Provisional translation only
April 12, 2018EARNINGS BRIEFING FOR THE PERIOD ENDED FEBRUARY 2018
Name of issuer:
Code number:
URL:
Stock listings:

Fukuoka REIT Corporation (FRC)8968
http://www.fukuoka-reit.jp/eng/
Tokyo Stock Exchange, and Fukuoka Stock Exchange

Representative:

Etsuo Matsuyuki CEO & Representative Director

Asset manager:
Representative:
Contact:

Fukuoka Realty Co., Ltd.
Etsuo Matsuyuki CEO & Representative Director
Akira Eguchi
Executive Managing Director and General Manager ofPlanning Dept.
Phone: +81-92-272-3900

Expected date for submitting securities report:
May 29, 2018
Expected commencement date of dividend payments:
May 18, 2018
Supplementary documents for earnings briefing
Yes
Analyst meeting (for institutional investors and analysts) Yes(Figures rounded down to nearest mm yen)

1. Performance and situation of assets for the period ended February 2018
(September 1, 2017 to February 28, 2018)(1) Performance(% shows percentage change from previous period)

Operating revenues
mm of yen
Period ended

February 2018
Period ended

August 2017

Operating income%

mm of yen

Ordinary income%

mm of yen

Profit%mm of yen

%

8,194

0.9

2,965

1.6

2,624

2.4

2,623

2.6

8,122

(16.5)

2,920(36.3)

2,562(39.0)

2,556(39.1)

Profit per unit
Period ended

February 2018
Period ended

August 2017

Return on net assets

Ratio of ordinary
Ratio of ordinary income
to operating revenues
income to total assets

3,512 yen

2.8%

1.5%

32.0%

3,422 yen

2.7%

1.5%

31.5%

(2) Dividends
Dividend
per unit

Total
dividend(excl. dividend in(excl. dividend inexcess ofexcess of earnings)
earnings)
Period ended

February 2018
Period ended

August 2017

Dividendin excess ofearnings
per unit

Total
dividend

Dividend
per unit

in excess ofearnings(incl. dividend inexcess of earnings)

Total dividend(incl. dividend inexcess of
earnings)

Payoutratio

Ratio ofdividend
to netassets3,512 yen

2,623 mm yen

0 yen

0 mm yen

3,512 yen 2,623 mm yen

100.0%

2.8%

3,422 yen

2,556 mm yen

0 yen

0 mm yen

3,422 yen 2,556 mm yen

100.0%

2.7%(3) Financial condition
Period ended

February 2018
Period ended

August 2017

Ratio of net assets tototal assets

Total assets

Net assets

Net assets per unit

177,283 mm yen

93,766 mm yen

52.9%

125,524 yen

178,063 mm yen

93,699 mm yen

52.6%

125,434 yen(4) Cash flows condition
Cash flows fromoperating activities
Period ended

February 2018
Period ended

August 2017

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of cash andcash equivalents at
end of period

4,292 mm yen(478) mm yen(3,555) mm yen

7,392 mm yen

3,590 mm yen(6,029) mm yen

667 mm yen

7,134 mm yen

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

2. Forecast of performance for the period ending August 2018 (March 1, 2018 to August 31, 2018)
and the period ending February 2019 (September 1, 2018 to February 28, 2019)(% shows percentage change from previous period)

Operating revenues Operating income
mm of yen
Period ending

August 2018
Period ending

February 2019

Ordinary income

ProfitDividend
per unit

mm of yen(excl.
dividend inexcess of
earnings)

in excess ofearnings
per unit%

mm of yen%

mm of yen%

9,173 12.0

3,235

9.1

2,842

8.3

2,841 8.3 3,570 yen

0 yen

9,116 (0.6)

3,224 (0.3)

2,843

0.0

2,842 0.0 3,570 yen

0 yen(Reference) Forecast profit per unit: Period ending August 2018
Forecast profit per unit: Period ending February 2019%

Dividend

3,570 yen
3,570 yen

3. Other(1) Changes in accounting policies, changes in accounting estimates and restatement of accounting errors(i) Changes in accounting policies accompanying amendments to accounting standards, etc.: No(ii) Changes in accounting policies other than above (i):No
(iii) Changes in accounting estimates:No(iv) Restatement of accounting errors:No(2) Number of investment units outstanding(i) Number of investment units outstanding at end of period (including treasury investment units):
As of February 2018
747,000 units
As of August 2017
747,000 units(ii) Treasury investment units at end of period:
As of February 2018
0 unitAs of August 2017
0 unitNote: Regarding the number of investment units, a basis for calculating profit per unit, please refer to “Per unit information,”on page 11.

* Statement on Implementation Status of Audit Procedure
This Earnings Briefing (“Kessan Tanshin” in Japanese) report is outside the scope of the auditing
procedure under the Financial Instruments and Exchange Act. As of the publication of this report, noauditing procedure under the Financial Instruments and Exchange Act has been completed for thefinancial statements.
* On the adequate use of performance forecasts and other items warranting special mention
Forecast figures are calculated based on information available on the date of release of the forecast andcontain uncertain factors to a large extent. Actual operating revenues, operating income, ordinary income,profit, and dividend per unit may differ due to changes in the business environment. The forecast should
not be construed as a guarantee of actual dividend. Concerning details of the preconditions for the above
forecast figures please refer to “2. Portfolio Management Policy and Management Situation, (2)Management situation – Preconditions for the performance forecast for the period ending August 2018
(March 1, 2018 to August 31, 2018) and the period ending February 2019 (September 1, 2018 to February
28, 2019)” on page 4.

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

Concerning the contents hereinafter, items that FRC judges “can be omitted from the disclosure from the standpoint ofimportance” are not shown in conformity with the “Format and Guidance for Preparation of Earnings Briefing for REITs”(February 2018).
1. Investment Corporation-Related Organizations
The disclosure is omitted, since there are no significant changes from the “Structure of the investment corporation”
disclosed by the latest securities report (submitted on November 28, 2017).
2. Portfolio Management Policy and Management Situation(1) Portfolio management policy
The disclosure is omitted, since there are no significant changes from “Investment policy,” “Investment target” and“Dividend policy” disclosed by the latest securities report (submitted on November 28, 2017).
(2) Management situation(i) Summary of the current fiscal period(a) Brief history of the investment corporation
Fukuoka REIT Corporation (hereinafter “FRC”) was established on July 2, 2004 based on the “Act on
Investment Trusts and Investment Corporations” (Act No. 198 in 1951 including later revisions) and listed on
the Tokyo Stock Exchange Group 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 realestate throughout all of Kyushu (including Okinawa Prefecture) with a central focus on Fukuoka City andYamaguchi Prefecture (hereinafter the “Fukuoka/Kyushu area) by turning regional characteristics in the realestate industry into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such as
Retail in Canal City Hakata (excluding some areas of specialty shops, hotels, theaters, offices and common
space), a commercial complex where specialty shops, cinema complex, theaters, amusement facilities,
hotels and offices are integrally developed (hereinafter “Canal City Hakata”). As of the end of the current
fiscal period (February 28, 2018), FRC manages a total of 26 properties comprising 10 Retail, 7 Officebuildings and 9 Others.
(b) Investment environment and portfolio performance
During the fiscal period under review (the 27th fiscal period), the Japanese economy showed a modest
recovery. Looking ahead, with the employment and income environment continuing to improve, the economy
is expected to continue recovering 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. With regard to the outlook, the area is expected to see strong overseas demand and solid
domestic demand continue going forward.
As for land price trends, the average rate of change in national average for residential land price took an
upward turn for the first time in ten years, while commercial land price and combined average price forresidential and commercial land continued to rise for three consecutive years, according to the 2018 Land
Market Value Publication. In Fukuoka City, the central area of FRC's investment targets, land prices continued
rising for six consecutive years, up 10.6% year-on-year for commercial land and up 4.3% year-on-year forresidential land, marking higher rates of increase.
Under such circumstances, 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 andincreasing the occupancy rate of its owned properties. As a result of these endeavors, the average occupancy
rate of all properties FRC owns was 99.6% at the end of the 27th 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, Officebuildings, and Others accounted for 59.1%, 27.2% and 13.7%, respectively.
(c) Summary of fundraising
As FRC conducted refinancing in the 27th fiscal period, the balance of its interest-bearing debt outstanding(including investment corporation bonds) at the end of the period totaled 68,900 mm yen, with the loan-tovalue ratio (ratio of interest-bearing debt (including investment corporation bonds) to total assets) at 38.9%
and the ratio of fixed-interest rate debt (ratio of interest-bearing debt with fixed interest rates (including
investment corporation bonds) to total interest-bearing debt) at 89.1% as of the same date. Going forward,
FRC will continue its endeavors for dispersion of debt repayment dates and extension of debt duration, in aneffort to reduce refinancing risks. At the same time, FRC will work to mitigate risks of rising interest rates byshifting to fixed-interest rate borrowings and through other measures.
Furthermore, FRC made a resolution on February 9, 2018 on the issuance of new investment units (49,000
units) in order to fund acquisition of new specified assets.

1

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

Moreover, the credit ratings assigned to FRC as of the end of the current fiscal period are as follows.
Credit Rating Agency
Rating Type
RatingRating Outlook
S&P Global Rating Japan Inc.
(S&P)
Rating and Investment
Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd.
(JCR)

Long-term Corporate Credit Rating

A−

Positive

Short-term Corporate Credit Rating

A−2—

Issuer Rating

A+

StableLong-term Issuer Rating

AA−

Stable(d) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 8,194 mm yen and operating income
after excluding operating expenses such as expenses related to leasing business and asset management
fees totaled 2,965 mm yen. Ordinary income was 2,624 mm yen and profit amounted to 2,623 mm yen.
Management decided to make a dividend of 3,512 yen per investment unit to meet the requirements of special
tax measures for an investment corporation (as stipulated in Article 67-15 of the Act on Special Measures
Concerning Taxation 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.
(ii) Forecast for the next fiscal period(A) Portfolio management policy
FRC will further reinforce management and leasing capabilities by cooperating with property managementcompanies including sponsor companies, and secure and maintain the stable operation of the properties bymaking the most use of their advantages.
FRC will 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 growth potential markets.” By geographic location, of Fukuoka and Kyushu areas, FRC will invest 60%
to 90% of its assets in the Fukuoka urban area since the Fukuoka urban area is expected to have a highpopulation growth rate in the future. In addition to the Fukuoka urban area, management has decided toactively acquire properties in major cities if there are regions or properties where FRC can generate
investment merits from community-oriented viewpoints. FRC will acquire high-quality properties withadequate 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 cancontinue to invest in FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try
to maintain a solid financial structure.
(B) Significant events that have occurred after the end of the current fiscal period:
Issuance of new investment units
FRC issued new investment units through public offering, which was resolved at its Board of Directors meeting
held on February 9, 2018, with the aim of acquiring real estate trust beneficiary interests. Payment completed
on March 1, 2018 for the new investment units issued.
As a result, FRC’s unitholders’ capital came to 98,938,764,550 yen as of April 12, 2018, with the total numberof investment units outstanding at 796,000 units as of the same date.
Issuance of new investment units through public offering
Number of investment units offered: 49,000 units
Issue price:
164,414 yen
Total issue price:
8,056,286,000 yen
Paid-in amount:
159,102 yen
Total paid-in amount:
7,795,998,000 yen
Payment date:
March 1, 2018
Base date for distribution:
March 1, 2018
Furthermore, FRC already acquired the real estate trust beneficiary interests of the following two properties
as of March 1, 2018 by using the proceeds obtained from the issuance of new investment units through public
offering to partly fund the acquisition.
Acquisition price
Property name
Use
Location
Seller(mm of yen)
(Note)
2-chome, Hashimoto, Nishi
Konoha Mall Hashimoto
Retail
10,000Ward, Fukuoka City
Fukuoka Jisho
Co., Ltd.
1-chome, Higashi Hie,
Higashi Hie Business Center II Office buildings
4,230
Hakata Ward, Fukuoka City
(Note) Acquisition price is the amount (transaction price indicated in the sales agreement) excluding expenses(transaction brokerage fees, taxes and other public charges, etc.) required for the acquisition of therelevant real estate trust beneficiary interest.

2

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018(c) Performance forecast for the next fiscal period
FRC aims to achieve the following performance goals for the period ending August 2018 (March 1, 2018 toAugust 31, 2018) and the period ending February 2019 (September 1, 2018 to February 28, 2019).
Concerning preconditions for the forecast, please refer to “Preconditions for the performance forecast for theperiod ending August 2018 (March 1, 2018 to August 31, 2018) and the February 28, 2019 (September 1,
2018 to February 28, 2019)” on page 4.
Period ending August 2018
Operating revenues

9,173 mm yen

Operating income
Ordinary income

3,235 mm yen
2,842 mm yen

ProfitDividend per unit
Dividend in excess ofearnings per unit

2,841 mm yen
3,570 yen
0 yen

Period ending February 2019
Operating revenues
9,116 mm yen
Operating income
Ordinary income

3,224 mm yen
2,843 mm yen

ProfitDividend per unit
Dividend in excess ofearnings per unit

2,842 mm yen
3,570 yen
0 yen

Note: The above forecast figures are calculated based on certain preconditions. The forecast should not be construed asa guarantee of actual performance since actual operating revenues, operating income, ordinary income, profit,
dividend per unit and dividend in excess of earnings per unit may differ due to changes in the business environment.

3

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

Preconditions for the performance forecast for the period ending August 2018 (March 1, 2018 to August 31, 2018)
and the period ending February 2019 (September 1, 2018 to February 28, 2019)
Item
Preconditions
28th fiscal period: March 1, 2018 to August 31, 2018 (184 days)
Calculation period
29th fiscal period: September 1, 2018 to February 28, 2019 (181 days)
 It is assumed that there will be 28 investment properties comprising the 26 properties FRC
Assets underowns as of February 28, 2018 plus Konoha Mall Hashimoto and Higashi Hie Business
management
Center II, which FRC acquired on March 1, 2018.
 In practice, the number may fluctuate due to changes in assets under management.
Total number of The total number of investment units outstanding is assumed to be 796,000 units, whichinvestment units
includes the new investment units (49,000 units) for which payment was completed by
outstanding
March 1, 2018.
 The balance of interest-bearing debt outstanding at the end of the 28th fiscal period (August
31, 2018) is expected to total 75,500 mm yen, an increase of 6,600 mm yen from the endof the current period (February 28, 2018). The loan-to-value ratio (interest-bearing debt Interest-bearing
total assets  100) is expected to stand at around 39.1% (as of February 28, 2018, the loandebt andto-value ratio stands at 38.9%).
refinancing
 The balance of interest-bearing debt outstanding at the end of the 29th fiscal period(February 28, 2019) is expected to total 75,500 mm yen, same as the end of the 28th fiscal
period (August 31, 2018). The loan-to-value ratio (interest-bearing debt  total assets  100)is expected to stand at around 39.1%.
 Of leasing revenues – real estate, revenues from properties FRC has already acquired are
calculated based on tenancy agreements that are valid as of April 12, 2018 by taking into
account the competitiveness of the properties the market environment, etc.
Operating
Of leasing revenues– real estate, revenues from percentage lease contracts are calculated
revenues
based on past results by taking into account sales fluctuation factors of the relevant tenants.
 For leasing revenues – real estate, tenant vacancies are taken into account to a certain
extent. It is assumed that there will be no rent arrears or non-payments by tenants.
 When acquiring investment properties, the property taxes and city planning taxes for theassets will be proportionally calculated according to the holding period and adjusted withthe former owner. However, the adjusted amount of the property taxes and city planningtaxes to be borne by FRC for the initial year will not be written off since they will be includedin the acquisition cost.
 FRC writes off estimated repair costs expected to be required for buildings for the
calculation periods (the 28th and 29th fiscal periods). Actual repair costs may differ
Operatingsignificantly from the estimated amounts since there is the possibility that repair costs are
expenses
incurred urgently due to damages to buildings caused by unforeseeable factors, repair costs
generally differ largely from period to period, and repair costs are not regularly incurred.
 Concerning outsourcing expenses, FRC anticipates 1,914 mm yen for the 28th fiscal period
and 1,901 mm yen for the 29th fiscal period.
 Concerning taxes and other public charges, FRC anticipates 666 mm yen for the 28th fiscal
period and 666 mm yen for the 29th fiscal period.
 Concerning depreciation and amortization expenses, FRC anticipates 1,600 mm yen for the
28th fiscal period and 1,607 mm yen for the 29th fiscal period.
 Concerning interest expenses (including interest expenses on investment corporation
Non-operating
bonds) and expenses related to financing, FRC anticipates 385 mm yen for the 28th fiscal
expensesperiod and 375 mm yen for the 29th fiscal period.
 Dividend (dividend per unit) is calculated based on the dividend policy stipulated in FRC’s
Articles of Incorporation.
Dividend per unit
 Dividend per unit may fluctuate due to fluctuations in leasing revenues caused by changes
in assets under management and tenants or various factors including unexpectedoccurrences of repair.
Dividend in excess
 Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned atof earnings per
the moment.
unit It is assumed that there will be no significant revisions to laws and regulations, the tax
system, and accounting standards that may influence the forecast figures.
Other It is also assumed that there will be no significant unexpected changes in general economic
conditions and the real estate market.
(3) Investment risks
The disclosure is omitted, since there are no significant changes from the “Investment risks” disclosed in the latest
securities report (submitted on November 28, 2017).

4

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

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

26th fiscal period

27th fiscal period(as of August 31, 2017)(as of February 28, 2018)

AssetsCurrent assets
Cash and deposits

2,253,209

2,924,449

Cash and deposits in trust

4,926,483

4,514,534

Operating accounts receivable

431,417459,948

Prepaid expenses

248,026

260,790

Consumption taxes receivable

258,416--

16

13,21940,8638,130,772

8,200,604

Deferred tax assets
OthersTotal current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation

87,978,370(24,412,671)(635,047)(344,218)

944,282

920,123

Lands in trust(667,932)

915,568(383,133)

890,394747
357

1,297,196(1,026,204)

62,735,975

1,273,527

747
(389)

(25,801,859)

1,583,500

1,264,341

Accumulated depreciation

Accumulated depreciation

63,565,699

1,579,329

Vehicles and transport equipment in trust

Tools and fixtures in trust

88,537,835

(437)

309

1,319,583
270,991(1,050,837)

268,745

101,545,140

101,545,140

21,825

6,780

167,268,420

166,362,914

1,765,318

1,765,318

19,551

16,9701,784,869

1,782,289

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

110,000

110,000

Long-term prepaid expenses

720,744786,412

Total investment and other assets

840,744906,412

169,894,034

169,051,616

32,25930,612

6,547

935

38,806

31,548178,063,613

177,283,768

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
Investment corporation bond issuance
expenses
Investment unit issuance expenses
Total deferred assets
Total assets

5

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018
(thousands of yen)Account

26th fiscal period

27th fiscal period(as of August 31, 2017)(as of February 28, 2018)

Liabilities
Current liabilities
Operating accounts payable

387,054602,374

Short-term debt

1,500,000-

Current maturities of long-term debt

10,200,000

2,100,000

Accounts payable-other

21,833

21,345

Accrued expenses

327,884

328,477

666

772

-

298,500

Advances received

997,414990,174

Deposits received

1,054,757

768,735

Total current liabilities

14,489,611

5,110,380

Investment corporation bonds

4,000,000

4,000,000

Long-term debt payable

54,200,000

62,800,000

368,837

373,423

11,305,882

11,233,280

69,874,720

78,406,704

84,364,331

83,517,084

91,142,766

91,142,766

Unappropriated surplus

2,556,515

2,623,917

Total surplus

2,556,515

2,623,917

Total unitholders’ equity

93,699,282

93,766,684

Total net assets

93,699,282

93,766,684

Total liabilities and net assets

178,063,613

177,283,768

Income taxes payable
Accrued consumption taxes

Non-current liabilities

Tenant leasehold and security deposits
Tenant leasehold and security deposits received
in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus6

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018(2) Statement of income(thousands of yen)Account

26th fiscal period

27th fiscal period(March 1, 2017 toAugust 31, 2017)(September 1, 2017 to
February 28, 2018)

Operating revenues
Leasing revenues – real estate
Other leasing revenues – real estate
Dividends income

7,605,973

7,725,449

511,797

468,871

4,873

8,122,643-

8,194,321

Operating expenses
4,593,665

4,614,437

479,496482,350

Asset custody fees

6,618

6,622

Administrative service fees

51,58351,813

Director’s compensations

9,600

9,600

Other operating expenses

61,643

Expenses related to leasing business
Asset management fees

Operating income

5,202,607

63,6102,920,036

5,228,434
2,965,887

Non-operating revenues
Interest received
Appropriation of balance rerated to amended
returnOthers

35

36

7,833

-

672

8,541

2,426

2,463

Non-operating expenses
Interest expenses
Interest expenses on investment corporationbonds
Amortization of investment corporation bondissuance expenses
Amortization of investment unit issuance
expensesFinancing related expenses
Others

253,565

228,998

14,86623,200

1,093

1,646

5,612

5,612

87,187

84,211

4,093

366,41830

343,698

Ordinary income

2,562,159

2,624,651

Profit before income taxes

2,562,159

2,624,651

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

666

1,032

5,189

-

9

Profit

5,864

(16)

1,015

2,556,294

2,623,635

Surplus brought forward

221

281

Unappropriated surplus

2,556,515

2,623,917

7

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018(3) Statement of changes in net assets
26th fiscal period (March 1, 2017 to August 31, 2017)(thousands of yen)
Unitholders’ Equity

Item

Unitholders’capitalBalance as ofMarch 1, 2017
Changes in
the current
fiscal period
Dividend of
surplus
Reversal ofreverse fortemporarydifference
adjustment
ProfitTotal ofchanges in thecurrent fiscal
periodBalance as ofAugust 31,
2017

91,142,766

Unitholders’ capital
Deduction fromunitholders’ capital
Total
Reservefordeduction

Surplustemporarydifference
adjustments

fromunitholders’capital(1,660,581)(1,660,581)

1,660,581

1,660,581

Total
net assets

surplusTotal
unitholders’equity4,199,108

4,199,108

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

Unitholders’ Unappropriatedcapital, net
surplus89,482,185

1,660,581

Total

-

1,660,581

1,660,581

1,660,581(1,642,592)(1,642,592)

17,98817,98891,142,766--

91,142,766

2,556,515

2,556,515

93,699,282

93,699,282

27th fiscal period (September 1, 2017 to February 28, 2018)(thousands of yen)
Unitholders’ Equity
Surplus
Item

Balance as of September 1,
2017
Changes in the current fiscal
periodUnitholders’ capital

Unappropriated surplus

91,142,766

Total
net assets

2,556,515

93,699,282

93,699,282(2,556,234)(2,556,234)(2,556,234)

2,623,635

2,623,635

2,623,635-

67,401

67,401

67,401

91,142,766

2,623,917

93,766,684

93,766,684

Dividend of surplus
ProfitTotal of changes in thecurrent fiscal period
Balance as of February 28,
2018

Total
unitholders’ equity

8

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018(4) Dividend statement
Account

26th fiscal period

27th fiscal period(March 1, 2017 to August 31, 2017)(September 1, 2017 to February 28, 2018)

I.

Unappropriated surplus

2,556,515 thousand yen

2,623,917 thousand yen

II.

Total

2,556,234 thousand yen

2,623,464 thousand yen[Dividend per investment
unit][3,422 yen]

[3,512 yen]

III. Surplus brought forward

281 thousand yen

453 thousand yen

Method for calculating dividends

The amount of dividends shall be decided in The amount of dividends shall be decided inaccordance with the dividend policy accordance with the dividend policy
stipulated in Article 38-1-1 of FRC’s Articles stipulated in Article 38-1-1 of FRC’s Articles
of Incorporation and must exceed 90% of of Incorporation and must exceed 90% of
FRC’s distributable profits as stipulated in FRC’s distributable profits as stipulated in
Article 67-15-1 of the Special Taxation Article 67-15-1 of the Special Taxation
Measures Act. Following the above policy, Measures Act. Following the above policy,
FRC shall decide to distribute 2,556,234 FRC shall decide to distribute 2,623,464
thousand yen, which is almost the entire thousand yen, which is almost the entire
amount of unappropriated surplus, as amount of unappropriated surplus, asearnings dividends. Moreover, dividend in earnings dividends. Moreover, dividend inexcess of earnings as stipulated in Article excess of earnings as stipulated in Article 3838-2 of FRC’s Articles of Incorporation will 2 of FRC’s Articles of Incorporation will not
not be provided.
be provided.

(Note) Amounts other than the amounts of dividend per investment units are rounded off to the nearest thousand yen.

9

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

(5) Cash flows statement(thousands of yen)Account
Net cash provided by (used in) operating activities
Profit before income taxes
Depreciation and amortization expenses
Amortization of investment corporation bond issuance
expenses
Amortization of investment unit issuance expenses
Interest received
Interest expenses
Decrease (increase) in operating accounts receivables
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits expenses
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Net cash provided by (used in) investment activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Proceeds from redemption of investment securities
Purchase of investment securities
Proceeds from restricted trust deposits
Payments for restricted trust deposits
Net cash provided by (used in) investment activities
Net cash provided by (used in) financial activities
Proceeds from short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of investment corporation bonds
Payments of investment corporation bond issuance expenses
Dividends paid
Net cash provided by (used in) financial activities
Net increase (decrease) in cash and cash equivalents
Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period

10

26th fiscal period

27th fiscal period(March 1, 2017 toAugust 31, 2017)(September 1, 2017 to
February 28, 2018)

2,562,159
1,474,387

2,624,651
1,500,084

1,093

1,646

5,612
(35)
268,432(54,967)(258,416)(239,564)(15,854)(3,248)
1,124
24,101
302,485
3,846(192,196)(4,514)
3,874,444
35(277,213)(6,604)
3,590,662

5,612
(36)
252,198(28,531)
258,416
298,500
24,657(233)
2,954(7,240)(286,022)(12,764)(65,668)(20,758)
4,547,465
36(254,559)(1,311)517
4,292,149(5,995,095)(20,197)(60)
144,468(255,520)
100,000(150)
3,819(7,078)(6,029,813)(409,429)
34,621(30,035)
42,265(114,867)
3,058(3,938)(478,325)

14,500,000(13,000,000)
15,000,000(15,275,000)
2,000,000(19,924)(2,537,240)
667,834(1,771,317)
8,905,823
7,134,506

4,500,000(6,000,000)
9,100,000(8,600,000)(2,555,413)(3,555,413)
258,410
7,134,506
7,392,916

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018(6) Notes on the going concern assumption
No relevant items.
(7) Significant accounting policies
The disclosure is omitted, since there are no significant changes from contents disclosed by the latest securities report(submitted on November 28, 2017).
(8) Notes to financial statements
FRC omits the disclosure of notes to balance sheet, statement of income, statement of changes in net assets, andcash flows statement, as well as notes on lease transactions, financial instruments, securities, derivative transactions,related-party transactions, tax-effect accounting, retirement benefits, asset retirement obligations, rental properties,
segment information and equity method income, etc. since it does not find substantial need for disclosure in theearnings briefing.
(Per unit information)
26th fiscal period

27th fiscal period(March 1, 2017 to August 31, 2017)(September 1, 2017 to February 28, 2018)

Net assets per investment unit: 125,434 yen
Profit per investment unit:
3,422 yen

Net assets per investment unit: 125,524 yen
Profit per investment unit:
3,512 yen

Note 1: Profit per investment unit is calculated by dividing profit by the weighted average number of investment units
outstanding during the fiscal period. Diluted profit per investment unit is not shown since there are no potential
investment units.
Note 2: Calculation of profit per investment unit is based on the following.

Account

26th fiscal period

27th fiscal period(March 1, 2017 toAugust 31, 2017)(September 1, 2017 to
February 28, 2018)

Profit (thousands of yen)Amount not attributable to common shareholders(thousands of yen)
Profit attributable to common investment units(thousands of yen)
Average number of investment units during the fiscal
period (units)

2,556,294

2,623,635——

2,556,294

2,623,635

747,000

747,000(Significant subsequent events)
Issuance of new investment units
FRC issued new investment units through public offering, which was resolved at its Board of Directors meeting held
on February 9, 2018, with the aim of acquiring real estate trust beneficiary interests. Payment completed on March 1.
2018 for the new investment units issued.
As a result, FRC’s unitholders’ capital came to 98,938,764,550 yen as of April 12, 2018, with the total number ofinvestment units outstanding at 796,000 units as of the same date.
Issuance of new investment units through public offering
Number of investment units offered: 49,000 units
Issue price:
164,414 yen
Total issue price:
8,056,286,000 yen
Paid-in amount:
159,102 yen
Total paid-in amount:
7,795,998,000 yen
Payment date:
March 1, 2018
Base date for distribution:
March 1, 2018
Furthermore, FRC already acquired the real estate trust beneficiary interests of the following two properties as ofMarch 1, 2018 by using the proceeds obtained from the issuance of new investment units through public offering topartly fund the acquisition.

Property name

Use

Location

SellerAcquisition price(mm of yen)
(Note)

2-chome, Hashimoto, Nishi
10,000Ward, Fukuoka City
Fukuoka Jisho
Co., Ltd.
1-chome, Higashi Hie,
Higashi Hie Business Center II Office buildings
4,230
Hakata Ward, Fukuoka City
(Note) Acquisition price is the amount (transaction price indicated in the sales agreement) excluding expenses(transaction brokerage fees, taxes and other public charges, etc.) required for the acquisition of the relevant
real estate trust beneficiary interest.
Konoha Mall Hashimoto

Retail(9) Change in the number of investment units outstanding
No relevant items.

11

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

4. Change in Directors(1) Change in directors in FRC
No relevant items.
(2) Change in directors at Fukuoka Realty Co., Ltd.
No relevant items.
5. Reference Information(1) Investment situation(as of February 28, 2018)

Type ofasset

Location

Use(Note 1)

Total value of
properties owned

Percentage of
total assets(mm of yen) (Note 2)(%) (Note 3)

Fukuoka urban area

65,88637.2

Other Kyushu areas

36,338

20.5

Fukuoka urban area

42,497

24.0

Other Kyushu areas--

Fukuoka urban area

20,770

11.7

Other Kyushu areas

2,645

1.5

168,138

94.8

9,145

5.2

177,283

100.0[168,145][94.8]

RetailReal estatein Trust

Office buildings

OthersSubtotal
Deposits and other assets
Total amount of assets (Note 4)

Note 1: “Fukuoka urban area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City
for school and work, according to the 2010 census, which states “the number of workers and students aged 15 years orolder (students including those aged 14 years or younger: particular reference) including commuting between their homes
and places of work or school” conducted by Fukuoka City and the Statistics Bureau of the Ministry of Internal Affairs andCommunications. “Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area).
Note 2: “Total value of properties owned” is based on the value on the balance sheet (the value of real estate in trust is the bookvalue after depreciation).
Note 3: Concerning the “Percentage of total assets,” the figures are rounded off to one decimal place. The total of individual
percentages in the above table may not equal 100%.
Note 4: Figures in parentheses for “Total amount of assets” refer to the value and percentage of real estate owned in effect tothe total amount of assets.
(as of February 28, 2018)

Value on balance sheet(mm of yen)

Percentage of total amount of assets (%)

Total amount of liabilities

83,517

47.1

Total amount of net assets

93,76652.9(2) Investment assets(i) Primary issues of investment securities
No relevant items.
(ii) Real estate investment portfolio
No relevant items.

12Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018(iii) Other primary investment assets(A) Values and investment ratios at end of period are as follows.
(as of February 28, 2018)

Real estate property nameAcquisitionvalue(mm of yen)
(Note 1)

Value onbalance sheet(mm of yen)

Period-end
appraisal value(mm of yen)
(Note 2)

Canal City Hakata

32,00030,32631,800Canal City Hakata･B

28,70029,101

29,700Park Place Oita

17,76018,91919,400SunLive City Kokura

6,633

5,723

8,150

Square Mall Kagoshima Usuki

5,300

4,489

5,450

Kumamoto Intercommunity SC

2,400

2,030

2,760

Hanahata SC

1,130

1,001

1,250

Kurume Higashi Kushiwara SC

2,500

2,109

2,780

K’s Denki Kagoshima

3,550

3,066

3,710

Marinoa City Fukuoka (Marina
Side Building)Retail subtotal:
Canal City Business Center
Building

5,250

5,456

5,940

105,223

102,225

110,940

14,60013,342

15,200Gofukumachi Business Center

11,2009,233

13,700Sanix Hakata Building

4,400

3,896

5,510

Taihaku Street BusinessCenter

7,000

6,146

7,740

Higashi Hie Business Center

5,900

4,569

7,090

Tenjin Nishi-Dori Center
Building

2,600

2,700

3,030

Tenjin North Front Building

2,800

2,606

3,730

Office buildings subtotal:

48,50042,49756,000Amex Akasakamon Tower

2,060

1,747

1,940

City House Keyaki Dori

1,111

946

1,090

Aqualia Chihaya

1,280

1,200

1,640

D-Wing Tower

2,800

2,733

3,480

Granfore Yakuin Minami

1,100

1,145

1,290

Hotel FORZA Oita

1,530

1,431

1,860

Tosu Logistics Center

1,250

1,214

1,420

LOGICITY Minato Kashii

8,150

7,971

8,800

LOGICITY Hisayama

5,050

5,024

5,220

Others subtotal:
Total

24,331
178,054

23,415
168,138

26,740
193,680

Note 1:
Note 2:
Note 3:

Investment
ratio

Real estate appraiser(%) (Note 3)

Tanizawa Sogo
Appraisal Co., Ltd.
Tanizawa Sogo
16.1
Appraisal Co., Ltd.
Japan Real Estate
10.0
InstituteJapan Real Estate
3.7
InstituteJapan Real Estate
3.0
InstituteJapan Real Estate
1.3
InstituteTanizawa Sogo
0.6
Appraisal Co., Ltd.
Tanizawa Sogo
1.4
Appraisal Co., Ltd.
Tanizawa Sogo
2.0
Appraisal Co., Ltd.
Tanizawa Sogo
2.9
Appraisal Co., Ltd.
59.1
Tanizawa Sogo
8.2
Appraisal Co., Ltd.
Tanizawa Sogo
6.3
Appraisal Co., Ltd.
Japan Real Estate
2.5
InstituteJapan Real Estate
3.9
InstituteTanizawa Sogo
3.3
Appraisal Co., Ltd.
Japan Real Estate
1.5
InstituteJapan Real Estate
1.6
Institute
27.2
Daiwa Real Estate
1.2
Appraisal Co., Ltd.
Daiwa Real Estate
0.6
Appraisal Co., Ltd.
Japan Real Estate
0.7
InstituteTanizawa Sogo
1.6
Appraisal Co., Ltd.
Tanizawa Sogo
0.6
Appraisal Co., Ltd.
Japan Real Estate
0.9
InstituteJapan Real Estate
0.7
InstituteTanizawa Sogo
4.6
Appraisal Co., Ltd.
Tanizawa Sogo
2.8
Appraisal Co., Ltd.
13.7
100.0
18.0

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

13

Fukuoka REIT Corporation (8968); Earnings Briefing for the Period ended February 2018

(B) Summary of the real estate leasing business(as of February 28, 2018)

Real estate property name

Numberof tenants(Note 1)

Canal City Hakata
Canal City Hakata･B
Park Place Oita
SunLive City Kokura
Square Mall Kagoshima
Usuki
Kumamoto Intercommunity
SC
Hanahata SC
Kurume Higashi KushiwaraSC
K’s Denki Kagoshima
Marinoa City Fukuoka(Marina Side Building)Retail subtotal:
Canal City Business Center
Building
Gofukumachi BusinessCenterSanix Hakata Building
Taihaku Street BusinessCenterHigashi Hie Business Center
Tenjin Nishi-Dori Center
Building
Tenjin North Front Building
Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tosu Logistics Center
LOGICITY Minato Kashii
LOGICITY Hisayama
Others subtotal:
Total

Note 1:

Note 2:

Note 3:Note 4:Note 5:Note 6:

Occupancy
Total
rate
leasable floor(%) (Note 3)
space (m2)

Totalleased floor
space (m2)

Totalleasingrevenues(mm of yen)
(Note 4)

Percentage
of totalleasingrevenues(%) (Note 5)

1 [49]
1 [47]
1 [104]
1

99.1
99.4
99.7
100.0

46,602.94
68,820.27
113,837.70
61,450.22

46,194.14
68,411.30
113,510.64
61,450.22

1,275
1,638
1,191
292

15.6
20.0
14.5
3.6

12

100.0

14,602.88

14,602.88

254

3.1

2

100.0

6,968.66

6,968.66

90

1.1

2

100.0

2,801.15

2,801.15

40

0.5

1

100.0

6,467.80

6,467.80

88

1.1

1

100.0

7,296.17

7,296.17

111

1.4

1

100.0

33,069.82

33,069.82

177

2.2

99.7

361,917.61

360,772.78

5,160

63.0

1 [59]

98.0

23,031.09

22,577.76

624

7.6

35

100.0

19,905.34

19,905.34

537

6.6

16

100.0

6,293.75

6,293.75

198

2.4

1 [69]

99.2

14,677.27

14,554.68

300

3.7

1 [25]

100.0

13,614.59

13,614.59

333

4.1

1

100.0

3,339.32

3,339.32

86

1.1

11
66 [216]100.0

5,252.41

5,252.41

140

1.7

99.3

86,113.77

85,537.85

2,221

27.1

1 [66]
1 [42]
1 [97]
1 [134]
1 [99]
1

96.7
100.0
92.9
97.6
100.0
100.0

4,821.25
2,710.86
5,619.69
7,187.59
2,496.06
5,785.44

4,662.13
2,710.86
5,220.81
7,017.65
2,496.06
5,785.441

100.0

4,173.29

4,173.29

69
38
58
116
38
63
Undisclosed

0.8
0.5
0.7
1.4
0.5
0.8
Undisclosed

23 [220](Note 2)

(Note 2)2
1
10 [443](Note 2)99 [879]

100.0

43,233.72

43,233.72(Note 6)(Note 6)

Undisclosed

Undisclosed(Note 6)(Note 6)

Undisclosed

Undisclosed(Note 6)(Note 6)100.0

24,505.65

24,505.65

99.3

100,533.55

99,805.61

812

9.9

99.6

548,564.93

546,116.24

8,194

100.0

(Note 2)
“Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for retail and officebuildings among relevant properties. For the number of tenants in pass-through master leasing properties, the number ofsections stipulated in the tenancy agreements with end tenants is shown in parentheses. The Taihaku Street BusinessCenter is an office building with a residential tower. Its number of tenants comprises 12 offices and 57 residences.
The subtotal and total of all the tenants in other than pass-through master leasing properties and the number of sections
stipulated in the tenancy agreements with end tenants for pass-through master leasing properties is shown in parentheses
in the totals column for “Number of tenants.”“Occupancy rate” refers to the percentage of total leased floor space to total leasable floor space and the figures are rounded
off to one decimal place.
“Total leasing revenues” is the total of real estate leasing revenues and other revenues from real estate rent in the current
fiscal period.
“Percentage of total leasing revenues” is obtained by dividing each property’s total leasing revenues by the total amount of
total leasing revenues. The total of individual percentages in the above table may not equal 100%, since the figures arerounded off to one decimal place.
The figures are not disclosed as no consent to disclosure has been obtained from the tenants.

(3) Investment target
The disclosure is omitted, since there are no significant changes from the “Investment target” disclosed by the latest
securities report (submitted on November 28, 2017).

14