

0.9

Kurume Higashi
Kushiwara SC

2,500

2,427

2,510

2.1

K’s Denki Kagoshima

3,550

3,500

3,380

2.9

Name of property

Square Mall
Kagoshima Usuki
Kumamoto
Intercommunity SC

Real estate appraiser

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

Commercial facilities
subtotal:
Canal City BusinessCenter Building
Gofukumachi
Business Center

74,62374,19879,36061.7

14,60014,15915,60012.1

11,200

10,397

12,9009.3

Sanix Hakata Building

4,400

4,358

4,940

3.6

Japan Real Estate Institute

7,000

6,757

6,630

5.8

Japan Real Estate Institute

5,900

5,714

5,960

4.9

Tanizawa Sogo Appraisal
Co., Ltd.

43,10041,38846,030

35.7

2,060

1,992

1,690

1.7

City House Keyaki Dori

1,111

1,106

1,000

0.9

Residential properties
subtotal:

3,171

3,099

2,690

2.6

Total

120,894

118,686

128,080

100.0

Taihaku Street
Business Center
Higashi Hie
Business Center
Office buildings
subtotal:
Amex
Akasakamon Tower

Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

Daiwa Real EstateAppraisal Co., Ltd.
Daiwa Real EstateAppraisal Co., Ltd.

Note 1: “Acquisition value” refers to the amount (purchasing prices shown on the purchasing contracts) not including expenses forthe acquisition of relevant properties (agency fees and taxes and other public charges).
Note 2: “Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity withthe method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation and rules stipulated by theInvestment Trusts Association, Japan.
Note 3: “Investment ratio” is obtained by dividing each property’s acquisition value by the total acquisition value. The total ofindividual percentages in the above table may not equal 100%, since the numbers are rounded off to one decimal place.

18

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended August 2010(b) Summary of the real estate rental business

Name of property

Number oftenants(Note 1)

Occupancy
Total
Total
rate
leasable space leased space
(%)
(m2)
(m2)
(Note 3)(as of August 31, 2010)
Percentage of
Total
total
rental revenues
rental revenues(millions of yen)(%)
(Note 4)(Note 5)
1,339
24.6

Canal City Hakata

1 (49)

100.0

45,990.34

45,990.34

Park Place Oita
SunLive
City Kokura
Square Mall
Kagoshima Usuki
Kumamoto
Intercommunity SC
Hara SATY

1

99.9

103,963.52

103,829.95

964

17.7

1

100.0

61,450.22

61,450.22

292

5.4

11

100.0

14,661.72

14,661.72

255

4.7

2

100.0

6,968.66

6,968.66

89

1.6

1

100.0

27,580.75

27,580.75

212

3.9

2

100.0

2,801.15

2,801.15

40

0.7

1

100.0

6,467.80

6,467.80

88

1.6

1

100.0

7,296.17

7,296.17

111

2.0

Hanahata SC
Kurume Higashi
Kushiwara SC
K’s Denki Kagoshima
Commercial
facilities subtotal:
Canal City BusinessCenter Building
Gofukumachi
Business Center
Sanix Hakata
Building
Taihaku Street
Business Center
Higashi Hie BusinessCenterOffice buildings
subtotal:
Amex
Akasakamon Tower
City House
Keyaki DoriResidential
properties subtotal:

(103)

21

(171)

100.0

277,180.33

277,046.76

3,395

62.2

1

(53)

93.6

23,053.10

21,587.51

599

11.0

20

94.6

19,907.91

18,839.56

518

9.5

14

100.0

6,293.76

6,293.76

201

3.7

1

(64)

97.2

14,653.95

14,236.39

298

5.5

1

(15)

100.0

13,695.51

13,695.51

344

6.3

37

(166)

96.2

77,604.23

74,652.73

1,961

36.0

1

(57)

87.8

4,755.14

4,175.81

61

1.1

1

(40)

95.5

2,710.86

2,588.58

37

0.7

2

(97)

90.6

7,466.00

6,764.39

98

1.8

60 [434]99.0
362,250.56
358,463.88
5,455
100.0
(Note 2)
“Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for commercial andoffice buildings among relevant properties. For the number of tenants in pass-through master leasing properties, the numberof sections stipulated in the tenancy agreements with end tenants is shown in parentheses. The Taihaku Street BusinessCenter is an office building with a residential tower. Its number of tenants comprises 12 offices and 52 residents.
The total of all the tenants in other than pass-through master leasing properties and the number of sections stipulated in thetenancy agreements with end tenants for pass-through master leasing properties is shown in parentheses in the totals
column for “Number of tenants.”“Occupancy rate” refers to the percentage of total leased space to total leasable space and the numbers are rounded off to
one decimal place.
“Total rental revenues” are the total of real estate rent revenues and other revenues from real estate rent in the current fiscal
period.
“Percentage of total rental revenues” is obtained by dividing each property’s total rental revenues by the total amount of
total rental revenues. The total of individual percentages in the above table may not equal 100%, since the numbers arerounded off to one decimal place.

Total
Note 1:

Note 2:

Note 3:Note 4:Note 5:(3) Investment target
The disclosure is omitted, since there are no significant changes from “Investment target” disclosed by the latest
securities report (submitted on May 26, 2010).

19