Fukuoka REIT Corporation

26th Fiscal Period
Repor t on Performance andManagement Status (Semiannual Report)
March 1, 2017 to August 31, 2017

Security Code 8968

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Highlights for 26th Fiscal Period

To Our Unitholders

Financial Highlights

We would like to express our sincere appreciation to all unitholders
for your continued support of Fukuoka REIT Corporation (FRC).
We are pleased to report on the performance results andmanagement status of FRC for the 26th fiscal period (March 1, 2017
to August 31, 2017).
FRC was listed in June 2005 and started as Japan's first REIT
specializing in regional properties. Since then, we have exhibited
consistent growth and achieved stable performance through thesupport of our unitholders and sponsor companies.
The business conditions in the Fukuoka and Kyushu area aregradually improving.
Looking at the ultimate demand trends in the Fukuoka and Kyushu
area, consumer spending is recovering as a whole, as replacement
demand for durable goods is increasing and sales of food andbeverages as well as apparel have started to move upward.
Meanwhile, according to the government’s Prefectural Land Price
Survey announced in September 2017, the commercial land pricein Fukuoka City rose 9.6% year-on-year, as it did in the Land Price
Survey announced in March 2017, significantly surpassing thenational average figure of an increase of 0.5%.
FRC acquired a property in the 26th fiscal period utilizing its
silent partnership equity interests.
In the fiscal period under review, FRC acquired LOGICITY
Hisayama in June 2017 by exercising the preferential negotiationrights granted in association with the acquisition of silent partnership
equity interests in Limited Liability Company FRC1. The property is alogistics facility in a good location near the Fukuoka Interchange andwill secure stable earnings over a long period of time as it is leased
under a fixed-term building lease agreement that allows no earlycancellation or rent revision.
Canal City Hakata achieved an increase in visitors due tooperations that focus on experiential value.

Standing on these asset management operations, we decided to
pay out a dividend per unit of 3,422 yen for the fiscal period, up 22
yen from the forecast.
In terms of fundraising, FRC issued the Second Series ofUnsecured Bonds.
In the 26th fiscal period, we issued unsecured investment
corporation bonds, the second such issuance for FRC, amounting
to 2 billion yen in order to diversify fundraising methods and increase
the average length of time until debt maturity. With the issuance, we
procured long-term funds with a maturity of 15 years at an interest
rate of 1%. Moreover, FRC successfully reduced interest costs,
extended the duration of debt and dispersed the debt repayment
dates in refinancing and other financing.
Going forward, FRC will continue to exert its strengths as a REIT
specializing in regional properties and quickly respond to market
changes, while receiving support and cooperation from powerfulsponsors leading the Kyushu business world. In conjunction withsuch efforts, we will strive to achieve growth of our portfolio in themedium to long term and secure stable earnings through steadyasset management. We at FRC are resolved to pursue our missionof maximizing unitholder interests based on our management
philosophy of "Act Local, Think Global."
We greatly appreciate your continued support and cooperation.

With other assets also having healthy operations, the averageoccupancy rate of all properties owned by FRC as of the end of the
26th fiscal period was 99.8%

Steady Growth

Stable Dividend

LTV

Dividend per unit

Total assets

39.3 %

3,422 yen

178,063 mm yen

Credit ratings

Latest dividend forecast per unit 3,400 yen

Number of investment
properties at end of period

S&P

A-

(Positive)

A+

R&I

(Stable)JCRAA-

Dividend forecasts
27th fiscal period:

26 properties

28th fiscal period:

Occupancy rate (at end of period)

3,470 yen per unit
3,470 yen per unit

99.8 %(Stable)Changes in Investment Unit Price
Investment unit price (left axis) (Note 1)(yen)
300,000

Trading volume (right axis) (Note 2) (units)
April 27, 2015

26th

72,000

4th PO since listing

250,000

60,000June 21, 2005

(Note 1) The figure is based on the office data publicized by Miki Shoji Co., Ltd.
(Note 2) For Taihaku Street Business Center, the occupancy rate does not include the property's
residential portion.

March 1, 2013

Listing

3rd PO since listing

200,000

48,000March 1, 2011

2nd PO since listing

150,000

36,000・Unit price: 164,300 yen
・Total number of investment units outstanding: 747,000 units
・Market capitalization: 122,732 mm yen
・Net assets value per unit: 125,434 yen
・Market net assets value per unit: 156,061 yen

September 7, 2006

Canal City Hakata, the flagship of FRC, further enhanced its ability
to attract customers thanks in part to the fountain show utilizing
projection mapping that was introduced in November 2016, as wellas due to new tenants that focus on experiential value. Moreover, thenumber of foreign entrants into Fukuoka Prefecture in the first halfof 2017 increased by approximately 43% year-on-year. Because of
these and other factors, the number of monthly visitors to Canal City
Hakata set record highs for four consecutive months from January
through April 2017. The strong number of visitors led to strong sales
for all facilities.
Occupancy remained solid, with the average occupancy rateof all properties FRC owns recording 99.8%.
In the business districts of Fukuoka City, the vacancy rate of officebuildings has dropped for 21 consecutive months and remains at
an extremely low level, standing at 3.21% (Note 1) as of August 2017.
Supply in the future will also be limited. Bolstered by the good officemarket, the occupancy rate of the seven office buildings owned by
FRC reached 100% (Note 2) during the fiscal period under review.

(as of August 31, 2017)

1st PO since listing

100,000

24,000(as of August 31, 2017)

50,0000

12,0000
Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 29, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 29, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 28, Aug 31, Feb 29, Aug 31, Feb 28, Aug 31,
2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 20132013 2014 2014 2015 2015 2016 2016 2017 2017

*Each figure is as of the end of each month.
*FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date.
(Note 1) The investment unit prices through February 25, 2014 have been modified to the figures after the 5-for-1 split.
(Note 2) The trading volumes through February 25, 2014 have been modified to the figures obtained by multiplying the original figures by 5.

CONTENTSI.

CEO & Representative Director,
Fukuoka REIT Corporation

Etsuo Matsuyuki

Overview of Fukuoka REIT Corporation
To Our Unitholders
Highlights for 26th Fiscal Period
Trend of Growth in Asset Size of FRC / Financial Summary
Initiatives on Sustainability
Portfolio Overview
Profile

1
2
3
5
7
9

II. Semiannual Report
III. Independent Auditor's Report
IV. Balance Sheet
V. Statement of Income
VI. Statement of Changes in Net Assets
VII. Cash Flow Statement
VIII. Notes to Financial Statements

FUKUOKA REIT CORPORATION

2

10
27
28
30
31
32
33

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Trend of Growth in Asset Size of FRC
FRC More than Doubled Asset Size and Diversified Investment Types
Since Listing
Retail (total acquisition price, left axis)

Office buildings (total acquisition price, left axis)

Number of investment properties (right axis)

Others (total acquisition price, left axis)

Occupancy Rate

(mm yen)

99.6

99.4

300,000

99.8

99.0

99.4

98.6

99.7

99.4

99.2

98.8

98.8

99.1

99.3

98.8

98.1

99.0

23

19

14

100,000

25,800550,00054,333030,2007

55,07337,2008

55,073

2,060

2,060

11

11

37,20037,20037,20067,443

67,,773
443
62

15

16

15

16

16

16

3,171

3,171

3,171

3,171

37,20043,10043,10043,10043,10074,62374,62374,62374,62374,623

3,171

3,171

3,171

37,20037,20071,07374,623

2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
(Aug 2005) (Feb 2006) (Aug 2006) (Feb 2007) (Aug 2007) (Feb 2008) (Aug 2008) (Feb 2009) (Aug 2009) (Feb 2010) (Aug 2010) (Feb 2011)

17

3,171

3,171

43,100

99.6

99.5

27

27

27

99.4

(properties)

99.8

30 100.0%

24

23

26

25

25

25 95.0%

20 90.0%20

200,000

17

99.5

98.1

97.0

250,000

150,000

99.6

99.3

7,251

7,251

11,581

22,081

22,081

22,081

48,50048,50048,50013,931

12,831

11,581

19,281

24,331
15

43,10043,10045,70048,50048,50048,50048,50048,50048,50010

103,323

105,223

105,223

14th(Aug 2011)

15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
(Feb 2012) (Aug 2012) (Feb 2013) (Aug 2013) (Feb 2014) (Aug 2014) (Feb 2015) (Aug 2015) (Feb 2016) (Aug 2016) (Feb 2017)

26th(Aug 2017)

103,323

103,323

103,323

103,323

103,323

109,163

109,163

103,323

103,323

109,16350Financial Summary
Financial Highlights for 26th Fiscal Period and Business Forecasts for 27th and 28th Fiscal Periods

Category

26th fiscal period

27th fiscal period

28th fiscal period(March 1, 2017 to August 31, 2017)(September 1, 2017 to February 28, 2018)(March 1, 2018 to August 31, 2018)

ActualForecast

Forecast

Operating revenues

mm yen

8,122

8,134

8,110

Leasing NOI (Note 1)

mm yen

4,998

5,074

5,074

Depreciation and amortization expenses

mm yen

1,474

1,502

1,517

Operating income

mm yen

2,920

2,939

2,950

Ordinary income

mm yen

2,562

2,593

2,593

Profitmm yen

2,556

2,592

2,592

Dividend per unityen (1)

3,422

–

–

Latest dividend forecast per unityen (2)

3,400

3,470

3,470

yen (1)-(2)

+22

–

–

units

747,000

747,000

747,000

Difference from forecast
Total number of investment units
outstanding (at end of period)(Note 1) “Leasing NOI” is calculated using "Leasing business revenues − Expenses related to leasing business + Depreciation and amortization expenses."Dividend Performance
26th fiscal period end

August 31, 2017

26th fiscal period dividend

3,422 yen per unit

(semiannual periods ending every February and August)26th fiscal period days

184 days

Dividend yield

4.1% {(Dividend / Days × 365) / Unit price (as of August 31, 2017)}

（yen）

3,802
4,000 （19,014）3,687 3,726

3,672 3,699 3,674

3,609（18,632）（18,438）（18,373）3,468（18,360）（18,499）（18,049）3,475 3,479
3,563 3,574（17,377）（17,397）3,356 3,293 3,384 3,324 3,238 3,257 3,291 3,243（17,341）
3,435（16,922）（16,783）（16,621）（16,465）（16,458）（16,193）（16,289）（16,219）3,278

3,479

3,398 3,422

3,470 3,470

3,000

2,000

1,000

0

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

(Forecast) (Forecast)*FRC implemented a 5-for-1 split of its investment units with March 1, 2014 as the effective date. Dividend per unit indicates the value after the 5-for-1 split. Figures in parentheses indicate the value before
the 5-for-1 split.

FUKUOKA REIT CORPORATION3FUKUOKA REIT CORPORATION

4

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Initiatives on Sustainability
Formulation of Basic Policy on Customer-Oriented Business Conduct
Fukuoka Realty Co., Ltd. has adopted all seven principles set forth in the Principles for Customer-Oriented Business Conduct,announced by the Financial Services Agency on March 30, 2017, and on September 20, 2017 formulated a basic policy torealize customer-oriented business operations.
Fukuoka Realty’s Basic Policy
1) Fukuoka Realty is a financial business operator that operates listed REITs. We will constantly strive to provide high-quality services
so that we can meet the investment needs of unitholders.

Contribution to Local Communities
Fukuoka REIT makes various contributions to local communities through participation in the Hakata Community Development
Promotion Conference.
● Clean-Up Days

● Flower Planting● Community Activities

Asset management company employees actively
participate in community clean-up activities.

Flowers are planted from Hakata to Tenjin in acooperative effort by local residents and private
enterprises to create an appealing community.

Hakata Hinyari! Uchimizu promotes sprinklingof water on sidewalks and streets as anenvironmental improvement activity.

● National Strategic Road Occupancy Project● Hakata Community Development● Hakata City Walk Map

HAKATA STREET Bar is held as part of activities
to create bustle and festivity.

Persons who operate businesses in Hakata areinvited to meetups to think about and discuss
the Hakata district.

The Hakata City Walk Map is published to
publicize the attractions of Hakata and suggest
walking courses.

2) Fukuoka Realty, as an asset management company knowledgeable about the particular circumstances of the region, strives tomaximize the interest of unitholders by utilizing information and expertise.
3) Fukuoka Realty will make the fiduciary duty entrusted to us by unitholders the primary consideration and appropriately manage
conflicts of interest.
4) Fukuoka Realty’s executives and employees daily engage in honest and fair operation and act responsibly toward the Company’s
investors and other stakeholders.
5) Fukuoka Realty will proactively engage in voluntary IR activities in addition to statutory disclosure and timely disclosure and increase
the fairness and transparency of information disclosure.

Asset Management Fees for the Asset Manager
Asset Management Fees

Calculation Method

Asset Management Fee 1

The Investment Corporation shall pay the amount that is linked to the total amount of the assets it manages throughconsignment to the asset management company and calculated using the following formulas.
・Calculation period I (the period through the end of the third month from the month to which the day following theimmediately preceding closing of accounts belongs)
Total amount of assets under consigned management at the end of the immediately preceding fiscal period (refers
to the total amount of assets under consigned management stated in the balance sheet for the immediately preceding
fiscal period of the Investment Corporation; the same shall apply hereafter) × 0.3% × actual number of days of thecalculation period / 365
・Calculation period II (the period from the day following the end of the calculation period I to the closing of accounts)(Total amount of assets under consigned management at the end of the immediately preceding fiscal period +acquisition price of investment properties acquired during the calculation period I-amount of investment properties
disposed during the calculation period I, stated in the balance sheet at the end of the immediately preceding fiscal
period) × 0.3% × actual number of days of the calculation period / 365

Asset Management Fee 2

The amount equivalent to 2% of the total amount of the leasing business revenues (*1)

Asset Management Fee 3

The amount equivalent to 2% of the amount obtained by adding or subtracting gains or losses on sale of investment
properties or redemption of securities, to or from the leasing business revenues (*1) of the investment properties
calculated by deducting miscellaneous expenses (including depreciation and amortization expenses), interest
expenses, Asset Management Fee 1, Asset Management Fee 2 and Asset Management Fee 4.

Asset Management Fee 4

MeetupsExternal Assessment● DBJ Green Building Certification● CASBEE Certification

Five properties acquired certification as of 2016.

Two properties acquired certification as of 2016.

The sum total of the amount obtained by multiplying the acquisition price of the asset that has been newly acquired as
an investment property by the following rates.
・0.5% for the portion up to 50 billion yen(or 0.25% for assets acquired from interested parties)
・Nothing for the portion over 50 billion yen(*1) The leasing business revenues shall be the total amount of rents, common charges, parking revenues, incidental income, facility use charges, facility installation charges, delay damage charges,
cancellation penalties or similar monies for cancelling lease agreements, and other leasing business revenues (excluding, however, gains or losses on sale of real estate and other assets of the investment
properties.
(*2) The Asset Management Fees 1 through 4 above do not include fees for sale of real estate and other assets of the investment properties.
■ Canal City Hakata■ Park Place Oita
■ Canal City Business Center Building

FUKUOKA REIT CORPORATION

5■ Gofukumachi Business Center■ Higashi Hie Business Center

FUKUOKA REIT CORPORATION■ Higashi Hie Business Center■ LOGICITY Hisayama

6I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Portfolio Overview
1

Retail2

3

Retail4

RetailRetail

21 Others(residence)

22 Others(residence)

23 Others(hotel)Canal City Hakata

Canal City Hakata・B

Park Place Oita

One of the largest entertainmenttype retail facilities in Japan anda typical tourist destination in
Fukuoka

One of the largest entertainmenttype retail facilities in Japan anda typical tourist destination in
Fukuoka

A leading retail facility in the Oita
area, providing park entertainment
for families

One of the largest malls in
Kitakyushu and anchored by a
SunLive supermarket chosen by
local consumers

A large, high-rise (20-story) rental
condominium, approximately aseven-minute walk from Tenjin
subway station

A rental condominium in the Yakuin/
Hirao area that is popular among
younger generations and has
plentiful bus networks

5

6

7

8

25 Others(logistics)

26 Others(logistics)

RetailRetailRetailSunLive City Kokura

RetailD-Wing Tower

Granfore Yakuin Minami

24 Others(logistics)

Hotel FORZA Oita

Tosu Logistics Center

A business hotel located walking
distance from Oita Station andspecialized for lodging to meetbusiness needs

A logistics facility located in theGreen Logistics Park Tosu, operatingaround the clock and with threetemperature zones

Purchase of earthquake insurance
FRC has purchased earthquake insurance
for all the properties it owns.
Square Mall Kagoshima Usuki

Kumamoto Intercommunity SC

Hanahata SC

Kurume Higashi Kushiwara SC

LOGICITY Minato Kashii

LOGICITY Hisayama

A retail facility in Kagoshima,
designed by John Jerde who
designed Canal City Hakata andRoppongi Hills

Located along a major arterial roadand comprising Sports Depo, Golf 5
and Starbucks

Located in a new residential area
and comprising BON REPAS
supermarket and Matsumoto Kiyoshi
drug store

Located on a corner of a heavytraffic intersection and comprising
Sports Depo and Golf 5

A logistics facility among the largest
in the Fukuoka area, with a location
featuring traffic convenience andconcentration of such facilities

Approximately 5km from the Fukuoka
Interchange featuring traffic
convenience, with good generalpurpose capabilities

9

10 Retail11 Office Building

12 Office Building◉ Portfolio Map

Canal City Business Center
Building

Gofukumachi Business Center
Building

Located east of Marinoa
City Fukuoka and has stableattractiveness through synergy with
the Outlet building

An office building expected to exert
synergy with Canal City Hakata, withshowroom functions

An office building facing majorarterial roads and directly connected
to Gofukumachi Station on the city
subwayNagasaki

23
3

6

20

Kumamoto
Miyazaki3

Kagoshima

13 Office Building

14 Office Building

15 Office Building

16 Office Building

KyushuArea

Fukuoka IC

Fuku
R o u o ka E x
te 4p
K a sr e s s w a y
u ya
Line,

3

5
9

Sh
in
ka
ns
en

Having a large floor area andtenanted by an electric appliancestore widely attracting customers
from nearby cities

Marinoa City Fukuoka(Marina Side Building)

Oita

e
Lin

K s Denki KagoshimaIsland City

Fukuoka

ii
sh
Ka
JR

Saga

26

25

4
24
8

ssway
Kyushu Expre

Fukuoka
Metropolitan Area

Sa
ny
o

RetailHakata Bay

JR Sasaguri

Sanix Hakata Building

Taihaku Street Business Center

Higashi Hie Business Center

Tenjin Nishi-Dori Center Building

A highly-convenient, station-front
office building that is a two-minute
walk from Hakata Station

Good location along Taihaku-doriStreet, a two-minute walk from Gion
subway station and ten-minute walkfrom Hakata Station

Directly connected to Higashi Hie
subway station, a two-minute ride to
Hakata Station and three-minute rideto Fukuoka Airport

An office building facing Tenjin
Nishi-dori Street where commercial
facilities are concentrated

Fukuoka Expressway,
Route 1 (Loop Line)10

SubwayKuko Line

17 Office Building

18 Others(residence)

19 Others(residence)

202

3

SubwayNanakumaLine

1km

Fukuoka
E

ne
Li

202

0

xpr
ess
wa

5
y R oute

Line)
(Loop

7
FUKUOKA REIT CORPORATION

7

ifu
za
Da

385

ay
sw
es
pr
Ex

Aqualia Chihaya
A rental condominium comprisedof units mainly for singles andsmall families to match the local
characteristics

an
rb
U

Ni
sh
Omitetut su
a Te
Lin nj
e in

ine
aL
im
sh
go
Ka

City House Keyaki DoriA high-quality rental condominium
in a popular residential area of
Fukuoka, featuring traffic and living
convenience

Fukuoka Airport

15

JR

Amex Akasakamon Tower

Tenjin19

14

Hakata
1
11
13
2

16

263

202

A tower-type rental condominium
near downtown Fukuoka, with traffic
convenience and environment thatmatches a wide range of generations

17

22
202

Tenjin North Front Building

18 21

Ohori Park

20 Others(residence)

A relatively new office building
scarce in the Tenjin area that features
Kyushu s largest integration of urban
functions

12

FUKUOKAYAHUOKU!DOMELine

FUKUOKA REIT CORPORATION

8

Fukuoka
Metropolitan
Area

I. Overview of Fukuoka REIT Corporation

ProfileII. Semiannual Report
Overview of Asset Management

Status of the Investment Corporation
FRC is Japan's first REIT specializing in regional properties. FRC manages a portfolio centering on retail facilities featuring
excellent design and entertainment qualities and superior office buildings throughout all of Kyushu. With a central focus
on Fukuoka, and in Yamaguchi Prefecture and Okinawa Prefecture, we are utilizing our strength of knowing the local
characteristics of real estate, which is a very regional-specific business.

1. Changes in operating results and financial position

Representative: Etsuo Matsuyuki, CEO & Representative Director
Asset manager: Fukuoka Realty Co., Ltd. (Fukuoka Local Finance Branch Bureau (financial instruments) No. 10)
Listed date:

23rd fiscal period

24th fiscal period

25th fiscal period (Note 6)

26th fiscal period

8,423[8,423]
5,256[4,651]
3,167
2,663
2,661
181,597[8.5]
93,804[14.7]
91,142

8,343[8,343]
5,201[4,577]
3,141
2,670
2,669
181,445[(0.1)]
93,812[0.0]
91,142

8,234[8,234]5,165[4,540]
3,069
2,616
938
179,513[(1.1)]
92,081[(1.8)]
91,142

9,730[8,072]
5,145[4,517]
4,585
4,199
4,198
175,063[(2.5)]
93,681[1.7]
91,142

8,122[8,117]5,202[4,593]
2,920
2,562
2,556
178,063[1.7]
93,699[0.0]
91,142

units

747,000

747,000

747,000

747,000

747,000(c)/(d)yen(e)

mm yen(e)/(d)yen
yen

125,574
2,661
3,563[3,563][–]

125,585
2,669
3,574[3,574][–]

123,2672,598
3,479[1,256][2,223]

125,4102,538
3,398[3,398][–]125,434
2,556
3,422[3,422][–](unit)

Fukuoka REIT Corporation

Name:

22nd fiscal period

Fiscal Period

Overview of the Investment Corporation

June 21, 2005 (Tokyo Stock Exchange, and Fukuoka Stock Exchange)

Sponsors

Operating revenues

mm yen[Leasing business revenues]

mm yenOperating expenses

mm yen[Expenses related to leasing business]

mm yenOperating income
Ordinary income
ProfitTotal assets

mm yenmm yen(a)

mm yen(b)

mm yen(c)

mm yen[Change from previous period]

Net assets%[Change from previous period]

5%5%

The Bank of Fukuoka, Ltd.

5%5%The Nishi-Nippon City Bank, Ltd. Development Bank of Japan Inc.

Saibu Gas Co., Ltd.

Unitholders’ equity
Total number of investment
units outstanding
Net assets per unit
Total dividend
Dividend per unit%
(Note 3) mm yen(d)[Earnings dividend per unit][Dividend in excess of earnings per unit]

50%

Director

Fukuoka Realty Co., Ltd.

Fukuoka Jisho Co., Ltd. (Note 1)

10%

Outsidedirector

Kyushu Electric Power Co., Inc.

(Asset Manager)

5%

5%

5%

5%

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

KYUSHU RAILWAY COMPANYRoyal Holdings Co., Ltd.

(Note 1) Concluded MOU with Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. concerning pipeline support.

Fukuoka Realty Co., Ltd.

TEL:

+ 81- 92- 272- 3900

Etsuo Matsuyuki CEO & Representative Director

Established:

December 26, 2003

Address:

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

Capital:200, 000, 000 yen

Investment type (based on acquisition price)
Office buildings

Retail

27.2%

59.1%

Others13.7%

Investment area (based on acquisition price)
Other
Kyushu areas

77.0%

Total leasable floor space
548, 564. 96m

2

23.0%

Occupancy rate at end of period
99. 8%*Figures are based on properties owned as of August 31, 2017.
FUKUOKA REIT CORPORATION

9(March 1, 2017 toAugust 31, 2017)

1.5 [3.0]

1.4 [2.9]

2.4 [4.8]

1.5 [2.9]%

3.0 [6.0]

2.8 [5.7]

1.0 [2.0]

4.5 [9.1]

2.7 [5.4]

%

51.7

51.7

51.3

53.5

52.6

[Change from previous period]

%
%

[2.8]
100.0

[0.0]
100.0

[(0.4)]
100.0

[2.2]
60.5

[(0.9)]
100.0

properties

27

27

27

25

26

m2

554,464.84

554,549.65

554,541.30

523,817.31

548,564.96

%

99.5

99.6

99.5

99.4

99.8

mm yen

1,458

1,471

1,470

1,455

1,474

mm yen

445
5,229
184

630
5,237
182

665
5,164
184

1,789
5,010
181

741
4,998
184

Payout ratio(Note 5)【Other reference information】
Number of investment
properties (at end of period)
Total leasable floor space

Depreciation and amortization
expensesCapital expenditures
Leasing NOI
Days in fiscal period(Note 5) mm yen
days(Note 1) Consumption tax is not included in operating revenues, etc.
(Note 2) In the above table, monetary amounts are rounded down to the nearest specified unit and percentage figures are rounded off to one decimal place.
(Note 3) No consideration has been given to the change in unitholders’ equity due to distribution of dividend in excess of earnings that came from reserve for temporary difference adjustments. The same shallapply hereafter.
(Note 4) The dividend in excess of earnings per unit for the 24th fiscal period came from the reserve for temporary difference adjustments.
(Note 5) The indicators are calculated by using the following methods. Furthermore, the figures in square brackets represent annualized value based on the number of days in each fiscal period.
Ratio of ordinary income to total assets

Fukuoka metropolitan area

(September 1, 2016 to
February 28, 2017)

1.5 [3.0](at end of period)

Representative:(March 1, 2016 toAugust 31, 2016)%

Occupancy rate

Name:

(September 1, 2015 toFebruary 29, 2016)

Ratio of ordinary income to total (Note 5)
assets(Note 5)Return on net assets
Ratio of net assets to total(c)/(b)assets(at end of period)

Overview of the Asset Manager

Portfolio (Note)

yen(Note 4)

(March 1, 2015 toAugust 31, 2015)

Return on net assets
Payout ratio
Leasing NOI

Ordinary income / average total assets
Average total assets = (Total assets at beginning of period + total assets at end of period) / 2
Profit / average net assets
Average net assets = (Net assets at beginning of period + net assets at end of period) / 2
Dividend per unit (excluding dividend in excess of earnings) / profit per unit
Profit per unit = Profit / total number of investment units outstanding
Leasing business revenues – expenses related to leasing business + depreciation and amortization expenses(Note 6) For the 25th fiscal period, profit amounted to 4,198 million yen as a result of recording 1,657 million yen from gain on sales of real estate. However, because 1,660 million yen in reserve fortemporary difference adjustments was reversed, the total dividend obtained by deducting the amount of the reserve for temporary difference adjustments from unappropriated surplus of 4,199 million
yen came to 2,538 million yen. The payout ratio after taking into account the reversal of the reserve for temporary difference adjustments stands at 100.0%.
FUKUOKA REIT CORPORATION

10

II. Semiannual Report

II. Semiannual Report

Overview of Asset Management
2. Management assessment

Overview of Asset Management
Moreover, the credit ratings assigned to FRC as of the end of the 26th fiscal period are as follows:
Credit Rating Agency(1) Brief history of the investment corporation
Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on Investment Trusts andInvestment Corporations” (Act No. 198 in 1951 including later revisions, hereinafter the “Investment Trusts Act”) and listed on
the Tokyo Stock Exchange, Inc. and the Fukuoka Stock Exchange on June 21, 2005 as the nation’s first real estate investment
trust specializing in regional properties (code number: 8968). FRC invests in real estate throughout Kyushu (including Okinawa
Prefecture), with a central focus on Fukuoka City, and Yamaguchi Prefecture (hereinafter the “Fukuoka and Kyushu areas”) byusing expertise in regional characteristics, a strength in the real estate industry.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as Retail in Canal
City Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common space), a commercial complex
where specialty shops, cinema complex, theaters, amusement facilities, hotels and offices are integrally developed (hereinafter“Canal City Hakata”). As of the end of the 26th fiscal period (August 31, 2017), FRC manages a total of 26 properties
comprising 10 Retail, 7 Office buildings and 9 Others.

(2) Investment environment and portfolio performance
During the fiscal period under review (the 26th fiscal period), the Japanese economy remained on course for a modest
recovery. Looking ahead, with the employment and income environment continuing to improve, the economy is expected torecover moderately due to various political measures proving effective, among other factors.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy is expanding moderately, althoughvariations can be seen according to regions in the area and business types. With regard to the outlook, the area is expected tosee strong overseas demand and solid domestic demand, including rehabilitation from the Kumamoto Earthquake, to continue
going forward.
As for land price trends, the pace of decrease in combined national average for residential and commercial land over the
past year from July 2016 has decelerated, according to the 2017 Land Price Survey. By land type, residential land pricecontinued to show a decelerating pace of decrease and commercial land price turned to an increase from the level-off seen
last year. In Fukuoka City, the central area of FRC’s investment targets, land prices continued rising for the fifth consecutive
year, up 9.6% year-on-year for commercial land and up 3.3% year-on-year for residential land, marking higher rates ofincrease than last year.
Under such circumstances in the 26th fiscal period, FRC acquired LOGICITY Hisayama on June 1, 2017. Moreover, FRC
continued its efforts to reinforce competitive advantages and customer drawing ability at Canal City Hakata and other major
retail properties, and focused on maintaining and increasing the occupancy rate of its owned properties. As a result of theseendeavors, the average occupancy rate of all properties FRC owns was 99.8% at the end of the 26th fiscal period.
When analyzing FRC’s portfolio (on an acquisition price basis) by investment target area, the investment ratio in the Fukuoka
urban area accounted for 77.0%; when analyzing by property type, Retail, Office buildings, and Others accounted for 59.1%,
27.2% and 13.7%, respectively.

(3) Summary of fundraising
In the 26th fiscal period, FRC borrowed funds to acquire the above-mentioned property and conducted refinancing. As aresult, the balance of interest-bearing debt outstanding (including investment corporation bonds) at the end of the 26th fiscal
period totaled 69,900 million yen, with the loan-to-value ratio (ratio of interest-bearing debt (including investment corporation
bonds) to total assets) at 39.3% and the ratio of fixed-interest rate debt (including investment corporation bonds) at 79.8% asof the same date. In the fiscal period under review, FRC also issued the Second Series of Unsecured Bonds with a maturityof 15 years to disperse the debt repayment dates and increase the average length of time until debt maturity. Going forward,
FRC will continue its endeavors for dispersion of debt repayment dates and extension of debt duration in a similar manner, inan effort to reduce refinancing risks. At the same time, FRC will work to mitigate risks of rising interest rates by shifting to fixedinterest rate borrowings and through other measures.

FUKUOKA REIT CORPORATION

11

S&P Global Ratings Japan Inc. (S&P)

Rating Type

RatingRating Outlook

Long-term Corporate Credit Rating
Short-term Corporate Credit Rating

A−
A−2

Positive−

Rating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)

Issuer Rating

A+

StableLong-term Issuer Rating

AA−

Stable(4) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 8,122 million yen and operating income after excluding
operating expenses such as expenses related to leasing business and asset management fees totaled 2,920 million yen.
Ordinary income was 2,562 million yen and net income amounted to 2,556 million yen. Management decided to pay a
dividend of 3,422 yen per investment unit to meet the requirements of special tax measures for an investment corporation (asstipulated in Article 67-15 of the Act on Special Measures Concerning Taxation of Japan [Act No. 26 in 1957 including later
revisions]). Under this law, an investment corporation is allowed to deduct the maximum amount of dividends paid to investors
from its taxable income.
Furthermore, the appropriation of balance related to amended return in the statement of income refers to the payment amountof taxes that accrued in accordance with revised tax returns for income taxes, and shall be borne by the asset managementcompany based on the asset management agreement. This has no impact on the dividend FRC pays for the 26th fiscal
period.

3. Change in the number of investment units issued

Changes in unitholders’ capital from the incorporation of FRC to the end of the 26th fiscal period are as follows:
Date
July 2, 2004
November 8, 2004
June 20, 2005
July 21, 2005
September 7, 2006
March 1, 2011
March 1, 2013
March 1, 2014
April 27, 2015

Item
Established through private placement
Additional issue of investment units through private offering
Additional issue of new investment units through public offering
Additional issue of new investment units through third-party allotment
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering
Additional issue of new investment units through public offering
Split of investment units
Additional issue of new investment units through public offering

Number of investment units
issued (units)
Increase
Balance250
250
82,80083,0507,000
90,0502,000
92,05015,000107,050
16,000123,050
14,950138,000
552,000
690,000
57,000747,000

Unitholders’ capital(mm of yen)

Increase
125
41,4005,944
1,698
11,096
8,913
10,263–
11,701

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441
91,142

Remarks(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 1) FRC was established with an issue of investment units at 500,000 yen per unit.
(Note 2) New investment units were issued through private offering at the issue price of 500,000 yen per unit for the purpose of procuring funds for acquiring new properties, etc.
(Note 3) New investment units were issued through public offering at the issue price of 880,000 yen per unit (purchase price of 849,200 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 4) New investment units were issued through third-party allotment at the purchase price of 849,200 yen per unit.
(Note 5) New investment units were issued through public offering at the issue price of 766,360 yen per unit (purchase price of 739,772 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 6) New investment units were issued through public offering at the issue price of 576,083 yen per unit (purchase price of 557,078 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 7) New investment units were issued through public offering at the issue price of 710,580 yen per unit (purchase price of 686,529 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 8) FRC implemented a 5-for-1 split of its investment units.
(Note 9) New investment units were issued through public offering at the issue price of 212,257 yen per unit (purchase price of 205,290 yen) for the purpose of procuring funds for acquiring new properties, etc.

[Changes in market price of investment certificates]
The highest and lowest (closing price) market prices on the Real Estate Investment Trust Section of the Tokyo Stock
Exchange, Inc., on which FRC’s investment certificates are listed, in each fiscal period are as follows:
Fiscal period
HighestLowest22nd fiscal period

23rd fiscal period

24th fiscal period

25th fiscal period

26th fiscal period

226,000 yen
187,100 yen

209,000 yen
171,300 yen

214,500 yen
186,100 yen

192,000 yen
169,000 yen

182,800 yen
162,100 yen(March 1, 2015 toAugust 31, 2015)(September 1, 2015 toFebruary 29, 2016)(March 1, 2016 toAugust 31, 2016)(September 1, 2016 to
February 28, 2017)

FUKUOKA REIT CORPORATION

12(March 1, 2017 toAugust 31, 2017)

II. Semiannual Report

II. Semiannual Report

Overview of the Investment Corporation

Overview of Asset Management
4. Results of dividend, etc.

1. Summary of unitholders’ capitalWith respect to the dividend (excluding dividend in excess of earnings) for the 26th fiscal period, FRC determined to distributethe whole unappropriated surplus (except for the fraction amount, which is the dividend per unit of less than 1 yen) to be eligible
for special tax measures for an investment corporation (as stipulated in Article 67-15-1 of the Special Taxation Measures Act)
that allow FRC to deduct the maximum amount of earnings dividend from its taxable income. Accordingly, dividend per unit for
the fiscal period was 3,422 yen.
(thousands of yen)
Fiscal period
ProfitUnappropriated surplus
Undistributed earnings
Total dividends[Dividend per unit]

Earnings dividends[Earnings dividend per unit]

Contribution refund[Contribution refund per unit]

Of the contribution refund,
distribution of the reserve
for temporary difference
adjustments(Of the contribution refund per unit,
distribution per unit of the reserve fortemporary difference adjustments)

Of the contribution refund,
distribution through the
reduction in unitholders’capital for tax purposes(Of the contribution refund per unit,
distribution per unit through the
reduction in unitholders’ capital fortax purposes)

22nd fiscal period

23rd fiscal period(March 1, 2015 toAugust 31, 2015)

24th fiscal period(September 1, 2015 toFebruary 29, 2016)

2,661,683
2,661,720
159
2,661,561[3,563 yen]
2,661,561[3,563 yen]

25th fiscal period(March 1, 2016 toAugust 31, 2016)

[–]

[–]

–
[–]

–
[– ]

1,660,581[2,223 yen]

–

[–]

–

–

–

[–]

[–]

Total number of authorized
investment units
Total number of investment units
outstanding
Number of unitholders

23rd fiscal period

24th fiscal period

10,000,000 units

10,000,000 units

747,000 units
10,52422nd fiscal period
as of August 31, 2015

25th fiscal period

26th fiscal period

10,000,000 units

10,000,000 units

10,000,000 units

747,000 units

747,000 units

747,000 units

747,000 units

10,330

9,722

10,25910,190as of February 29, 2016as of August 31, 2016as of February 28, 2017as of August 31, 2017

26th fiscal period(September 1, 2016 to
February 28, 2017)938,400
938,409177
2,598,813[3,479 yen]
938,232[1,256 yen]
1,660,581[2,223 yen]–

2,669,627
2,669,786
8
2,669,778[3,574 yen]
2,669,778[3,574 yen]

Fiscal period(March 1, 2017 toAugust 31, 2017)

4,198,931
4,199,108
221
2,538,306[3,398 yen]
2,538,306[3,398 yen]

2,556,294
2,556,515
281
2,556,234[3,422 yen]
2,556,234[3,422 yen]

[– ]

[–]

–
[–]

[–]

–

–

[–]

–

–

–

2. Matters related to investment units
The following table sets forth the major unitholders of FRC as of August 31, 2017.
Investment units held (units)

NameJapan Trustee Service Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Fukuoka Jisho Co., Ltd.
Trust & Custody Service Bank, Ltd. (Securities investment trust account)
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
Kazuhiko Enomoto
STATE STREET BANK-WEST PENSION FUND CLIENTS-EXEMPT 505233
MetLife, Inc.
Shikoku Railway Company
Joyo Bank Ltd.
Total

196,925
83,09566,07542,572
26,576
11,985
11,400
11,2009,130
8,570
467,528

Percentage of total number ofinvestment units outstanding (%) (Note)
26.36
11.12
8.84
5.69
3.55
1.60
1.52
1.49
1.22
1.14
62.58

(Note) Percentage of total number of investment units outstanding is rounded down to the nearest specified unit.

[–]

3. Matters related to directors

5. Future portfolio management policy and vital issues
FRC will further reinforce management and leasing capabilities by cooperating with property management companies including
sponsor companies even in a weak consumer spending environment, and secure and maintain the stable operation of theproperties by making the most use of their advantages.
FRC will continue to make investments based on the basic policy stipulated in its Articles of Incorporation and its basic
philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in “high growthpotential markets.” By geographic location, of the Fukuoka and Kyushu areas, FRC will invest 60% to 90% of its assets in the
Fukuoka urban area, since the Fukuoka urban area is expected to have a high population growth rate in the future. In addition
to the Fukuoka urban area, management has decided to actively acquire properties in major cities, if there are regions orproperties where FRC can generate investment merits through its knowledge of the local land. FRC will acquire high quality
properties through use of its advantages, such as information gathering ability in the areas, good knowledge of regional
properties and close relations with the local business community and governments, so that investors can continue to invest in
FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try to maintain asolid financial structure.

6. Significant events that have occurred after the end of the 26th fiscal period
No relevant items.

FUKUOKA REIT CORPORATION

13(1) The names of FRC’s directors, etc. and their fees for the 26th fiscal period are as
follows:
Title

Name of directors, etc.

Major concurrent assignments

Total fee for each title for the
26th fiscal period(thousands of yen) (Note 2)

CEO and Representative Director

CEO and Representative Director, Fukuoka Realty
Co., Ltd.
Representative Council, Shindo Law Firm
Representative Partner, Kawasho Authorize
Accountant OfficeEtsuo Matsuyuki
Hiroyasu ShindoSupervisory Directors
Independent Auditor

Yasuo Kawasho
PricewaterhouseCoopers
Aarata LLC

–

6,000
3,600
11,000(Note 1) The CEO and Representative Director and Supervisory Directors do not possess investment units of FRC under their own name or under another person’s name. Although there are cases where theSupervisory Directors may be directors of companies other than those stated above, none of the companies or those stated above have vested interest in FRC.
(Note 2) The fees for the CEO and Representative Director and Supervisory Directors are the amounts paid to them in the 26th fiscal period, and the fee to the Independent Auditor is the amount payable to it(estimate) for audits pertaining to the 26th fiscal period.
(Note 3) The total fee paid to PricewaterhouseCoopers Aarata LLC includes the fee for the services other than those stipulated in Article 2-1 of the Certified Public Accountants Act.

(2) Policy on deciding to dismiss and not to reappoint the Independent Auditor
FRC will review at its Board of Directors meetings decisions regarding the dismissal of the Independent Auditor in accordancewith the provisions of the Investment Trusts Act, and review decisions not to reappoint the Independent Auditor following thecomprehensive consideration of the audit quality, audit fee and other various conditions.

FUKUOKA REIT CORPORATION

14

II. Semiannual Report

II. Semiannual Report

Overview of the Investment Corporation

Status of FRC’s Assets under Management

4. Names of asset management company, asset custodian and generaladministrators as of the end of the 26th fiscal period
The following table sets forth the asset management company, asset custodian and general administrators of FRC as ofAugust 31, 2017
Category of entrustment

2. Major assets owned by FRC
The following is an overview of the major assets (top ten properties on a book value basis) owned by FRC as of August 31,
2017.
Real estate property name (Note 1)

Book value(mm of yen)

Name

Total leasable floor Total leased floor
space (m2)space (m2)Occupancy rate(%) (Note 2)

Percentage of total
leasing businessrevenues (%) (Note 3)

Main use

Canal City Hakata

30,51846,602.94

46,602.94

100.0

15.4

RetailMitsubishi UFJ Trust and Banking Corporation

Canal City Hakata·B

29,213

68,820.27

68,820.27

100.0

19.7

RetailGeneral Administrator (accounting matters, etc.)

Mitsubishi UFJ Trust and Banking Corporation

Park Place Oita

18,932

113,837.73

113,837.73

100.0

15.1

RetailGeneral Administrator (administration of unitholders’ list)

Sumitomo Mitsui Trust Bank, Limited

Canal City Business Center Building

13,39523,031.09

23,031.09

100.0

7.9

Office buildings

General Administrator (administration of investment corporation bonds registry)

Sumitomo Mitsui Banking Corporation

Gofukumachi Business Center

9,313

19,905.34

19,905.34

100.0

6.7

Office buildings

LOGICITY Minato Kashii

8,008

43,233.72

43,233.72

100.0

Undisclosed (Note 4)

Taihaku Street Business Center

6,219

14,677.27

14,499.25

98.8

3.7

Office buildings

SunLive City Kokura

5,770

61,450.22

61,450.22

100.0

3.6

RetailMarinoa City Fukuoka (Marina Side Building)

5,473

33,069.82

33,069.82

100.0

2.2

RetailLOGICITY Hisayama

5,062

24,505.65

24,505.65

100.0

Undisclosed (Note 4)

Others131,907449,134.05

448,956.03

100.0

–

Asset Management Company

Fukuoka Realty Co., Ltd.

Asset Custodian

Status of FRC’s Assets under Management
1. FRC’s asset structure

Total
25th fiscal period

Type of asset

Area

Use

26th fiscal period

as of February 28, 2017as of August 31, 2017

Total value of
properties held

Percentage of
total assets

Total value of
properties held

Percentage of
total assets

Fukuoka metropolitan area

66,011

37.7

66,213

37.2

Other Kyushu areas

36,76321.0

36,487

20.5

Fukuoka metropolitan area

43,16824.7

42,798

24.0

−

−

−

−

Fukuoka metropolitan area

15,907

9.1

20,876

11.7

Other Kyushu areas

2,676

1.5

2,654

1.5

Silent partnership equity interests (Note 4)

104

0.1

−

−

Deposits and other assets

10,432

6.0

9,032

5.1

Total amount of assets (Note 5)

175,063[164,809]

100.0[94.1]

178,063[169,053]

100.0[94.9](Note 1)(mm of yen) (Note 2)

RetailReal estate trust
beneficiary interest

Office buildings

OthersOther Kyushu areas(%) (Note 3)(mm of yen) (Note 2)(Note 1) The properties listed above are owned in the form of trust beneficiary interest.
(Note 2) “Occupancy rate” refers to the percentage of leased floor space to leasable floor space and the numbers are rounded off to one decimal place.
(Note 3) “Percentage of total leasing business revenues” is rounded off to one decimal place.
(Note 4) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

(%) (Note 3)(Note 1) “Fukuoka metropolitan area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City for school and work, according to the 2010 census, which states “thenumber of workers and students aged 15 years or older (students including those aged 14 years or younger: particular reference) commuting between their homes and places of work or school” conductedby Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs and Communications. “Other Kyushu areas” refers to the Fukuoka and Kyushu area excluding the Fukuoka urban area.
(Note 2) “Total value of properties held” is based on the value on the balance sheet (the value of real estate trust beneficiary interest 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) Silent partnership equity interests represent FRC’s equity investment in an SPC (Limited Liability Company FRC1) that operates with LOGICITY Hisayama as the investment property.
(Note 5) Figures in square brackets for “Total amount of assets” refer to the value and percentage of real estate held in effect to the total amount of assets.

FUKUOKA REIT CORPORATION15FUKUOKA REIT CORPORATION

16

OthersII. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Status of FRC’s Assets under Management
3. Details of real estate properties in the portfolio
The following table provides details of the real estate properties owned by FRC as of August 31, 2017.

Real estate property nameForm ofownership

Location

2-22, 1-Chome, Sumiyoshi,
Hakata Ward, Fukuoka City
2-1, 1-Chome, Sumiyoshi,
Canal City Hakata·B
Hakata Ward, Fukuoka City1, 2-Chome, Koen Dori Nishi,
Park Place Oita
Oita City, Oita
14-1, 2-Chome, Kami Kuzuhara,
SunLive City Kokura
Kokura Minami Ward, Kitakyushu
City
2-18, 2-Chome, Usuki,
Square Mall Kagoshima Usuki
Kagoshima City, Kagoshima
1-5, 1-Chome, Kozono, HigashiKumamoto Intercommunity SC
Ward, Kumamoto City
9-12, 4-Chome, Hanahata,
Hanahata SC
Minami Ward, Fukuoka City
370-3 Higashi Kushiwara,
Kurume Higashi Kushiwara SC
Kurume City, Fukuoka
4-12, Tokai-cho, Kagoshima
K’s Denki Kagoshima
City, Kagoshima
Marinoa City Fukuoka (Marina Side 12-30, 2-Chome, Odo, Nishi
Building)
Ward, Fukuoka City
Retail subtotal:
2-25, 1-Chome, Sumiyoshi,
Canal City Business Center Building
Hakata Ward, Fukuoka City
10-10, Kami Gofukumachi,
Gofukumachi Business Center
Hakata Ward, Fukuoka City
1-23, 2-Chome, Hakataeki Higashi,
Sanix Hakata Building
Hakata Ward, Fukuoka City
3-21 Gokushomachi, Hakata
Taihaku Street Business Center
Ward, Fukuoka City
1-2, 3-Chome, Higashi Hie,
Higashi Hie Business Center
Hakata Ward, Fukuoka City
5-28, 2-Chome, Tenjin, Chuo
Tenjin Nishi-Dori Center Building
Ward, Fukuoka City
4-20, 4-Chome, Tenjin, Chuo
Tenjin North Front Building
Ward, Fukuoka City
Office buildings subtotal:
4-23, 2-Chome, Maizuru, Chuo
Amex Akasakamon Tower
Ward, Fukuoka City
16-21, 2-Chome, Kego, Chuo
City House Keyaki DoriWard, Fukuoka City
3-12, 4-Chome, Chihaya,
Aqualia Chihaya
Higashi Ward, Fukuoka City
10-38, 2-Chome, Daimyo, Chuo
D-Wing Tower
Ward, Fukuoka City
11-20, 1-Chome, Hirao, Chuo
Granfore Yakuin Minami
Ward, Fukuoka City
5-18, 1-Chome, Chuo-cho, Oita
Hotel FORZA Oita
City, Oita
1607 Momota, Himekata-cho
Tosu Logistics Center
Aza, Tosu City, Saga
3-4, 2-Chome, Minato Kashii,
LOGICITY Minato Kashii
Higashi Ward, Fukuoka City
2335-3 Oaza Yamada,
LOGICITY Hisayama
Hisayama-machi, Kasuya
County, Fukuoka
Others subtotal:
Total
Canal City Hakata

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

Total leasable
floor space (m2)Period-end
appraisalvalue(mm of yen)
(Note)

Book value
at end ofperiodReal estate property nameReal estate appraiser(mm of yen)

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

46,602.94

31,90030,51868,820.27

29,90029,213

113,837.73

19,10018,932

Japan Real Estate Institute61,450.22

7,930

5,770

Japan Real Estate Institute14,602.88

5,420

4,521

Japan Real Estate Institute6,968.66

2,720

2,042

2,801.15

1,250

1,008

6,467.80

2,790

2,127

7,296.17

3,710

3,091

33,069.82

5,940

5,473

361,917.64

110,660

102,701

23,031.09

26th fiscal period

25th fiscal period(September 1, 2016 to February 28, 2017)

14,90013,395

Japan Real Estate InstituteTanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

19,905.34

13,4009,313

6,293.75

5,430

3,906

Japan Real Estate Institute

14,677.27

7,590

6,219

Japan Real Estate Institute13,614.59

6,710

4,637

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

2,970

2,709

Japan Real Estate Institute5,252.41

3,580

2,617

Japan Real Estate Institute86,113.77

54,58042,7984,821.25

1,940

1,765

2,710.86

1,090

950

5,619.69

1,630

1,190

7,187.59

3,420

2,749

2,496.06

1,290

1,149

5,785.44

1,860

1,431

Japan Real Estate Institute4,173.29

1,420

1,223

Japan Real Estate InstituteDaiwa Real EstateAppraisal Co., Ltd.
Daiwa Real EstateAppraisal Co., Ltd.
Japan Real Estate InstituteTanizawa Sogo Appraisal
Co., Ltd.
Tanizawa Sogo Appraisal
Co., Ltd.

43,233.72

8,800

8,008

Tanizawa Sogo Appraisal
Co., Ltd.

24,505.65

5,220

5,062

Tanizawa Sogo Appraisal
Co., Ltd.

100,533.55
548,564.96

26,670191,910

23,531
169,031

Canal City Hakata
Canal City Hakata·B
Park Place Oita
SunLive City Kokura
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
AEON Hara Shopping Center (Note 5)
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima
Marinoa City Fukuoka (Marina Side Building)Retail subtotal:
Canal City Business Center Building
Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center
Higashi Hie Business Center
Tenjin Nishi-Dori Center Building
Tenjin North Front Building
Office buildings subtotal:(March 1, 2017 to August 31, 2017)

Total leasing
Percentage ofTotal leasing
Percentage of
Number of tenants Occupancy rate
Number of tenants Occupancy ratebusiness revenues total leasing
business revenues total leasingat end of period at end of period
at end of period at end of period
during period business revenues
during periods business revenues(Note 1)(%) (Note 3)(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)(mm of yen)(%) (Note 4)

1 [45]
1 [48]
1 [101]
1
12
2
–

99.5
99.8
98.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,256
1,611
1,186
292
252
88
34
40
88
111
177

15.6
20.0
14.7
3.6
3.1
1.1
0.4
0.5
1.1
1.4
2.2

99.4

5,138

63.7

100.0
100.0
100.0
98.5
100.0
100.0
100.0

631
531
196
298
329
86
135

7.8
6.6
2.4
3.7
4.1
1.1
1.7

99.8

2,210

27.4

100.0
95.5

0.8
0.5
0.7
0.7
1.4
0.5
0.8
Undisclosed

–

2
1
1
1
23 [214](Note 2)

1 [61]
35
16
1 [67]
1 [25]
1
11
66 [216](Note 2)Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Kego (Note 6)
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita

1 [103]
1 [133]
1 [94]
1

98.2
97.0
94.9
100.0

Tosu Logistics Center

1

100.0

67
37
55
58
113
38
63
Undisclosed(Note 7)(Note 7)

100.0

Undisclosed

Undisclosed(Note 7)(Note 7)LOGICITY Minato Kashii
LOGICITY Hisayama

1 [67]
1 [40]
–

–

2
–

–

Others subtotal:

9 [441]Total

98 [871](Note 2)
(Note 2)

99.3
99.4

–

–

17

(Note 2)

1 [61]
35
16
1 [68]
1 [25]
1
11
66 [217](Note 2)

1 [60]
1 [39]
–

100.0
100.0
100.0
100.0
100.0
100.0

1,250
1,598
1,228
292
257
89

15.4
19.7
15.1
3.6
3.2
1.1

–

–

–

100.0
100.0
100.0
100.0

40
88
111
177

0.5
1.1
1.4
2.2

100.0

5,134

63.3

100.0
100.0
100.0
98.8
100.0
100.0
100.0

639
540
199
299
334
86
139

7.9
6.7
2.5
3.7
4.1
1.1
1.7

99.8

2,239

27.6

91.1
92.2

65
36

0.8
0.5

–

–

–

1 [103]
1 [136]
1 [91]
1

98.2
99.4
91.9
100.0

1

100.0

59
113
37
63
Undisclosed

0.7
1.4
0.5
0.8
Undisclosed(Note 7)(Note 7)2

100.0

Undisclosed

Undisclosed(Note 7)(Note 7)

100.0

Undisclosed

Undisclosed(Note 7)(Note 7)

99.0

743

9.2

99.8

8,117

100.0

1

9.0
100.0

99 [877](Note 2)
(Note 2)

(Note 1) “Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and office buildings among relevant properties. For the number of tenants in pass-throughmaster leasing properties, the number of sections stipulated in the tenancy agreements with end tenants is shown in square brackets. The Taihaku Street Business Center is an office building with aresidential tower. Its number of tenants comprises 12 for the office building and 56 for the residence in the 26th fiscal period (12 for the office building and 55 for the residence in the 25th fiscal period).
(Note 2) The total of all the tenants in other than pass-through master leasing properties and the total number of sections stipulated in the tenancy agreements with end tenants for pass-through master leasing
properties is shown in square brackets in the subtotal and total columns for “Number of tenants.”(Note 3) “Occupancy rate” refers to the percentage of leased floor space to leasable floor space and the numbers are rounded off to one decimal place.
(Note 4) “Percentage of total leasing business revenues” is rounded off to one decimal place, and the total of individual percentages in the above table may not equal 100%.
(Note 5) FRC disposed the property on September 30, 2016.
(Note 6) FRC disposed the property on November 29, 2016.
(Note 7) The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

4. Details of renewable energy generation facilities in the portfolio
No relevant items.

5. Details of the rights to operate public facilities, etc. in the portfolio
No relevant items.

6. Securities incorporated in the portfolio
No relevant items.

(Note) "Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity with the method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation
and rules stipulated by The Investment Trusts Association, Japan.
FUKUOKA REIT CORPORATION

–

2
1
1
1
23 [226]

10 [434]

723
8,072

1 [49]
1 [50]
1 [107]
1
12
2

FUKUOKA REIT CORPORATION

18

II. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Capital Expenditures for Owned Real Estate

7. List of specific transaction and forward exchange transaction contract
amount and status of fair value
The following table provides the contract amount of FRC’s specific transactions and the status of its fair value as of August 31, 2017
Contract amount, etc. (mm of yen)
Of which, exceeding 1 year

CategoryType

Off-market transaction

Interest rate swap transaction(Receivable floating; Payable
fixed)

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

18,50018,500(171)

2. Capital expenditures during the 26th fiscal period
Capital expenditures for the real estate properties owned by FRC totaled 741 million yen in the 26th period. Furthermore,
FRC incurred construction costs of 958 million yen in total in the period, including 209 million yen in repair and maintenanceexpenses classified as expenses on the statement of income and 8 million yen in expenses for restoration to former state. The
following table provides the overview of major construction work that was completed in the 26th fiscal period.
Real estate property nameLocation

PurposeConstruction cost

Period(mm of yen)

Canal City Hakata

Hakata Ward, Fukuoka City

Renovation of external walls of Canal City
Business Center building(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors.

Canal City Hakata·B

Hakata Ward, Fukuoka City

Replacement of foam fire extinguishingapparatus for ground parking lots andcountermeasures against cold waves

From February 2017
To April 201733

8. Status of other assets

Canal City Hakata·B

Hakata Ward, Fukuoka City

Renovation of external walls of Canal City
Business Center building

From February 2016
To May 2017243

All real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in theportfolio” on page 17. There is no incorporation of other specified assets as of the end of the 26th fiscal period.

Park Place Oita

Oita City, Oita

Improvement of food terrace environment

From February 2017
To April 201769

Marinoa City Fukuoka (Marina Side
Building)

Nishi Ward, Fukuoka City

Painting of external walls

From February 2017
To July 201743

Canal City Business Center Building

Hakata Ward, Fukuoka City

Renovation of external walls of Canal City
Business Center building

From February 2016
To May 2017

31

Total

18,50018,500(171)

9. Status of owned assets by country and region
As of the end of the 26th fiscal period, no overseas real estate properties in countries or regions other than Japan areincorporated into FRC’s portfolio.

From February 2016
To May 2017

122

3. Reserves for long-term repair and maintenance plans
FRC has deposited the following amounts from the cash flows generated during the 26th fiscal period in order to fund largescale repair and maintenance work in the medium- to long-term, based on long-term repairs and maintenance plans preparedfor respective properties.

Capital Expenditures for Owned Real Estate(millions of yen)
Fiscal period

1. Planned capital expenditures
The following table provides major items of capital expenditures associated with currently planned renovations, etc. for realestate properties owned by FRC as of the date of this Semiannual Report. The planned construction costs indicated below
may be partly classified as expenses. In addition, FRC will implement renewal construction work in order to maintain andimprove the competitiveness of properties in the market as well as tenant satisfaction, on top of the construction, facilities andreplacement work for which expenditures will be made regularly.

Balance of deposits at beginning of period

22nd fiscal period(March 1, 2015 toAugust 31, 2015)

23rd fiscal period(September 1, 2015 toFebruary 29, 2016)

24th fiscal period(March 1, 2016 toAugust 31, 2016)

PurposeSchedule
Total

Hakata Ward,
Fukuoka City

Refurbishment of sites for former tenants

From June 2018
To July 2018

247

-

-

Canal City Hakata·B

Hakata Ward,
Fukuoka City

Replacement of emergency telephones

From February 2018
To April 2018

55

-

-

Park Place Oita

Oita City, Oita

Replacement of air-conditioning units

From October 2017
To February 2018

178

-

-

Canal City BusinessCenter Building

Hakata Ward,
Fukuoka City

Refurbishment of sites for former tenants

From December 2017
To February 2018

50

-

-

Sanix Hakata Building

Hakata Ward,
Fukuoka City

Replacement of central monitoring equipment

From October 2017
To November 2017

14

-

-

FUKUOKA REIT CORPORATION

19(March 1, 2017 toAugust 31, 2017)

800

800

1,000

Deposits during the period

–

–

–

200

–

Amounts used from deposits during the period

–

–

–

–

–

Deposits carried forward to the next period

800

800

800

1,000

1,000

Construction
Amountcost
already paid

Canal City Hakata

26th fiscal period

800(mm of yen)

Location(September 1, 2016 to
February 28, 2017)

800

Planned construction cost
Real estate property
name25th fiscal period

FUKUOKA REIT CORPORATION

20

II. Semiannual Report

II. Semiannual Report

Expenses and Liabilities

Expenses and Liabilities

1. Details of expenses related to asset management
26th fiscal period

25th fiscal period

Item

Category(thousands of yen)

(September 1, 2016 to
February 28, 2017

Lender(March 1, 2017 toAugust 31, 2017)

Balance asof March 1,
2017

Balance asof August 31,
2017

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds

Description

July 29, 2011

1,000

–

1.800

July 31, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

January 31, 2012

500

500

1.338

January 31, 2019

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Acquisition fund
Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee

Drawdown
date(mm of yen)

(mm of yen)

(Note 1)(b) Asset custody fees

6,676

6,618

(c) Administrative service fees

51,646

51,583

The Dai-Ichi Life Insurance
Company
Sumitomo Mitsui Banking
Corporation(d) Directors’ compensations

9,600

9,600

The Nishi-Nippon City Bank

February 1, 2013

2,500

2,500

0.775

February 29, 2020

83,042

61,643

Mizuho Bank

February 28, 2013

1,700

1,700

0.557

February 29, 2020

627,860

608,941

Lump-sum uponmaturity
Lump-sum uponmaturity

Mitsubishi UFJ Trust and Banking
Corporation

March 29, 2013

600

–

0.407

March 30, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Aozora Bank

June 28, 2013

1,000

1,000

0.457

June 30, 2020

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

200

200

July 31, 2014

3,000

3,000

0.538

July 31, 2019

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

500

500

0.835

July 30, 2021

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee(a) Asset management fees

476,894(e) Other operating expenses
Total

479,496(Note) Aside from the amounts of the asset management fees shown above, 4,175 thousand yen was paid in the 25th fiscal period for asset management, capitalized in the acquisition costs, related to theacquisition of Sports Club NAS Park Place Oita and silent partnership equity interests in the 25th fiscal period, and 12,625 thousand yen was paid in the 26th fiscal period for asset management,
capitalized in the acquisition costs, related to the acquisition of LOGICITY Hisayama.

Mizuho Bank

2. Status of debt

The Norinchukin Bank
The Bank of Saga

As of the end of the 26th fiscal period (August 31, 2017), FRC has the following debt from respective financial institutions.
Balance asof March 1,
2017

Balance asof August 31,
2017

Averageinterest
rate (%)

Repayment
date

Repayment
methodUse offunds

Description

–
–

583
116

0.380

September 29, 2017

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee(Note 2)–

571

Resona Bank (Note 2)
The Bank of Nagasaki (Note 2)
The Oita Bank (Note 2)
The Bank of Saga (Note 2)
Subtotal

–
–
–
–
–

80
57
57
34
1,500

September 29, 2017

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Category
LenderThe Bank of Fukuoka (Note 2)
Resona Bank (Note 2)
The Nishi-Nippon City Bank

Short-term
debt(mm of yen)August 31, 2017

August 31, 2017

(mm of yen)

0.380

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fundMarch 31, 2017

Lump-sum uponmaturity

Acquisition fundNo collateral/
No guarantee

1.203

March 31, 2017

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

–

1.253

March 31, 2017

–

1.203

March 31, 2017

1,875

–

2.200

June 30, 2017

The Bank of Fukuoka

July 29, 2011

2,000

–

1.305

July 31, 2017

The Nishi-Nippon City Bank

July 29, 2011

2,000

–

1.305

July 31, 2017

March 1, 2012

2,000

–

1.170

March 30, 2012

500–

Resona Bank

March 30, 2012

600

The Higo Bank

March 30, 2012

300
1,000

June 29, 2012

Lump-sum uponmaturity
Lump-sum uponmaturity

–

700

–

700

–

600

–

500

–

500

–

500

–

500

–

0.858

June 30, 2017

1,500

1,500

0.657

December 30, 2017

Resona Bank

September 28, 2012

2,000

2,000

1.033

September 29, 2017

The Nishi-Nippon City Bank

February 28, 2013

1,900

1,900

0.557

February 28, 2018

Sumitomo Mitsui Trust Bank

February 28, 2013

1,100

1,100

0.607

February 28, 2018

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Mitsubishi UFJ Trust and Banking
February 28, 2013
Corporation

1,500

1,500

0.407

February 28, 2018

February 28, 2013

600

600

0.407

July 29, 2011

–

1,000

1.800

March 29, 2013–

600

23,875

10,200

1,400

1,400

800

800

The Iyo Bank

500

500

The Higo Bank

300

300

August 29, 2014

4,000

4,000

1.010

August 31, 2022

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

September 25, 2014

500

500

0.520

September 25, 2019

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

June 30, 2015

1,600

1,600

0.790

June 30, 2022

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui Trust Bank

July 31, 2015

1,500

1,500

0.564

July 31, 2023

Development Bank of Japan

August 31, 2015

4,000

4,000

0.880

August 31, 2023

The Bank of Fukuoka

August 31, 2015

400

400

0.407

August 31, 2022

The Nishi-Nippon City Bank

August 31, 2015

400

400

0.870

August 31, 2023

The Bank of Fukuoka

February 29, 2016

2,000

2,000

0.407

February 29, 2024

The Nishi-Nippon City Bank

February 29, 2016

2,000

2,000

0.440

February 29, 2024

Development Bank of Japan

February 29, 2016

2,000

2,000

0.620

February 28, 2025

Mizuho Bank

February 29, 2016

500

500

0.440

February 29, 2024

Shinsei Bank

July 29, 2016

700

700

0.400

July 31, 2024

September 30, 2016

300

300

0.401

September 30, 2025

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fund

Refinance fund
Refinance fund

0.718

December 30, 2025

Lump-sum uponmaturity

The Bank of Tokyo- Mitsubishi
UFJ
Sumitomo Mitsui Banking
Corporation

No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

No collateral/
No guarantee
No collateral/
No guarantee

Long-term
debt

Refinance fundNo collateral/
No guarantee

0.407

1,500

1,500

The Oita Bank

100

100

The Kagoshima Bank

100

100

100

100

The Eighteenth Bank

100

100

The Shinwa Bank

100

100

The Hiroshima Bank

100

100

21

December 30, 2016

Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Resona Bank

March 31, 2017

–

600

0.658

March 31, 2027

February 28, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

The Higo Bank

March 31, 2017

–

300

0.481

March 31, 2025

July 31, 2018

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

–

1,300

Lump-sum uponmaturity

The Nishi-Nippon City Bank

–

1,000

Refinance fund

The Oita Bank–

700

The Kitakyushu Bank

–

700

–

700

0.777

June 30, 2026

March 30, 2018

Refinance fund
Refinance fund
Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

December 30, 2016

1,500

1,500

0.407

December 30, 2026

Mitsubishi UFJ Trust and Banking
Corporation

March 31, 2017

–

800

0.481

March 31, 2025

The Miyazaki BankFUKUOKA REIT CORPORATION

July 31, 2014

Development Bank of JapanThe Kitakyushu Bank

December 30, 2011

The Dai-Ichi Life Insurance
Company
Mitsubishi UFJ Trust and Banking
Corporation
Subtotal

1,000

The Hiroshima Bank

Sumitomo Mitsui Trust Bank
Lump-sum uponmaturity

The Bank of Fukuoka

Aozora Bank

Refinance fund

–

1,000

2,300

1,000

Development Bank of Japan

June 30, 2009

The Bank of Fukuoka
The Nishi-Nippon City BankThe Oita Bank
The Miyazaki BankThe Shinwa BankThe Iyo Bank
The Bank of Saga
The Eighteenth Bank
The Kitakyushu Bank

2,300

The Kitakyushu Bank

(Note 1)Development Bank of Japan

Mitsubishi UFJ Trust and Banking
Corporation
Sumitomo Mitsui Banking
Corporation

Current
maturities
of long-term
debt

Drawdown
date

Mizuho Bank
The Norinchukin Bank

June 30, 2017

The Shinwa Bank–

600

The Iyo Bank–

500

The Eighteenth Bank–500FUKUOKA REIT CORPORATION

22

Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundII. Semiannual Report

II. Semiannual Report

Expenses and Liabilities

3. Investment corporation bonds
As of August 31, 2017, FRC has the following investment corporation bonds outstanding.

Category

Drawdown
dateLenderLong-term
debt

Balance asof March 1,
2017(mm of yen)

Balance asof August 31,
2017(mm of yen)

Averageinterest
rate (%)

Repayment
dateJune 30, 2017

–

1,800

0.650

December 31, 2026

The Bank of Fukuoka

July 31, 2017

–

2,000

0.792

July 31, 2027

The Nishi-Nippon City Bank

July 31, 2017

–

2,000

0.892

July 31, 2027

August 31, 2017

–
–
–
–
–
–
–
40,800

500
500
100
100
100
100
100
54,20064,67565,900Subtotal
Total

Use offunds

Description

Issue

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guaranteeFirst Series ofUnsecured Bonds
Second Series ofUnsecured Bonds

Balance as of Decrease during Balance as ofAugust 31,
March 1,the fiscal period
2017
2017
(mm of yen)

Issue date

(mm of yen)

(Note 1)Development Bank of JapanThe Nishi-Nippon City Bank
The Bank of Fukuoka
The Oita Bank
The Kitakyushu BankThe Eighteenth BankThe Shinwa Bank
The Hiroshima Bank

Repayment
methodLump-sum uponmaturity
Lump-sum uponmaturity
Lump-sum uponmaturity

December 30, 2013(%)

Maturity
methodUse

Description(mm of yen)

2,000

–

2,000

1.32

December 29, 2023

–

–

2,000

1.00

July 30, 2032

2,000

–

4,000

July 31, 2017

Total

Maturity
date

CouponLump-sumupon maturity(Note 1)
Lump-sumupon maturity(Note 1)

No collateral/
No guarantee(Note 2)
No collateral/ No
guarantee(Note 2)

Repayment of debt
Repayment of debt

(Note 1) The Bonds may be repurchased and cancelled by FRC at any time on and after the date following the payment date, unless otherwise determined by the book-entry transfer agent.
(Note 2) The bonds are subject to the limited pari passu clause among specified investment corporation bonds.
0.850

August 31, 2027

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

4. Short-term investment corporation bonds
No relevant items.

(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest rate of debt for which FRC conductedinterest rate swap transactions in order to hedge against interest rate fluctuation risks is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The debts were made based on the commitment line agreements between FRC and respective banks.

5. Subscription rights to shares
No relevant items.

Acquisitions and Sales during the 26th Fiscal Period
1. Acquisition and sale of real estate, asset-backed securities,
infrastructure assets, etc. and infrastructure-related assets, etc.
Acquisition
Property nameAcquisition price(mm of yen)

Acquisition date
LOGICITY Hisayama

Disposition
Disposition price(mm of yen)

Disposition date

Book value(mm of yen)

Gain or loss on sale
(mm of yen)

June 1, 2017

5,050

–

–

–

–

–

5,050

–

–

–

–

Total

(Note) Acquisition price or disposition price are amounts (transaction prices indicated in the sales agreement) excluding expenses (transaction brokerage fees, taxes and other public charges, etc.) required forthe acquisition or disposition of the relevant properties.

2. Acquisition and sale of other assets
No relevant items.

3. Survey on prices of specified assets, etc.
(1) Real estate, etc.
Acquisition or
disposition

Acquisition

Property name

LOGICITY
Hisayama

Type of asset

Real estate in trust

Transaction dateJune 1, 2017

Acquisition price ordisposition price(Note 1)(mm of yen)

Real estateappraisal value(Note 2)(mm of yen)

5,050

5,190

Real estateappraiser

Appraisal date

Tanizawa Sogo
Appraisal Co., Ltd.

March, 1, 2017

(Note 1) Acquisition price or disposition price is the amount (transaction price indicated in the sales agreement) excluding related expenses (transaction brokerage fees, taxes and other public charges, etc.)
required for the acquisition or disposition of the relevant property.
(Note 2) The above appraisals were valuated by applying the “Real Estate Appraisal Standards, Chapter 3: Valuation for price of real estate for securitization.”(2) Other
FRC carried out no transaction that was required to have the value, etc. reviewed pursuant to the provisions of Article 201 of
the Investment Trusts Act.
FUKUOKA REIT CORPORATION23FUKUOKA REIT CORPORATION

24

II. Semiannual Report

II. Semiannual Report

Acquisitions and Sales during the 26th Fiscal Period

Acquisitions and Sales during the 26th Fiscal Period
4. Transactions with interested parties, etc.

5. Transactions with the asset management company regarding
concurrent work conducted by the asset management company(1) Transaction status

The asset management company (Fukuoka Realty Co., Ltd.) concurrently conducts land and building transaction business but
there was no relevant transaction conducted in the 26th fiscal period. Moreover, the asset management company does notconcurrently conduct any class 1 financial instruments transaction business, class 2 financial instruments transaction businessor real estate syndication business, and has no such transactions with FRC.

Transaction amount, etc.
Category

Purchase amount, etc.
(thousands of yen)Total

5,050,000 (100.0%)

Sale amount, etc.
(thousands of yen)
– (–)

Breakdown of transactions with interested parties, etc.
Limited Liability Company FRC1
Total

5,050,000 (100.0%)
5,050,000 (100.0%)

Overview of Accounting

– (–)
– (–)

(Note 1) The figures in the above table refer to the amounts shown in the sales contracts.
(Note 2) Interested parties, etc. refer to the interested parties of the asset management company who have concluded an asset management agreement with FRC and are designated in Article 123 of
the Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of these interested parties, etc., the above table indicates the business partners with which FRC conductedtransaction during the 26th fiscal period.

(2) Amount of fees paid, etc.
Category
Property leasing brokerage fees (Note 3)
Property management fees (Note 4)
Outsourcing fees (Note 3) (Note 6)

Other operating expenses (Note 3)

Breakdown of transactions with interested parties, etc.
Paid party (Note 1)

Paid amount (B)Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd. (Note 2)
Fukuoka Jisho Co., Ltd.
285,388
FJ. Entertainment Works Ltd. (Note 2)
Fukuoka Jisho Co., Ltd.
1,308,221 FJ. Entertainment Works Ltd. (Note 2)
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
1,255,436 FJ. Entertainment Works Ltd. (Note 2)
Sunlife Co., Ltd.

5,553
5,157
172,818
103,535
936,247
213,546
85,162
239,442
219,722400(thousands of yen)

16,299Please refer to the IV. Balance Sheet, V. Statement of Income, VI. Statement of Changes in Net Assets, VII. Cash Flow
Statement, and VIII. Notes to Financial Statements on later pages of this report.

2. Changes in calculation method of depreciation

FRC paid the following fees to the interested parties, etc. during the 26th fiscal period.
Total paid fees(A)

1. Assets, liabilities, principal and profits/loss

No relevant items.

(B)/(A)(%)(thousands of yen)

34.1
31.6
60.6
36.3
71.6
16.3
6.5
19.1
17.5
0.0

(Note 1) Interested parties, etc. refer to the interested parties, etc. of the asset management company who has concluded an asset management agreement with FRC, as designated in Article 123 of the
Enforcement Order of the Act on Investment Trusts and Investment Corporations. Of these interested parties, etc., the above table indicates the paid parties to which FRC paid fees during the26th fiscal period.
(Note 2) FJ. Entertainment Works Ltd. was renamed from Canal Entertainment Works Co., Ltd., which was absorbed and merged with Park Place Oita Co., Ltd. on June 1, 2017. The same shall apply hereafter.
(Note 3) The property leasing brokerage fees, outsourcing fees and other operating expenses include property leasing brokerage fees, etc. paid to third parties through interested parties, etc.
(Note 4) The property management fees do not include the following construction supervision fees. In addition, of the fees below, the construction supervision fees paid upon acquiring real estate are includedin the acquisition cost of the relevant real estate.
Fukuoka Jisho Co., Ltd.
15,500 thousand yen
FJ. Entertainment Works Ltd.
6,143 thousand yen(Note 5) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 26th fiscal period. The amounts include construction
work fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd.
761,631 thousand yen
FJ. Entertainment Works Ltd.
117,839 thousand yen
Sunlife Co., Ltd.
59,258 thousand yen(Note 6) The outsourcing fees shown above are paid fees, etc. regarding building management outsourcing fees, and do not coincide with the Outsourcing fees described in VIII. Notes to Financial Statements(Notes to statement of income) that include property management fees and others.

3. Changes in valuation method of real estate and infrastructure assets,
etc.
No relevant items.

4. Overview of self-managed investment trust beneficiary certificatesNo relevant items.

5. Disclosure on corporation owning foreign real estate
No relevant items.

6. Disclosure on real estate owned by corporation owning foreign realestateNo relevant items.

Other
1. Handling of fractions of monetary amounts and percentage figures
Unless otherwise stated, the figures less than the specified unit are rounded down for monetary amounts and rounded off to
one decimal place for percentage figures throughout this Semiannual Report.

FUKUOKA REIT CORPORATION25FUKUOKA REIT CORPORATION

26

III. Independent Auditor's Report

IV. Balance Sheet(thousands of yen)Account

25th fiscal period(as of February 28, 2017)

26th fiscal period(as of August 31, 2017)

AssetsCurrent assets
Cash and deposits

4,434,396

2,253,209

Cash and deposits in trust

4,513,353

4,926,483

Operating accounts receivable

376,449

431,417

Prepaid expenses

251,873

248,026–

258,416

Consumption taxes receivable
Deferred tax assets

9

–

3,836

13,2199,579,918

8,130,772

OthersTotal current assets
Non-current assets
Property, plant and equipment
Buildings in trust*1

84,307,621*1

87,978,370

Accumulated depreciation(23,045,241)(24,412,671)

Buildings in trust, net

61,262,379

63,565,699

Structures in trust

1,473,234

1,579,329

Accumulated depreciation(601,047)(635,047)

Structures in trust, net

872,187944,282

Machinery and equipment in trust

1,008,869

1,264,341

Accumulated depreciation(308,501)(344,218)

Machinery and equipment in trust, net

700,368

920,123

Vehicles and transport equipment in trust

747

747

Accumulated depreciation

(342)

(389)

Vehicles and transport equipment in trust, net

405

357

Tools and fixtures in trust

1,280,623

1,297,196

Accumulated depreciation(1,005,845)(1,026,204)

Tools and fixtures in trust, net

274,777

270,991Lands in trust*1

99,631,188*1

101,545,140

178,535

21,825

162,919,841

167,268,420

1,765,318

1,765,318

20,605

19,551

1,785,924

1,784,869

Investment securities

104,078–

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

110,000

110,000

Long-term prepaid expenses

528,547

720,744

Total investment and other assets

752,626

840,744

165,458,391

169,894,034

Investment corporation bond issuance expenses

13,42732,259Investment unit issuance expenses

12,1596,547

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

Total non-current assets
Deferred assets

Total deferred assets
Total assets
FUKUOKA REIT CORPORATION27

FUKUOKA REIT CORPORATION

25,58738,806

175,063,897

178,063,613

28

IV. Balance Sheet

V. Statement of Income(thousands of yen)(thousands of yen)Account

25th fiscal period(as of February 28, 2017)

26th fiscal period(as of August 31, 2017)

Account

25th fiscal period(September 1, 2016 to February 28, 2017)

26th fiscal period(March 1, 2017 to August 31, 2017)

Operating revenues

Liabilities
Current liabilities

Leasing revenues – real estate*1

7,603,068*1

7,605,973

Operating accounts payable

Other leasing revenues – real estate*1469,211*1

511,797*3

1,657,588

–

974

4,873

9,730,842

8,122,643

595,539

387,054–

1,500,000

Gain on sales of real estate

23,875,000

10,200,000

Dividend income

Short-term debt
Current maturities of long-term debt
Accounts payable-other

24,687

21,833

Accrued expenses

335,540

327,884

Income taxes payable

854

666

Accrued consumption taxes

239,564–

Advances received

973,313

997,414

Deposits received

752,271
26,796,772

Total current liabilities

Total operating revenues
Operating expenses
Expenses related to leasing business*1*2

4,517,495

479,496

6,676

6,618

1,054,757

Administrative service fees

51,646

51,583

14,489,611

Director’s compensations

9,600

9,600

Other operating expenses

83,042

61,643

Total operating expenses

5,145,355

5,202,607

4,585,487

2,920,036
35

2,000,000

4,000,000

Long-term debt

40,800,000

54,200,000

368,897368,837

Non-operating revenues

11,305,882

Interest received

40

Appropriation of balance related to amended return–

Tenant leasehold and security deposits received in trust*1

11,416,934*1

Total non-current liabilities

54,585,831

69,874,720

Total liabilities

81,382,604

84,364,331

Net assets
Unitholders’ equity
91,142,766

91,142,766

Deduction from unitholders’ capital*4

Total deduction from unitholders’ capital(1,660,581)*4–(1,660,581)–

89,482,185

91,142,766

Unappropriated surplus

4,199,108

2,556,515

Total surplus

4,199,108

2,556,515

93,681,293

93,699,282

Unitholders’ capital, net
Surplus

Total unitholders’ equity
Total net assets

Operating income

*4

7,833

Others946

672

Total non-operating revenues

987

8,541

Interest expenses

276,464

253,565Interest expenses on investment corporation bonds

13,20014,866

Amortization of investment corporation bond issuance
expenses

982

1,093

Amortization of investment unit issuance expenses

5,612

5,612

Financing related expenses

90,391

87,187

Non-operating expenses

Unitholders’ capital
Reserve for temporary difference adjustments

4,593,665

476,894

Investment corporation bonds
Tenant leasehold and security deposits*2

Asset custody fees

Non-current liabilities

Asset management fees

*1

*3

Total liabilities and net assets

93,681,293
175,063,897*393,699,282
178,063,613

Others15

4,093

386,664

366,418

Ordinary income

4,199,809

2,562,159

Net income before income taxes

4,199,809

2,562,159

860

666

–

5,189

Total non-operating expenses

Income taxes-current
Income taxes based on amended return
Income taxes-deferred

17

9

Total income taxes

878

5,864

4,198,931

2,556,294

ProfitFUKUOKA REIT CORPORATION

29

Surplus brought forward

177

221

Unappropriated surplus

4,199,108

2,556,515

FUKUOKA REIT CORPORATION

30

VII. Cash Flow Statement

VI. Statement of Changes in Net Assets

Account

25th fiscal period (September 1, 2016 to February 28, 2017)(thousands of yen)

Unitholders’ Equity

Item

Balance as of
September 1,
2016
Changes in thecurrent fiscal
periodDividend of
surplusDividend inexcess of
earnings using
reserve fortemporarydifference
adjustments
ProfitTotal of changes
in the current
fiscal period
Balance as ofFebruary 28,
2017

Unitholders’ capital
Deduction from unitholders’ capital
Reserve for
Total deduction
Unitholders’ capital
temporaryfrom unitholders’difference
capitaladjustments
91,142,766––

Surplus
Unitholders’capital, net

Unappropriatedsurplus91,142,766

Total surplus

938,409938,409

Total
unitholders’equityTotal
net assets

92,081,175

92,081,175

Balance as ofAugust 31, 2017

4,199,809

2,562,159

Depreciation and amortization expenses

1,455,895

1,474,387

982

1,093

5,612

5,612

Amortization of investment corporation bond issuance expenses
Interest received

(40)

(35)

Interest expenses

289,664

268,432

Gain on sales of real estate(1,660,581)–

91,142,766(1,660,581)(1,660,581)(1,660,581)(1,660,581)(1,660,581)(938,232)(1,660,581)(938,232)(1,660,581)(1,660,581)

89,482,185(938,232)(1,660,581)

4,198,931

4,198,931

4,198,931

4,198,931

3,260,699

3,260,699

1,600,118

1,600,118

4,199,108

4,199,108

93,681,293

93,681,293

Unitholders’ capital
Deduction from unitholders’ capital
Reserve for
Total deduction
Unitholders’ capital
temporaryfrom unitholders’difference
capitaladjustments
91,142,766(1,660,581)

1,660,581(1,660,581)

1,660,581(258,416)

Increase (decrease) in operating accounts payable

3,547(15,854)

Increase (decrease) in accounts payable-other

11,659(3,248)

Increase (decrease) in accrued expenses(6,027)

1,124

Increase (decrease) in advances received(97,675)

24,101

Increase (decrease) in deposits expenses(450,682)

302,485

Decrease (increase) in prepaid expenses

9,282

3,846

Decrease (increase) in long-term prepaid expenses

17,379(192,196)

Others, net

20,251(4,514)

Subtotal

3,974,151

3,874,44440

35Interest income received(296,961)(277,213)

Proceeds from Insurance income

75,052－

Payments for loss on disaster(65,923)－

Income taxes paid

(1,248)(6,604)

3,685,111

3,590,662

Proceeds from sales of property, plant and equipment in trust

7,862,034－

Purchase of property, plant and equipment in trust(3,250,588)(5,995,095)－(20,197)

Net cash provided by (used in) investment activities

Unitholders’capital, net

Unappropriatedsurplus

Total surplus

89,482,185

4,199,108

4,199,108

1,660,581

Total
unitholders’equityTotal
net assets

Purchase of intangible assets in trust
93,681,293

93,681,293(2,538,306)(2,538,306)(2,538,306)(2,538,306)(1,660,581)(1,660,581)––

2,556,294

2,556,294

2,556,294

2,556,294(1,642,592)(1,642,592)

17,98817,988Proceeds from tenant leasehold and security deposits

5,208

－

Repayments of tenant leasehold and security deposits(8,077)(60)

Proceeds from tenant leasehold and security deposits in trust

172,380

144,468

Repayments of tenant leasehold and security deposits in trust(482,527)(255,520)－

100,000(103,928)(150)

Redemption of investment securities
Purchase of investment securities
Proceeds from restricted trust deposits

29,511

3,819

Payments for restricted trust deposits(4,010)(7,078)4,220,004(6,029,813)

Proceeds from short-term debt

3,000,000

14,500,000

Repayments of short-term debt

(7,000,000)(13,000,000)

Proceeds from long-term debt

3,900,000

15,000,000

Repayments of long-term debt

(5,175,000)(15,275,000)－

2,000,000－(19,924)

Dividends paid

(2,597,440)(2,537,240)

Net cash provided by (used in) financial activities(7,872,440)

667,834

Net increase (decrease) in cash and cash equivalents

32,676(1,771,317)

Net cash provided by (used in) investment activities–

91,142,766

1,660,581–

1,660,581–

1,660,581

91,142,766

2,556,515

2,556,515

93,699,282

93,699,282

Net cash provided by (used in) financial activities

Proceeds from issuance of investment corporation bonds
Payment of investment corporation bond issuance expenses

Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period
FUKUOKA REIT CORPORATION

31(54,967)(239,564)

Net cash provided by (used in) operating activities
Surplus－39,693－

Increase (decrease) in accrued consumption taxes

Interest expenses paid

(thousands of yen)

(1,657,588)

132,386

Decrease (increase) in consumption taxes receivable

Unitholders’ Equity

Balance as ofMarch 1, 2017
Changes in thecurrent fiscal
periodDividend of
surplus
Reversal ofreserve fortemporarydifference
adjustment
ProfitTotal of changes
in the current
fiscal period

Net income before income taxes

Decrease (increase) in operating accounts receivables(938,232)

26th fiscal period(March 1, 2017 toAugust 31, 2017)

Net cash provided by (used in) operating activities

Amortization of investment unit issuance expenses

26th fiscal period (March 1, 2017 to August 31, 2017)

Item(thousands of yen)

25th fiscal period(September 1, 2016 to
February 28, 2017)

8,873,147
8,905,823*1

FUKUOKA REIT CORPORATION

32

8,905,823*1

7,134,506

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Significant accounting policies)
1. Valuation standard and method for assets

2. Depreciation method for non-current assets[Additional information]

Securities
Other securities
Securities without fair value
Silent partnership equity interests are stated at their net asset value corresponding to the equity interestsin the silent partnership.
(1) Property, plant and equipment
Depreciation is calculated using the straight-line method.
The useful lives of major categories of property, plant and equipment are as follows:
Buildings in trust:
10 – 70 years
Structures in trust:
15 – 60 years
Machinery and equipment in trust:
15 – 30 years
Vehicles and transport equipment in trust:
7 years
Tools and fixtures in trust:5 – 20 years(2) Intangible assets
Intangible assets are amortized utilizing the straight-line method.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized utilizing the straight-line method.

3. Accounting for deferred assets

4. Standards for recognition of revenues and expenses

5. Method of hedge accounting

6. Scope of funds (cash and cash equivalents) in cash
flow statement

7. Other significant items fundamental to preparing thefinancial statements

Investment unit issuance expenses
Investment unit issuance expenses are amortized utilizing the straight-line method over three years.
Investment corporation bond issuance expenses
Investment corporation bond issuance expenses are amortized utilizing the straight-line method overthe period through redemption.
Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses themethod of charging the corresponding amounts of assessed taxes to the current fiscal period as
expenses related to leasing business.
The amount equivalent to property taxes, etc. for the initial fiscal year paid to the seller as settlementmoney upon acquisition of real estate or trust beneficiary interests in real estate as entrusted property
are not expensed but capitalized as part of the acquisition cost of the relevant property.
The amount equivalent to property taxes, etc. capitalized in the acquisition cost of realestate, etc. were 3,310 thousand yen for the 25th fiscal period and 13,553 thousand yen for the 26th
fiscal period.
(1) Method of hedge accounting
Deferred hedge accounting is applied for interest rate swap transactions. However, special accounting
is applied for interest rate swap transactions that satisfy the requirements for special accounting.
(2) Hedging instruments and hedged items
Hedging instrument: interest rate swap transactions
Hedged items: interest rates of borrowings(3) Hedging policy
FRC conducts derivative transactions to hedge interest rate fluctuation risks for floating-rate borrowings
based on FRC’s Articles of Incorporation.
(4) Method for assessing the effectiveness of hedging
Assessment of the effectiveness of hedging is omitted as requirements are satisfied for special
accounting for interest rate swap transactions.
The funds (cash and cash equivalents) in the cash flow statement consist of cash on hand and cash intrust; deposits that can be withdrawn at any time and deposits in trust; and short-term investments witha maturity of 3 months or less from the date of acquisition, which are readily convertible to cash and bear
only an insignificant risk of value fluctuation.

(1) Accounting methods for trust beneficiary interests in real estate as entrusted property
Regarding trust beneficiary interests in owned real estate as entrusted property, all asset and liability
accounts of the entrusted properties as well as all revenue and expense accounts generated by theentrusted properties are recorded in relevant accounts on the balance sheet and statement of income.
Furthermore, the following material accounts are separately stated on the balance sheet for entrusted
properties recorded in relevant accounts.
① Cash and deposits in trust② Buildings in trust, structures in trust, machinery and equipment in trust, vehicles and transport
equipment in trust, tools and fixtures in trust, lands in trust and construction in progress in trust③ Leasehold right in trust④ Other intangible assets in trust⑤ Lease and guarantee deposits in trust⑥ Tenant leasehold and security deposits received in trust(2) Accounting for consumption taxes
National and local consumption taxes are accounted with the consumption taxes excluded.

FUKUOKA REIT CORPORATION

33(Notes to provision and reversal of reserve for temporary difference adjustments)
25th fiscal period (from September 1, 2016 to February 28, 2017)
In accordance with the sale of AEON Hara Shopping Center, FRC will reverse the reserve for temporary difference adjustments
amounting to 1, 660, 581 thousand yen.

26th fiscal period (from March 1, 2017 to August 31, 2017)
Not applicable.

(Notes to balance sheet)*1. Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:(thousands of yen)
25th fiscal period

26th fiscal period

as of February 28, 2017

Buildings in trust
Lands in trust

as of August 31, 2017

6,324,579
16,101,020
22,425,600

Total

6,328,836
16,101,020
22,429,857

Secured liabilities are as follows:(thousands of yen)
25th fiscal period

26th fiscal period

as of February 28, 2017

Tenant leasehold and security deposits
received in trust

as of August 31, 2017

1,794,675

1,625,100

2. Balance of unused committed line of credit
FRC has executed committed line of credit agreements with its banks primarily to conduct efficient and dynamic cash management.
[Committed line of credit agreement 1](thousands of yen)
25th fiscal period

26th fiscal period

as of February 28, 2017

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of August 31, 2017

6,000,000–

6,000,000
700,000

6,000,000

5,300,000[Committed line of credit agreement 2](thousands of yen)
25th fiscal period

26th fiscal period

as of February 28, 2017

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of
periodas of August 31, 2017

7,000,000–

7,000,000
800,000

7,000,000

6,200,000*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
(thousands of yen)
25th fiscal period

26th fiscal period

as of February 28, 2017as of August 31, 2017

50,00050,000FUKUOKA REIT CORPORATION

34

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements*4. Reserve for temporary difference adjustments
25th fiscal period (from September 1, 2016 to February 28, 2017)*2. Transactions with affiliated companies.

(1) Reason for recording reserve, relevant assets, initial difference and reserve amount
Relevant assets Reason for recording

Land in trust

Incurrence ofimpairment
loss

Initial difference–

1,660,581

Item(thousands of yen)

Balance as ofReserve for the 25th Reversal for the 25th
Balance as of
September 1, 2016
fiscal period
fiscal period
February 28, 2017–

1,660,581

1,660,581

Land in trust

Proceeds from sales of real estate

3,700,000
3,584,343

FRC plans to reverse the corresponding
amount when it disposes the land intrust.

Other selling expenses

112,157

Gain on sales of real estate(2) Aqualia Kego

Balance as ofMarch 1, 2017

1,660,581

1,660,581

Reserve for the 26th Reversal for the 26th
fiscal period
fiscal period–

1,660,581(thousands of yen)
Balance as ofAugust 31, 2017–

Reason for reversal

Land in trust

Sale ofrelevant asset(thousands of yen)

Proceeds from sales of real estate

4,320,000

Costs of sale of real estate

2,620,102

Other selling expenses

45,807
1,654,089

26th fiscal period (from March 1, 2017 to August 31, 2017)
Not applicable.

*4 The appropriation of balance related to amended return in the statement of income refers to the payment amount of taxes that accrued in accordance with revised tax
returns of income taxes, and shall be borne by the asset management company based on the asset management agreement. This has no impact on the dividend FRC
pays for the 26th fiscal period.

Specific method of reversal

FRC reversed the corresponding
amount when it disposed the land intrust.

(Notes to statement of changes in net assets)
25th fiscal period(Notes to statement of income)26th fiscal period(September 1, 2016 to February 28, 2017)

*1. Breakdown of revenues and expenses related to real estate leasing business.

A. Real estate leasing business revenues
Leasing revenues - real estate
Rents
Common charges
Parking revenues
Other leasing revenues - real estate
Incidental income
Other miscellaneous income
Total real estate leasing business revenues
B. Expenses related to real estate leasing business
Expenses related to leasing businessOutsourcing fees
Repair and maintenance expenses
Taxes and other public charges
Insurance premiums and trust compensation
Utilities expenses
Depreciation and amortization expenses
Other expenses related to real estate leasing businessTotal expenses related to real estate leasing business
C. Revenues and expenses related to real estate leasing business (A - B)

3,498

Gain on sales of real estate(2) Specific method of reversal
Item(thousands of yen)

Costs of sale of real estate

Initial difference

1,468,156

25th fiscal period (from September 1, 2016 to February 28, 2017)

Specific method of reversal(1) Reason for recording reserve, relevant assets, initial difference, reason for reversal and reserve amount

Incurrence ofimpairment
loss(March 1, 2017 to August 31, 2017)

1,410,591*3. Breakdown of gain on sales of real estate–

26th fiscal period (from March 1, 2017 to August 31, 2017)

Relevant assets Reason for recording(September 1, 2016 to February 28, 2017)

Reason for reversal(1) AEON Hara Shopping Center

Land in trust

26th fiscal period

Expenses related to real estate leasing business(2) Specific method of reversal
Item(thousands of yen)
25th fiscal period(thousands of yen)
25th fiscal period

26th fiscal period(September 1, 2016 to
February 28, 2017)(March 1, 2017 toAugust 31, 2017)

6,115,241
1,069,876
417,950

7,603,068

437,21132,000469,211
8,072,279

6,111,246
1,073,260
421,466
490,737
21,060Total number of authorized investment units and total number ofinvestment units issued
Total number of authorized investment units
Total number of investment units issued(March 1, 2017 to August 31, 2017)

10,000,000 units
747,000 units

10,000,000 units
747,000 units(Notes to cash flow statement)*1. Relationship between the balance of cash and cash equivalents at end of period and the amounts of the corresponding accounts on the balance sheet.
(thousands of yen)
25th fiscal period

7,605,973

511,797
8,117,770

26th fiscal period(September 1, 2016 to February 28, 2017)
Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents(March 1, 2017 to August 31, 2017)

4,434,396
4,513,353(41,926)
8,905,823

2,253,209
4,926,483(45,186)
7,134,506(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

1,566,717
222,809643,149
57,483401,794
1,455,895
169,646FUKUOKA REIT CORPORATION

4,517,495
4,517,495
3,554,784

35

1,593,610
209,443644,377
57,638454,387
1,474,387
159,820(Notes to leases)
The future lease revenues under the non-cancellable operating leases are as follows:(thousands of yen)
25th fiscal period

26th fiscal period(as of February 28, 2017)

4,593,665
4,593,665
3,524,104

Due within 1 year
Due after 1 year
Total

(as of August 31, 2017)

5,283,926
25,843,983
31,127,909

FUKUOKA REIT CORPORATION

5,728,777
24,694,161
30,422,938

36

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to financial instruments)

2. Matters concerning fair value of financial instruments

1. Matters concerning status of financial instruments

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding
fair values and the difference between these amounts as of February 28, 2017. Please note that the following table does notinclude those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).

(1) Policy on handling financial instruments
In order to secure stable earnings and steady growth of assets under management, FRC procures funds primarily throughborrowings from financial institutions, issuance of investment corporation bonds or issuance of investment units forproperty acquisitions, repair and maintenance work, repayment of interest-bearing debt and other purposes.
In procuring interest-bearing debt, FRC borrows funds primarily in long-term, fixed interest debt based on the policy of
establishing a solid financial structure, and conducts conservative operations intended to secure financial stability andliquidity by dispersing debt payment dates and utilizing committed lines of credit and through other measures.
With regard to surplus funds, FRC manages them as various deposits and savings, etc. to support efficient management
while considering security.
FRC conducts derivative transactions only for the purpose of hedging the risk of future interest rate fluctuation, and not
for the purpose of speculation.
(2) Description of financial instruments and associated risks, and risk management structure
Debt and investment corporation bonds are funds procured primarily for acquiring real estate trust beneficiary interests andrefinancing of borrowings. Borrowings and investment corporation bonds are exposed to liquidity risks upon debt payment
dates, but FRC works to mitigate these risks by such measures as appropriately controlling the ratio of interest-bearing
debt to total assets and executing commitment line agreements with local financial institutions that are lenders to secure
on-hand liquidity.
In addition, borrowings with floating interest rates are exposed to interest rate fluctuation risks. However, FRC works
to reduce the risks by such measures as adjusting the ratio of the balance of borrowings with floating interest rates tototal borrowings in accordance with the financial environment and other factors. FRC conducts derivative transactions(specifically interest rate swap transactions) for part of its borrowings with floating interest rates in order to hedge the risk
of future fluctuations in the rates of interest payable. Furthermore, assessment of the effectiveness of these interest rate
swaps is omitted as it has been determined that they have met the requirements for special accounting. FRC executes andmanages its derivative transactions in accordance with its financial derivative transaction management policies and, it does
so only with financial institutions it determines to have a certain level of creditworthiness, by reference to their credit ratings,
to reduce counterparty risks.
FRC manages surplus funds in large time deposits. Such deposits are subject to the risks of failure of the financial
institutions holding the deposits as well as other credit risks. FRC mitigates the risks by limiting its deposits to financial
institutions with a certain level of creditworthiness, by reference to their credit ratings, as well as by setting short durations
for these deposits.
Tenant leasehold and security deposits received in trust are deposits from tenants and are exposed to liquidity risks if
tenants move out before the contracts expire. FRC mitigates this risk by such measures as securing on-hand liquidity.
Investment securities are exposed to credit risks of the issuer and value fluctuation risks of the real estate, etc. owned by
the issuer. FRC mitigates these risks by periodically investigating the financial situation of the issuer and the value of thereal estate, etc., among other measures.
(3) Supplementary explanation on matters concerning fair value of financial instruments
The fair value of financial instruments, aside from values based on market price, may include values based on reasonablecalculations when there is no market price. Certain assumptions are made in calculating those values, and there may becases where the values will vary when different assumptions are used.
As for the contract value and other conditions of derivative transactions indicated in “2. Matters concerning fair value offinancial instruments,” the contract value is not an indicator of the market risks related to such transactions.

FUKUOKA REIT CORPORATION

37(thousands of yen)

(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheet
4,434,396
4,513,353
8,947,750–
23,875,000
2,000,000
40,800,000
1,027,991
67,702,991––

Fair value(Note 1)

Difference

4,434,396
4,513,353
8,947,750–
23,941,727
2,093,670
41,143,636
1,026,108
68,205,143
–
–

–
–
–
–
66,727
93,670343,636(1,882)502,152––

The following table includes the book values for financial instruments as recorded on the balance sheet, the corresponding fairvalues and the difference between these amounts as of August 31, 2017. Please note that the following table does not include
those financial instruments for which determination of fair value is considered to be extremely difficult (refer to (Note 2)).
(thousands of yen)

(1) Cash and deposits(2) Cash and deposits in trust
Total of assets(3) Short-term debt
(4) Current maturities of long-term debt
(5) Investment corporation bonds(6) Long-term debt
(7) Tenant leasehold and security deposits received in trust
Total of liabilities(8) Derivative transactions
Total of derivative transactions

Book value recorded on thebalance sheet
2,253,209
4,926,483
7,179,693
1,500,000
10,200,000
4,000,000
54,200,000
850,082
70,750,082––

Fair value(Note 1)

2,253,209
4,926,483
7,179,693
1,500,000
10,215,974
4,157,970
54,319,767
847,905
71,041,617––

Difference––––
15,974
157,970
119,767(2,177)
291,535––(Note 1) Calculation method for fair value of financial instruments(1) Cash and deposits, (2) Cash and deposits in trust and (3) Short-term debt
As these are settled within a short period of time, the fair value is approximately the same as the book value and is thus stated at that book value.
(4) Current maturities of long-term debt, (5) investment corporation bonds and (6) Long-term debt
The fair value of long-term debt with fixed interest rates (including debt with practical fixed interest rates through interest rate swaps) and investment corporation bonds (the “debt, etc.”) is
calculated by discounting the total amount of principal and interest by the rate assumed as being applicable in the event of a new drawdown of similar debt, etc.
The fair value of long-term debt with floating interest rates is based on the book value, as the contract terms require the interest rates to be revised in a certain period of time (within six months)
and thus is considered to be nearly equal to the book value.
(7) Tenant leasehold and security deposits received in trust
The fair value of tenant leasehold and security deposits received in trust, which are deposited by the lessees, is calculated by discounting the future cash flows of such deposits by a reasonably
estimated rate that takes into account the term remaining until the reimbursement deadline and credit risks.
(8) Derivative transactions
Please refer to (Notes to derivative transactions)

FUKUOKA REIT CORPORATION

38

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to derivative transactions)(Note 2) Financial instruments for which determination of fair value is considered extremely difficult.

(thousands of yen)
25th fiscal period(1) Investment securities(2) Tenant leasehold and security deposits
received in trust

1. Derivatives to which hedge accounting is not applied

26th fiscal period(as of February 28, 2017)(as of August 31, 2017)

104,078–

10,388,943

10,455,799

25th fiscal period (as of February 28, 2017)
Not applicable.

(1) Investment securities are not subject to the requirement to disclose fair value, as it is considered extremely difficult to determine the fair value. This is because there isno market price for investment securities and future cash flows cannot be estimated.
(2) Tenant leasehold and security deposits received in trust are not subject to the requirement to disclose fair value, as it is considered extremely difficult to determine
the fair value. This is because future cash flows cannot be estimated since there is no market price and it is difficult to assume the reimbursement dates due to thepossibility of cancellation, renewal and re-execution of lease contracts by lessees even if the contract terms are fixed, and because the past rate of tenants moving outof the properties owned by FRC may not be indicative of future move out rates as they are too specific to individual circumstances.

26th fiscal period (as of August 31, 2017)(Note 3) Amount of redemption of monetary claims scheduled to be due after closing of accounts (February 28, 2017)

25th fiscal period (as of February 28, 2017)(thousands of yen)

2. Derivatives to which hedge accounting is applied
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing ofaccounts for each method of hedge accounting.

Due in 1 year or less
4,434,396
4,513,353
8,947,750

Cash and deposits
Cash and deposits in trust
Total

Not applicable.

(thousands of yen)

Method of hedge accounting

Amount of redemption of monetary claims scheduled to be due after closing of accounts (August 31, 2017)(thousands of yen)

Special accounting for interest rate swaps

Due in 1 year or less
2,253,209
4,926,483
7,179,693

Cash and deposits
Cash and deposits in trust
Total

Long-term debt
Investment
corporation bonds––

2 to 3 years
8,400,000

3 to 4 years
1,000,000––

4 to 5 years
6,300,000–

Due after 5 years
23,000,000(thousands of yen)–

1 to 2 years
4,200,000–

2 to 3 years
5,700,000

24,500,000

18,500,000

(*)



–

(thousands of yen)

Method of hedge accounting
Special accounting for interest rate swaps

Due in 1 year or less
10,200,000

Long-term debt

The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing ofaccounts for each method of hedge accounting.

2,000,000

Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of August 31, 2017).

Long-term debt
Investment
corporation bonds

Interest rate swap transaction
Receivable floating; Payable fixed

26th fiscal period (as of August 31, 2017)(thousands of yen)

1 to 2 years
2,100,000

Type of derivative transactions, etc. Main hedged item(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt for accounting purposes. Accordingly, their fair value is included in the fair value of the relevant
long-term debt (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

(Note 4) Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of February 28, 2017).

Due in 1 year or less
23,875,000

Contract amount, etc.
Calculation
Fair value method for theOf which,fair value
exceeding 1 year

3 to 4 years
6,300,000––

4 to 5 years
6,000,000–

Due after 5 years
32,000,000
4,000,000

Contract amount, etc.
Calculation
Fair value method for theOf which,fair value
exceeding 1 year

Type of derivative transactions, etc. Main hedged item
Interest rate swap transaction
Receivable floating; Payable fixedLong-term debt

18,500,000

18,500,000(*)–(*) Transactions for which special accounting for interest rate swaps is applied are combined with long-term debt for accounting purposes. Accordingly, their fair value is included in the fair value of the relevant
long-term debt (refer to Notes to financial instruments, 2. Matters concerning fair value of financial instruments, (Note 1) (6)).

(Notes to retirement benefits)
25th fiscal period (as of February 28, 2017)
Not applicable as FRC does not have any retirement benefit system.

(Notes to investment securities)

26th fiscal period (as of August 31, 2017)

25th fiscal period (as of February 28, 2017)

Not applicable as FRC does not have any retirement benefit system.

Silent partnership equity interests (recorded on the balance sheet at 104,078 thousand yen) are not described, as it isconsidered extremely difficult to determine the fair value. This is because there is no market price and future cash flows cannot
be estimated.

(Notes to tax effect accounting)

26th fiscal period (as of August 31, 2017)

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

25th fiscal period

26th fiscal period（as of February 28, 2017）

Not applicable.

（as of August 31, 2017）

Deferred tax assets
99
9Amount of accrued business taxes not deductible from taxable income
Total deferred tax assets
Deferred tax assets, net

FUKUOKA REIT CORPORATION39FUKUOKA REIT CORPORATION

40

–
–
–

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

2. Breakdown of significant causes of the difference between the effective statutory income tax rate and the effective income tax rate after application of tax effectaccounting.
(%)
25th fiscal period（as of February 28, 2017）

Effective statutory income tax rate (Note)
Deductible dividend amount
Increase (decrease) in valuation reserve
Other
Effective income tax rate after application of tax effect accounting

26th fiscal period

25th fiscal period (from September 1, 2016 to February 28, 2017)
Not applicable.

（as of August 31, 2017）31.53(19.06)(12.47)0.02
0.02(2) Affiliated companies, etc.

31.53
(31.45)–(0.06)
0.03(Note) With the Prefectural Ordinance to Partially Amend the Fukuoka Prefectural Tax Ordinance (Fukuoka Prefectural Ordinance No. 38 of 2016) disclosed on October 11, 2016, the applicable period of
the excessive taxation of prefectural tax on corporations was extended from the period covering through the end of the fiscal year starting on January 31, 2017 to the period covering through the fiscal
year starting on January 31, 2022. In accordance with this, the effective statutory tax rate used for the fiscal year starting on September 1, 2016 and thereafter is 31.53%.

26th fiscal period (from March 1, 2017 to August 31, 2017)
Not applicable.

(3) Sister companies
25th fiscal period (from September 1, 2016 to February 28, 2017)(thousands of yen)

(Notes to equity method income and earnings)
25th fiscal period (from September 1, 2016 to February 28, 2017)Classification

Not applicable as FRC does not have any affiliated companies.

26th fiscal period (from March 1, 2017 to August 31, 2017)
Not applicable as FRC does not have any affiliated companies.

Name

Location

Subsidiaries of Park Place Oita
Oita City, Oita
Co., Ltdother affiliates(Note 2)400,000

Subsidiaries of Fukuoka Realty Hakata Ward,other affiliates
Co., Ltd.
Fukuoka City

Asset
management
200,000of FRCand otherbusinesses(Notes to transactions with related parties)
1. Transactions with related parties(1) Parent company and major corporate unitholders
25th fiscal period (from September 1, 2016 to February 28, 2017)Classification

Name

Location

Capital

Fukuoka Jisho Hakata Ward,
4,000,000
Other affiliates
Co., Ltd.
Fukuoka City
(Note 3)Business
description

Generalreal estatebusiness

FRC’s share of
voting rights,
etc.
[or ownership ofsuch in FRC]

Description ofrelationship(thousands of yen)

Balance
Description of Transaction
Categoryat end(thousands
of of
yen)
transaction
amountperiodPurchase ofreal estate
Ownership in(Note 1)
Consignment
FRC Directof real estateConsignment[8.85%]
management, etc. of real estate
Indirect [1.00%]
management,
etc. (Note 2)

1,470,000––(Note 4)(thousands of yen)Classification

Name

Location

Capital

Fukuoka Jisho Hakata Ward,
4,000,000
Other affiliates
Co., Ltd.
Fukuoka City
(Note 2)

Generalreal estatebusiness[or ownership ofsuch in FRC]

Description ofrelationship

Description of Transaction
Categorytransaction
amountOwnership in
Consignment
Consignment
FRC Directof real estate 1,468,156
of real estate
management,(Note 3)[8.85%]
management, etc. etc. (Note 1)
Indirect [1.00%]

Operatingaccounts
payableBalanceat end ofperiod115,875(Note 3)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Canal City Hakata, Canal City Hakata·B, Canal City Business Center and Taihaku
Street Business Center. The lease contract is a master lease type with pass-through rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s
revenues. For properties covered by the said type of agreements, the above table shows figures that regard end tenants as direct lessees.
(Note 3) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

FUKUOKA REIT CORPORATION

41[or ownership ofsuch in FRC]

Description ofrelationship

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

–

Asset
Payment
management ofof asset
FRC, etc. andmanagement
concurrent service fees (Note 4)of officer (Note 3)

570,992(Note 5)476,894(Note 5)

Operatingaccounts
payableAccruedexpenses

Balanceat end ofperiod143,179(Note 5)

230,340(Note 5)(Note 1) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 2) FRC has concluded a real estate lease and management consignment agreement with Park Place Oita Co., Ltd. for Park Place Oita. The lease contract is a master lease type with pass-through rent,
in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the property covered by the said type of agreement, the above table shows
figures that regard end tenants as direct lessees.
(Note 3) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a Director of Fukuoka Realty Co., Ltd.
(Note 4) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 5) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

26th fiscal period (from March 1, 2017 to August 31, 2017)

115,601

26th fiscal period (from March 1, 2017 to August 31, 2017)
FRC’s share of
voting rights,
etc.

Real estatebusiness

FRC’s share of
voting rights,
etc.

(thousands of yen)
Operating
1,410,591 accounts(Note 4)payable(Note 1) Transaction terms and conditions are determined in reference to appraisal values by third parties and after negotiating on prices.
(Note 2) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 3) FRC has concluded a building lease and management consignment agreement with Fukuoka Jisho Co., Ltd. for Canal City Hakata, Canal City Hakata·B, Canal City Business Center and Taihaku
Street Business Center. The lease contract is a master lease type with pass-through rent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s
revenues. For properties covered by the said type of agreements, the above table shows figures that regard end tenants as direct lessees.
(Note 4) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

Business
description

CapitalBusiness
description

Classification

Subsidiaries ofother affiliates

Name

LimitedLiability
Company
FRC1

Location

CapitalBusiness
description

FRC’s share of
voting rights,
etc.
[or ownership ofsuch in FRC]

Description ofrelationship

Description of Transaction
Categorytransaction
amountPurchase ofreal estate

Chuo Ward,
Fukuoka City

10

Real estatebusiness–

Purchase of realestateFJ.
Subsidiaries of Entertainment Hakata Ward,other affiliates Works Ltd. Fukuoka City

20,000Real estatebusiness–

Consignment
Consignmentof real estateof real estate
management,
management, etc. etc. (Note 2)

–

Asset
Payment
management ofof asset
FRC, etc. andmanagement
concurrent service
fees (Note 5)of officer (Note 4)(Note 3)

Subsidiaries of Fukuoka Realty Hakata Ward,other affiliates
Co., Ltd.
Fukuoka City

Asset
management
200,000of FRCand otherbusinesses(Note 1)5,050,000

576,824(Note 6)479,496(Note 6)

Balanceat end ofperiod––Operatingaccounts
payable131,601

Accruedexpenses

231,921(Note 6)(Note 6)(Note 1) Transaction terms and conditions are determined in reference to appraisal values by third parties and after negotiating on prices.
(Note 2) Transaction terms and conditions are determined in reference to market prices, etc. and by concluding business consignment agreements after negotiating on prices.
(Note 3) FRC has concluded a real estate lease and management consignment agreement with FJ. Entertainment Works Ltd. for Park Place Oita. The lease contract is a master lease type with pass-throughrent, in which rents and other proceeds from end tenants are directly related to an increase or decrease of FRC’s revenues. For the property covered by the said type of agreement, the above tableshows figures that regard end tenants as direct lessees.
(Note 4) Etsuo Matsuyuki, CEO & Representative Director of FRC, concurrently serves as a Director of Fukuoka Realty Co., Ltd.
(Note 5) The amount of the asset management fees is decided based on the asset management consignment agreement following discussion between the concerned parties.
(Note 6) Consumption taxes are not included in the transaction amount but are included in the balance at end of period.

FUKUOKA REIT CORPORATION

42

VIII. Notes to Financial Statements(4) Directors and major individual unitholders

The following table provides the income (loss) from properties for lease.

(thousands of yen)

25th fiscal period (from September 1, 2016 to February 28, 2017)
Use

Not applicable.

26th fiscal period (from March 1, 2017 to August 31, 2017)

RetailNot applicable.

2. Parent company and major affiliated companies
25th fiscal period (from September 1, 2016 to February 28, 2017)

Office buildings

Not applicable.

26th fiscal period (from March 1, 2017 to August 31, 2017)

OthersNot applicable.

(Notes to asset retirement obligations)25th fiscal period (from September 1, 2016 to February 28, 2017)

Total

Not applicable.

Not applicable.

FRC owns retail, office buildings and residential properties for lease in the Kyushu area centering on Fukuoka Prefecture. The
following table provides the book value recorded on the balance sheet, amount of change during the period and fair value ofthese properties for lease.
(thousands of yen)
Use
Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period

Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period

OthersAmount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period
Fair value at end of period

Total

Amount recorded on the balance sheet
Balance at beginning of period
Amount of change during period
Balance at end of period

Amount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing businessAmount recorded on the statement of income
Real estate leasing business revenues
Expenses related to real estate leasing business
Revenues and expenses related to real estate leasing business

5,138,156
3,030,216
2,107,940

5,134,492
3,085,103
2,049,388

2,210,415
1,165,023
1,045,392

2,239,691
1,186,204
1,053,486

723,707322,256
401,451

743,586
322,357
421,229

8,072,279
4,517,495
3,554,784

8,117,770
4,593,665
3,524,104

Fair value at end of period

25th fiscal period

26th fiscal period(September 1, 2016 to
February 28, 2017)(March 1, 2017 toAugust 31, 2017)

104,461,711(1,526,262)
102,935,449
110,280,000

102,935,449(233,757)
102,701,692
110,660,000

43,308,190(126,420)
43,181,769
54,150,000

43,181,769(382,950)
42,798,818
54,580,000

21,339,229(2,750,683)
18,588,546
21,250,000

18,588,546
4,964,232
23,552,778
26,670,000

169,109,131(4,403,366)
164,705,765
185,680,000

164,705,765
4,347,524
169,053,289
191,910,000[Segment information]
Descriptions omitted as FRC has a single business segment of real estate leasing business.

25th fiscal period (from September 1, 2016 to February 28, 2017)(1) Information by product and service
Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers
exceed 90% of operating revenues recorded in the statement of income.

(2) Information by region(a) Operating revenues
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating
revenues recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds(thousands
90% of of yen)property, plant and equipment recorded on the balance sheet.

(3) Information by major customer
Customer’s nameOperating revenues

Undisclosed (Note)

1,654,089

43

Related segment
Real estate leasing business(Note) The customer’s name is not disclosed as no consent to disclosure has been obtained from the customer. Furthermore, the customer does not fall under the category of related parties or interested
parties, etc. under the Investment Trusts Act.

(Note 1) Amount recorded on the balance sheet is the cost of acquisition less accumulated depreciation.
(Note 2) Of the amount of change during the 25th fiscal period, the amount of increase is primarily attributable to acquisition of Sports Club NAS Park Place Oita (1,484 million yen) and capital expenditures (1,789
million yen), and the amount of decrease is primarily attributable to disposition of two properties (AEON Hara Shopping Center and Aqualia Kego) (6,204 million yen in total) and depreciation andamortization expenses (1,455 million yen). Of the amount of change during the 26th fiscal period, the amount of increase is primarily attributable to acquisition of LOGICITY Hisayama (5,081 million
yen) and capital expenditures (741 million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,474 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers.

FUKUOKA REIT CORPORATION(March 1, 2017 toAugust 31, 2017)(Notes to segment information)(Notes to properties for lease)

Office buildings

26th fiscal period(September 1, 2016 to
February 28, 2017)(Note) Real estate leasing business revenues and expenses related to real estate leasing business are comprised of leasing business revenues and accompanying expenses (outsourcing fees, depreciation
and amortization expenses, taxes and other public charges, etc.), and are recorded as Leasing revenues - real estate, Other leasing revenues - real estate and Expenses related to leasing business,
respectively.

26th fiscal period (from March 1, 2017 to August 31, 2017)

Retail25th fiscal period

FUKUOKA REIT CORPORATION

44

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

26th fiscal period (from March 1, 2017 to August 31, 2017)(Schedule of securities)( 1) Information by product and service

Not applicable.

Descriptions are omitted as FRC’s operating revenues under single product/service classification for outside customers
exceed 90% of operating revenues recorded in the statement of income.

( 2) Information by region(a) Operating revenues
Descriptions are omitted as FRC’s operating revenues for outside customers in Japan exceed 90% of operating
revenues recorded in the statement of income.
(b) Property, plant and equipment
Descriptions are omitted as the amount of FRC’s property, plant and equipment located in Japan exceeds 90% of
property, plant and equipment recorded on the balance sheet.

(Schedule of contract amount, etc. and fair value of derivative transactions
and forward exchange transactions)(thousands of yen)Type

Special accounting for interest rate swaps

Interest rate swap transaction
Receivable floating; Payable fixed

Total

Descriptions are omitted as FRC’s operating revenues for an individual outside customer are less than 10% of operating
revenues recorded in the statement of income.

(Notes to per unit information)
Net assets per unit (yen)Profit per unit (yen)26th fiscal period

125,434
3,422(Note 1) Profit per unit was calculated by dividing the profit by the daily weighted average number of investment units. Diluted profit per unit is not stated as there are no dilutive investment units.
(Note 2) Profit per unit was calculated based on the following data:

25th fiscal period(September 1, 2016 to February 28, 2017)

Profit (thousands of yen)Amounts not attributable to ordinary unitholders (thousands of yen)
Profit attributable to ordinary investment units (thousands of yen)
Average number of units during the fiscal period (units)

Account

2,556,294–
2,556,294
747,000(thousands of yen)
(March 1, 2017 to August 31, 2017)

I. Unappropriated surplus

4,199,108

2,556,515

II. Addition to unitholders’ capital

1,660,581–

1,660,581–

Of which, reversal of reserve for temporary
difference adjustments
III. Total dividend[Dividend per investment unit]
Of which, earnings dividend

2,538,306

2,556,234[3,398 yen]

[3,422 yen]

221

281

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90% of
FRC’s distributable profits as stipulated in Article 67-151 of the Special Taxation Measures Act.
Following the above policy, FRC proposed to distribute2,538,306 thousand yen, which is almost the entire
amount obtained by deducting the reversal of reserve fortemporary difference adjustments from unappropriatedsurplus (4,199,108 thousand yen), as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

The amount of dividends shall be decided in accordancewith the dividend policy stipulated in Article 38-1-1 of
FRC’s Articles of Incorporation and shall exceed 90% of
FRC’s distributable profits as stipulated in Article 67-151 of the Special Taxation Measures Act.
Following the above policy, FRC shall decide to distribute
2,556,234 thousand yen, which is almost the entire
amount of unappropriated surplus, as earnings dividends.
Moreover, dividend in excess of earnings as stipulated in
Article 38-2 of FRC’s Articles of Incorporation will not beprovided.

IV. Surplus brought forward

Method for calculating dividends

18,500,000(171,720)

Total
intangible
assetsDecrease

Increase(Note 1)

(Note 2)

Balance as ofAugust 31,
2017

Accumulated
depreciation

11,451

87,978,370

24,412,671

1,367,429

63,565,699

Structures in trust

1,473,234

106,094–

1,579,329

635,047

33,999944,282

Machinery andequipment in trust

1,008,869

255,472–

1,264,341

344,218

35,717920,123

747

–

–

747

389

47

357

in trust

1,280,623

34,57017,9981,297,196

1,026,204

34,625

270,991

Land in trust

99,631,188

1,913,952–

101,545,140––

101,545,140

178,535

17,705

174,414

21,825––

21,825

187,880,819

6,009,996

203,864

193,686,952

26,418,532

1,471,819

167,268,420

Leasehold right in
trust

1,765,318––

1,765,318––

1,765,318

Other intangible
assets in trust

45,3571,513–

46,871

27,3192,567

19,551

Subtotal
Total

1,810,676

1,513

–

1,812,189

27,3192,567

1,784,869

189,691,496

6,011,509

203,864

195,499,141

26,445,851

1,474,387

169,053,289(Note 1) The main increase in the 26th fiscal period is due to construction work at properties and acquisition of LOGICITY Hisayama.
(Note 2) The main decrease in the 26th fiscal period is due to disposal.

(Schedule of other specified assets)
No relevant items.

(Schedule of investment corporation bonds)
Issue

Issue date

First Series ofUnsecured Bonds
Second Series ofUnsecured Bonds

Total

December 30,
2013
July 31, 2017

Balance as of
Decrease
Balance as
March 1, during the fiscal of August 31,
2017
period2017

Coupon(%)

Maturity date

Maturity
methodUse

Description(thousands of yen)(thousands of yen)(thousands of yen)

2,000,000–

2,000,000

1.32

December 29,
2023

Lump-sumupon maturity

Repayment ofdebt

No collateral/
No guarantee

July 30,2032

Lump-sumupon maturity

Repayment ofdebt

No collateral/
No guarantee––

2,000,000

2,000,000–

4,000,000

1.00(Notes to significant subsequent events)
No relevant items.
45(Note 1)

(Note 1)

(Note 1) The bonds may be repurchased and cancelled by FRC at any time on and after the date following the payment date, unless otherwise determined by the book-entry transfer agent.
(Note 2) The bonds are subject to the limited pari passu clause among specified investment corporation bonds.

(Note) Amounts other than the amounts of dividend per unit are rounded down to the nearest thousand yen.

FUKUOKA REIT CORPORATION

Depreciation for Net property andthe period
equipment

3,682,201

Construction inprogress in trust

26th fiscal period(September 1, 2016 to February 28, 2017)18,500,000

84,307,621

Subtotal

25th fiscal period

Balance as ofMarch 1,
2017

Vehicles and(March 1, 2017 to August 31, 2017)(Notes to cash distributions)(171,720)

Buildings in trust

Total property, transport
plant and equipment in trust
equipment Tools and fixtures

26th fiscal period

4,198,931–
4,198,931
747,000

18,500,000(thousands of yen)

(March 1, 2017 to August 31, 2017)

125,410
5,621

18,500,000(Schedule of property, plant and equipment, and intangible assets)
Type of asset

25th fiscal period(Note 1)

(Note 1) The contract amount, etc. of the interest rate swap transaction is based on the notional principal amount.
(Note 2) The fair value is calculated by the counterparty of the transaction contract based on the actual interest rate on the market and other factors.

( 3) Information by major customer(September 1, 2016 to February 28, 2017)

Contract amount, etc.
Fair value
Of which,(Note 2)exceeding 1 year

Category

FUKUOKA REIT CORPORATION

46(Note 2)

(Note 2)

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Schedule of debt)
Category
LenderThe Bank of Fukuoka

Balance as of
Balance as of
Average
March 1,
August 31,
Increase
Decreaseinterest rate Repayment date(thousands of yen) (thousands of yen)
2017
2017
(%) (Note 1)(thousands of yen)

Category
Use of funds

Description
Lender(thousands of yen)–

Resona Bank (Note 2)–

383,333

383,333–

The Nishi-Nippon City
Bank (Note 2)–

1,928,571

1,928,571–

Resona Bank (Note 2)–

270,000

270,000–

The Bank of Nagasaki(Note 2)–

192,857

192,857–

The Oita Bank (Note 2)–

192,857

192,857–

The Bank of Saga–

115,714

115,714–The Bank of Fukuoka(Note 2)–

1,166,666

1,166,666–

Resona Bank (Note 2)–

233,333

233,333–

The Nishi-Nippon City
Bank (Note 2)–

1,142,857

1,142,857–

Short-term
The Bank of Nagasaki
debt

Resona Bank (Note 2)–

160,000

160,000–(Note 2)–

114,285

114,285–

The Oita Bank (Note 2)–

114,285

114,285–

The Norinchukin Bank

The Bank of Saga–

68,571

68,571–The Bank of Saga

The Bank of Fukuoka–

583,333–

583,333

Resona Bank (Note 2)–

116,666–

116,666

The Nishi-Nippon City
Bank (Note 2)–

571,428–

571,428

Resona Bank (Note 2)–

80,000–80,000

The Bank of Nagasaki–

57,142–

57,142The Oita Bank (Note 2)–

57,142–

57,142The Bank of Saga–

34,285–34,285–9,500,000

8,000,000

1,500,000(Note 2)

(Note 2)
(Note 2)

(Note 2)

(Note 2)

Subtotal
Development Bank ofJapan
The Bank of Fukuoka
The Nishi-Nippon CityBank
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation

Current
maturities
of longterm debt

1,875,000
2,000,000

1,916,666––

1,916,666

1,875,000
2,000,000–

Mitsubishi UFJ Trust andBanking Corporation(Note 2)

–
–

0.380

0.380

0.380

July 31, 2017

July 31, 2017

August 31, 2017

Acquisition fundAcquisition fund

Refinance fundNo collateral/
No guarantee

Current
maturities
of longterm debt

No collateral/
No guarantee

No collateral/
No guarantee

Aozora BankThe Dai-Ichi Life
Insurance Company
Mitsubishi UFJ Trust andBanking Corporation

0.380

0.380

0.380

2.200
1.305

August 31, 2017

September 29, 2017

September 29, 2017

June 30, 2017
July 31, 2017

Refinance fund

Refinance fund

Refinance fundNo collateral/
No guarantee

No collateral/
No guarantee

Use of funds

Description(thousands of yen))

1,500,000––

1,500,000

0.407

February 28, 2018

Refinance fundNo collateral/
No guarantee

600,000––

600,000

0.407

February 28, 2018

Refinance fundNo collateral/
No guarantee–

1,000,000–

1,000,000

1.800

July 31, 2018

Refinance fundNo collateral/
No guarantee–

600,000–

600,000

0.407

March 30, 2018

Refinance fundNo collateral/
No guarantee

Subtotal

23,875,000

1,600,000

15,275,000

10,200,000

1,000,000–

1,000,000

–

1.800

July 31, 2018

Refinance fundNo collateral/
No guarantee

500,000––

500,000

1.338

January 31, 2019

Refinance fundNo collateral/
No guarantee

2,500,000––

2,500,000

0.775

February 29, 2020

Acquisition fundNo collateral/
No guarantee

Mizuho Bank

1,700,000––

1,700,000

0.557

February 29, 2020

Refinance fundNo collateral/
No guarantee

600,000–

600,000–

0.407

March 30, 2018

Refinance fundNo collateral/
No guarantee

Aozora Bank

1,000,000––

1,000,000

0.457

June 30, 2020

Refinance fundNo collateral/
No guarantee

Mizuho Bank

200,000––

200,000

3,000,000––

3,000,000

0.538

July 31, 2019

Refinance fundNo collateral/
No guarantee

500,000––

500,000

Mizuho Bank

2,300,000––

2,300,000

The Norinchukin Bank

1,000,000––

1,000,000

The Hiroshima Bank

1,400,000––

1,400,000

July 30, 2021

Refinance fund

800,000––

800,000

0.835

The Kitakyushu Bank

No collateral/
No guarantee

The Iyo Bank

500,000––

500,000

The Higo Bank

300,000––

300,000

4,000,000––

4,000,000

1.010

August 31, 2022

Refinance fundNo collateral/
No guarantee

500,000––

500,000

0.520

September 25, 2019

Refinance fundNo collateral/
No guarantee

1,600,000––

1,600,000

0.790

June 30, 2022

Refinance fundNo collateral/
No guarantee

1,500,000––

1,500,000

0.564

July 31, 2023

Refinance fundNo collateral/
No guarantee

4,000,000––

4,000,000

0.880

August 31, 2023

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Refinance fundNo collateral/
No guarantee

Development Bank ofJapan
The Bank of TokyoMitsubishi UFJ
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui TrustBank
Development Bank ofJapan

Long-term
debt(thousands of yen)

The Dai-Ichi Life
Insurance Company
Sumitomo Mitsui Banking
Corporation
The Nishi-Nippon CityBank

Mitsubishi UFJ Trust andBanking Corporation
No collateral/
No guarantee

Balance as of
Balance as of
Average
March 1,
August 31,
Increase
Decreaseinterest rate Repayment date(thousands of yen) (thousands of yen)
2017
2017
(%) (Note 1)

2,000,000–

2,000,000

–

1.305

July 31, 2017

Refinance fundNo collateral/
No guarantee

2,000,000–

2,000,000

–

1.170

March 31, 2017

Acquisition fundNo collateral/
No guarantee

The Bank of Fukuoka

400,000––

400,000

0.407

August 31, 2022

Refinance fundNo collateral/
No guarantee

500,000–

500,000–

1.203

March 31, 2017

Refinance fundNo collateral/
No guarantee

The Nishi-Nippon City
Bank

400,000––

400,000

0.870

August 31, 2023

Refinance fundNo collateral/
No guarantee

Resona Bank

600,000–

600,000–

1.253

March 31, 2017

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

2,000,000––

2,000,000

0.407

February 29, 2024

Refinance fundNo collateral/
No guarantee

The Higo Bank

300,000–

300,000–

1.203

March 31, 2017

Refinance fundNo collateral/
No guarantee

2,000,000––

2,000,000

0.440

February 29, 2024

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka

1,000,000–

1,000,000–

The Nishi-Nippon CityBank
Development Bank ofJapan

2,000,000––

2,000,000

0.620

February 28, 2025

Refinance fundNo collateral/
No guarantee

The Nishi-Nippon CityBank

1,000,000–

1,000,000–

Mizuho Bank

500,000––

500,000

0.440

February 29, 2024

Refinance fundNo collateral/
No guarantee

The Oita Bank

700,000–

700,000–

Shinsei Bank

700,000––

700,000

0.400

July 31, 2024

Refinance fundNo collateral/
No guarantee

The Miyazaki Bank

700,000–

700,000–

300,000––

300,000

0.401

September 30, 2025

Refinance fundNo collateral/
No guarantee

The Shinwa Bank

600,000–

600,000–

Sumitomo Mitsui TrustBank
Development Bank ofJapan

1,500,000––

1,500,000

The Iyo Bank

500,000–

500,000–

The Oita Bank

100,000––

100,000

The Bank of Saga

500,000–

500,000–

The Kagoshima Bank

100,000––

100,000

The Eighteenth Bank

500,000–

500,000–

The Kitakyushu Bank

100,000––

100,000

0.718

December 30, 2025

Refinance fundNo collateral/
No guarantee

The Kitakyushu Bank

500,000–

500,000–

0.407

December 30, 2026

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka
Resona Bank

1,500,000
2,000,000

–
–

–
–

1,500,000
2,000,000

0.858

0.657
1.033

June 30, 2017

December 30, 2017
September 29, 2017

Refinance fundNo collateral/
No guarantee

The Eighteenth Bank

100,000––

100,000

Refinance fundNo collateral/
No guarantee

The Shinwa Bank

100,000––

100,000

Refinance fundNo collateral/
No guarantee

The Hiroshima Bank

100,000––

100,000

The Bank of Fukuoka

1,500,000––

1,500,000

The Nishi-Nippon CityBank

1,900,000––

1,900,000

0.557

February 28, 2018

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui TrustBank

1,100,000––

1,100,000

0.607

February 28, 2018

Refinance fundNo collateral/
No guarantee

FUKUOKA REIT CORPORATION47

FUKUOKA REIT CORPORATION

48

VIII. Notes to Financial Statements

Category
LenderLong-term
debt

Balance as of
Balance as of
Average
March 1,
August 31,
Increase
Decreaseinterest rate Repayment date(thousands of yen) (thousands of yen)
2017
2017
(%) (Note 1)(thousands of yen)

Use of funds

Description(thousands of yen))

Mitsubishi UFJ Trust andBanking Corporation–

800,000–

800,000

0.481

March 31, 2025

Refinance fundNo collateral/
No guarantee

Resona Bank–

600,000–

600,000

0.658

March 31, 2027

Refinance fundNo collateral/
No guarantee

The Higo Bank–

300,000–

300,000

0.481

March 31, 2025

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka–

1,300,000–

1,300,000

The Nishi-Nippon CityBank–

1,000,000–

1,000,000

The Oita Bank–

700,000–

700,000

The Kitakyushu Bank–

700,000–

700,000

June 30, 2026

Refinance fund–

700,000–

700,000

0.777

The Miyazaki Bank

No collateral/
No guarantee

The Shinwa Bank–

600,000–

600,000

The Iyo Bank–

500,000–

500,000

The Eighteenth Bank–

500,000–

500,000

Development Bank of
Japan

–

1,800,000–

1,800,000

0.650

December 31, 2026

Refinance fundNo collateral/
No guarantee

The Bank of Fukuoka–

2,000,000–

2,000,000

0.792

July 31, 2027

Refinance fundNo collateral/
No guarantee

The Nishi-Nippon CityBank
The Nishi-Nippon CityBank–

2,000,000–

2,000,000

0.892

July 31, 2027

Refinance fundNo collateral/
No guarantee–

500,000–

500,000

The Bank of Fukuoka–

500,000–

500,000

The Oita Bank–

100,000–

100,000

The Kitakyushu Bank–

100,000–

100,000

0.850

August 31, 2027

Refinance fundNo collateral/
No guarantee

The Eighteenth Bank–

100,000–

100,000

The Shinwa Bank–

100,000–

100,000

The Hiroshima Bank–

100,000–

100,000

40,800,000

1,500,000

1,600,000

54,200,000

64,675,000

26,100,000

24,875,000

65,900,000

Subtotal
Total(Note 1) The average interest rate is a weighted-average figure during the fiscal period and is rounded to the third decimal place. Furthermore, the average interest rate of debt for which FRC conductedinterest rate swap transactions is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) The debts were made based on the commitment line agreements between FRC and respective banks.
(Note 3) Amount of repayment of long-term debt scheduled to be due within 5 years after period end.



(thousands of yen)
Category
Long-term debt

1 to 2 years
4,200,000

2 to 3 years
5,700,000

3 to 4 years
6,300,000

FUKUOKA REIT CORPORATION

4 to 5 years
6,000,00049

FUKUOKA REIT CORPORATION

50