30th Fiscal Period
Report on Performance andManagement Status (Semiannual Report)

Security Code 8968

March 1, 2019 to August 31, 2019

Fukuoka REIT
Corporation

8968

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation
To Our Unitholders

ProfileStatus of the Investment Corporation

We would like to express our sincere appreciation to all unitholders

At Canal City Hakata, “EVANGELION Angel Attack on

for your continued support of Fukuoka REIT Corporation (FRC).

Hakata,” the tenth offering of Canal Aqua Panorama, is being

We are pleased to report on the performance results and manage-

performed.

Overview of the Investment Corporation

ment status of FRC for the 30th fiscal period (March 1, 2019 to AuCanal City Hakata, the flagship of FRC, aims to become an interna-gust 31, 2019).

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 realestate, which is a very regional-specific business.

tional shopping center offering the greatest joy in Asia, by providing
FRC was listed in June 2005 and started as Japan’s first REIT spe-collaboration with popular contents and experiential value unique tocializing in regional properties. Since then, we have exhibited consis-

Canal City Hakata. At Canal Aqua Panorama, an original projection

tent growth and achieved stable performance through the support ofanimation featuring “EVANGELION,” a globally popular Japanese

our unitholders and sponsor companies.

manga/anime series, is performed as its tenth offering. On top of this,the guests who are the fans of Canal City Hakata are entertained by

The business conditions of the Fukuoka and Kyushu area are

an abundant selection of content, including THE GUNDAM BASE

expanding moderately.

FUKUOKA, the second shop in Japan to be opened on November

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

30, 2019, and GUNDAM Café.
Consumer spending in the Fukuoka and Kyushu area is increasing
moderately, given improvements in the employment and income en-

Going forward, FRC will continue to exert its strengths as a REIT

vironments. Looking ahead, a mild expansion is expected to contin-

specializing in regional properties and quickly respond to market

ue, although attention should be paid to the impact of the uncertainty

changes, while receiving support and cooperation from powerfulabout overseas economies and the impact of a labor shortage on thesponsors leading the Kyushu business world. We will also strive tosupply side. According to the government’s Prefectural Land Pricemaintain and increase the dividend per unit level through steady asset

Survey announced in September 2019, the commercial land price inmanagement. We at FRC will also pursue our mission of maximizing

Fukuoka City rose 12.8% year-on-year, as it showed a similar in-unitholder interests over the medium to long term based on our man-crease in the 2019 Land Market Value Publication announced inagement philosophy of “Act Local, Think Global.”March 2019.

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

5%

5%

5%

5%

THE BANK OFFUKUOKA, LTD.

THE NISHI-NIPPONCITY BANK, LTD.

Development Bank of Japan Inc.

SAIBU GAS CO., LTD.

50%

Director

Fukuoka Realty Co., Ltd.

FUKUOKA JISHO
CO., LTD. (Note 1)

10%

Outsidedirector

Kyushu Electric Power Co., Inc.

(Asset Manager)

We greatly appreciate your continued support and cooperation.
Occupancy remained solid, with the average occupancy rate
(Note)of all properties FRC owns at 99.6%.

Based on “Office Market Data” by Miki Shoji Co., Ltd.

In the business districts of Fukuoka City, the vacancy rate of office

5%

5%

5%

5%

buildings has remained at the 1% level since January 2019, marking

Kyudenko Corporation

Nishi-Nippon Railroad Co., Ltd.

Kyushu Railway Company

ROYAL HOLDINGS Co., Ltd.

1.87% (Note) as of August 2019. As such, the figure has been at an(Note 1) Concluded MOU with Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. concerning pipeline support.

extremely low level that is the second lowest only after Tokyo. Bol-

Overview of the Asset Manager

stered by the good office market, the occupancy rate of the eight
office buildings owned by FRC reached 98.6% at the end of the fiscal

Name:
Fukuoka Realty Co., Ltd.
Representative: Etsuo Matsuyuki CEO & Representative Director
Address:
2-25, 1-Chome, Sumiyoshi, Hakata Ward, Fukuoka City

period under review. With other assets also operating in good shape,
the period-end occupancy rate of the entirety of properties FRC owns
through the 30th fiscal period stood at 99.6%.
Standing on these asset management operations, FRC posted operating revenues of 9,231 million yen, operating income of 3,318 million yen, ordinary income of 2,939 million yen and profit of 2,939
million yen. The dividend per unit came to 3,693 yen.

Etsuo Matsuyuki

Investment type (based on acquisition price)

CEO & Representative Director,
Fukuoka REIT Corporation

CONTENTSI.

Portfolio

Telephone: +81-92-272-3900
Established: December 26, 2003
Capital:200,000,000 yen

RetailOffice buildings

59.2%

26.9%

Others13.9%

Investment area (based on acquisition price)

Overview of Fukuoka REIT Corporation
To Our Unitholders ........................................................................................................ 1
Profile .............................................................................................................................................. 2
Trend of Growth in Asset Size of FRC / Financial Summary ......................................................... 3
Portfolio Overview .......................................................................................................................... 5
Initiatives on Sustainability ............................................................................................................. 7

II. Semiannual Report ............................................................................................................... 9III. Independent Auditor's Report ...................................................................................... 26
IV. Balance Sheet ....................................................................................................................... 27
V. Statement of Income ......................................................................................................... 29
VI. Statement of Changes in Net Assets ........................................................................ 30
VII. Cash Flow Statement ........................................................................................................ 31
VIII. Notes to Financial Statements ..................................................................................... 32

FUKUOKA REIT CORPORATION

1

Other
Kyushu areas

Fukuoka metropolitan area

77.2%

22.8%

Total leasable floor space

Occupancy rate at end of period

580,664.27 m2

99.6%*Figures are based on properties owned as of August 31, 2019.
FUKUOKA REIT CORPORATION

2

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
Retail (left axis)(mm yen)

Office buildings (left axis)

Residence (left axis)

Logistics (left axis)

Since Listing

Hotels (left axis)

Number of investment properties (right axis)

Occupancy Rate (right axis)

99.6

200,000
99.8

99.0

99.4

99.4

 cquired fromA
sponsors

14

150,000

Other thansponsors

29

properties

39.4%
77,269million yen

99.7

98.8

99.4

99.2

98.8

99.1

99.0

98.6

99.6
98.1

99.3

98.8

97.0

99.6

99.5

99.4

29

29

(properties) (%)

40 10099.6

60.6%
118,710As ofmillion yen
August 31, 2019195,979

28

million yen

27

100,000

19

14
11

7

99.5

99.6

Sponsors

15

16

15

16

16

16

17

27

27

25

24

23

23

50,000

99.6

99.3

98.1

99.8

99.7

25

26

30

90

26

20

20

17

11

10

8

5

0

12th
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
13th
14th
15th
16th
(Aug. 2005) (Feb. 2006) (Aug. 2006) (Feb. 2007) (Aug. 2007) (Feb. 2008) (Aug. 2008) (Feb. 2009) (Aug. 2009) (Feb. 2010) (Aug. 2010) (Feb. 2011) (Aug. 2011) (Feb. 2012) (Aug. 2012)

22nd
17th
18th
19th
20th
21st
23rd
24th
25th
26th
27th
28th
29th
30th
(Feb. 2013) (Aug. 2013) (Feb. 2014) (Aug. 2014) (Feb. 2015) (Aug. 2015) (Feb. 2016) (Aug. 2016) (Feb. 2017) (Aug. 2017) (Feb. 2018) (Aug. 2018) (Feb. 2019) (Aug. 2019)0

Financial Summary
 inancial Highlights for 30th Fiscal Period and Business Forecasts forF
31st and 32nd Fiscal Periods
Category

30th fiscal period

31st fiscal period

32nd fiscal period(March 1, 2019 to August 31, 2019)(September 1, 2019 to February 29, 2020)(March 1, 2020 to August 31, 2020)

ActualForecast

Forecast

Operating revenues

mm yen

9,231

9,270

9,350

Leasing NOI (Note)

mm yen

5,633

5,646

5,670

Depreciation and amortization expenses

mm yen

1,651

1,662

1,680

Operating income

mm yen

3,318

3,281

3,309

Ordinary income

mm yen

2,939

2,907

2,930

Profitmm yen

2,939

2,906

2,929

Dividend per unityen (1)

3,693

–

–

Latest dividend forecast per unityen (2)

3,680

3,650

3,680

yen (1)-(2)

+13

–

–

units

796,000

796,000

796,000

Difference from forecast
Total number of investment units outstanding(at end of period)(Note) “Leasing NOI” is calculated using “Leasing business revenues − Expenses related to leasing business + Depreciation and amortization expenses.”
FUKUOKA REIT CORPORATION

3

Dividend Performance
August 31, 201930th fiscal period end(semiannual periods ending every February and August)30th fiscal period dividend

30th fiscal period days
Dividend yield

3,693 yen per unit

184 days
4.1% {(Dividend / Days × 365) / Unit price (as of August 31, 2019)}（yen）

4,000 3,802

3,687 3,726

3,468

3,672 3,699 3,674 3,609

3,475 3,479

3,356 3,293 3,384 3,324

3,238 3,257 3,291 3,243 3,278

3,435

3,563 3,574 3,479

3,398 3,422

3,512 3,593

3,687 3,693 3,650 3,680

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 29th 30th 31st 32nd

*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 CORPORATION 4(Forecast) (Forecast)I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation
Purchase of earthquake
insurance

Portfolio Overview
1

Retail2

Canal City Hakata

3

Retail4

RetailRetail25 Others(hotel)26 Others(hotel)Others27 (logistics)

Others28 (logistics)

Park Place Oita

SunLive City Kokura

Hotel FORZA Oita

Tissage Hotel Naha

Tosu Logistics Center

LOGICITY Minato Kashii

One of the largest entertainment-type
retail facilities in Japan and comprising
United Cinemas and others

One of the largest entertainment-type
retail facilities in Japan and comprisingGrand Hyatt Fukuoka and others

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

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

A business hotel located walking distancefrom Oita Station and specialized for
lodging to meet business needs

A hotel in Naha City, Okinawa Prefecture
located a 10-minute car ride from Naha
Airport. Guestrooms are of sufficient sizeand quality to take in leisure demand.

A logistics facility located in the Green
Logistics Park Tosu, operating around theclock and with three temperature zones

A logistics facility among the largest in the
Fukuoka area, with a location featuring
traffic convenience and concentration ofsuch facilities

5

6

7

8

Others29 (logistics)

As of June 30, 2020
Others (logistics)

RetailCanal City Hakata• B

FRC has purchased earthquake insurance
for all the properties it owns.

RetailRetailRetailInvestment Policy
Investment area

Konoha Mall Hashimoto

Square Mall Kagoshima Usuki

Kumamoto Intercommunity SC

A community-based retail facility with SunLive
as its anchor tenant and directly connected to
Hashimoto Station via a pedestrian bridge

A retail facility in Kagoshima, designed byJohn Jerde who designed Canal City
Hakata and Roppongi Hills

Located along a major arterial road andcomprising Sports Depo, Golf 5 andStarbucks coffee

9Retail10 Retail11 Retail

Hanahata SC
Located in a new residential area andcomprising BON REPAS supermarket
and Matsumoto Kiyoshi drug store

60 - 90%

LOGICITY Hisayama

LOGICITY Wakamiya

Approximately 5 km from the Fukuoka
Interchange featuring traffic convenience,and has good general-purpose capabilities

A logistics facility located north of Fukuoka
in Miyawaka City, roughly halfway between
the two ordinance-designated cites
Fukuoka City and Kitakyushu City.

Investment type40-70% RetailFukuoka metropolitanarea

20-50% Office buildings

Other Kyushu areas
10 - 30% (including Okinawa andYamaguchi prefectures)

12 Office Building

0-30%

0 - 10% Others

Others(Hotel, Residence,
Logistics and otherfacilities)

Portfolio Map
Having a large floor area and tenanted byan electric appliance store widely
attracting customers from nearby cities

14 Office Building

Located east of Marinoa City Fukuoka
and has stable attractiveness throughsynergy with the Outlet building

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

15 Office Building

29

28

Fukuoka
Metropolitan Area

4

Island City

FukuokaSaga

16 Office Building

27
9Nagasaki

Oita

25
3

e
Lin

13 Office Building

Canal City Business Center Building

22

7

Sh
in
ka
ns
en

Located on a corner of a heavy-trafficintersection and comprising Sports Depoand Golf 5

Marinoa City Fukuoka (Marina Side Building)ssway
Kyushu Expre

K’s Denki Kagoshima

ii
sh
Ka
JR

Kurume Higashi Kushiwara SC

MiyazakiSanyo

Kumamoto
3

Fukuoka IC

Kagoshima

Gofukumachi Business Center

Sanix Hakata Building

Taihaku Street Business Center

Higashi Hie Business Center

An office building facing major arterial
roads Meiji-dori Street and Taihaku-doriStreet, and directly connected to
Gofukumachi Station on the city subway

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

Good location along Taihaku-dori Street, a
two-minute walk from Gion subway stationand ten-minute walk from Hakata Station

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

17 Office Building

18 Office Building

19 Office Building

Others20 (residence)

6
10

Tenjin North Front Building

Higashi Hie Business Center II

Amex Akasakamon Tower

An office building facing Tenjin Nishi-doriStreet where commercial facilities areconcentrated

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

Directly connected to Higashi Hie subway
station, a two-minute ride to Hakata
Station and highly recognized for its
excellent business continuity plan (BCP)

A tower-type rental condominium near
downtown Fukuoka, with traffic convenience and environment that matches awide range of generations

Others22 (residence)

Others23 (residence)

Kyushu University Fukuoka Ex pr
Hakozaki Campus R oute 4 Kas essway,
uya Line
Site

KyushuArea

26

Fukuoka Expressway,
Route 1 (Loop Line)

SubwayKuko Line

JR Sasaguri

13

FUKUOKAYAHUOKU!DOME

20 23

Ohori Park

202

18

21

15

Hakata
1
12
14
2

17
Tenjin19

3

SubwayNanakumaLine

202

Others24 (residence)

A large, high-rise (20-story) rental
condominium, approximately a seven-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

FUKUOKA REIT CORPORATION

5

0

1km

FukuokaE

ne
Li

A rental condominium comprised of units
mainly for singles and small families tomatch the local characteristics

202

ifu
za
Da

Granfore Yakuin Minami

ay
sw
es
pr
Ex

A high-quality rental condominium in a
popular residential area of Fukuoka,
featuring traffic and living convenience

D-Wing Tower

ine
aL
im
sh
go
Ka

5

JR

Ni
sh
Omitetut su
a Te
Lin nj
e in

263

385

Aqualia Chihaya

Fukuoka Airport

16

24

202

City House Keyaki Dori

Line

an
rb
U

Others21 (residence)

Hakata Bay

Okinawa

11

Tenjin Nishi-Dori Center Building

3

xpr
ess
wa

y R oute

op Line)
5 (Lo8FUKUOKA REIT CORPORATION

6

Fukuoka
Metropolitan
Area

I. Overview of Fukuoka REIT Corporation

I. Overview of Fukuoka REIT Corporation

Initiatives on Sustainability
FRC is engaged in a variety of activities to conduct asset management with environmental, social and governance (ESG) awareness, sharing ideas on sustainability with the Asset Manager.
The Asset Manager has established the Sustainability Promotion Committee as an organized decision-making institution, andidentified key agenda, or materiality issues, on which further endeavors should be focused.

Identifying Materiality Issues (as of September 2019)
In the procedures of identifying the materiality, the significance of each issue was considered from the viewpoint of risks andopportunities in terms of the impact on the stakeholders. The action plans and goals set up respectively are monitored and, as
needed, reviewed and reflected onto the action plans and goals for the following fiscal year by the Sustainability Promotion
Committee. The matters resolved by the Committee are reported to the boards of directors of the Asset Manager and FRC.
Materiality issues

Policies and goals

Relevant SDGs (Note)

Reduce environmental load

• Collaborating with property management companies andbuilding management companies promoting the control andreduction of energy consumption, greenhouse gas emission,water consumption and waste discharge.

Maintain and enhancebuilding performance andenvironmental performance• Periodically conduct performance and function assessment ofreal estate properties, and upgrade outdated performance, etc.
• Acquire green building certifications, etc. to visualize thebuilding performance, in an effort to maintain and enhance
property competitiveness.

Asset
Manager• Work to enhance the operational quality by expanding the
education and training system for employees and encouragethem to gain qualifications.
• Continuously improve the office environment to keep providing
comfortable work conditions.
• Take into account the work-life balance to enhance employee
satisfaction.

Tenants• Promote improvement of employee satisfaction (ES), in aneffort to enhance employment satisfaction of employees attenants.

Environmental

Create an
attractive
workplaceSocialContribute to increased
attractiveness and vitalizationof Fukuoka and Kyushu area

• Reinforce provision of information on the strengths andattractiveness of the Fukuoka and Kyushu area.
• Coordinate with local economic circles to support research on
local economies and industries and promote creation of
attractive towns.

Promote co-creation withlocal communities• Deepen communications and coordination with the local
society through participation in local community activities andvarious initiatives at properties under management, in order to
evolve together with the local society.

Disclose information to andcommunicate with thestakeholders• Conduct disclosure of financial and non-financial information
to the stakeholders in a timely and appropriate manner.
• Endeavor to establish a relation of trust with the stakeholders
through proactive communications with them, and reflect thecollected opinions to the business management strategies.

Governance
Ensure compliance/ risk
management• Enhance and operate the internal system to ensure vigorouscompliance and conduct appropriate risk management, suchas thoroughly abiding by laws and regulations and eliminating
conflict of interests from transactions with interested parties,
with an aim to maintain and enhance corporate value.

(Note) SDGs, which is an abbreviation of Sustainable Development Goals, represent the international goals through 2030 adopted by the United Nations Sustainable Development Summit held in September 2015.
The SDGs consist of 17 goals and 169 targets to realize a sustainable world.

Registration as Signatory
The Asset Manager became a registered signatory to the Principles for Responsible Investment (PRI) and Principles for Financial Action for the 21st Century (PFA21) in September
2018.

Principles for Responsible
Investment (PRI)

Principles for Financial Action
for the 21st Century(PFA21)

External Evaluation
 articipation in GRESBPAssessment 2019 atio of Properties Certified as
R
Green Buildings [as of August 31, 2019]

Participated for the second consecutive
year and rated “Green Star” and “4Stars” in the GRESB Real Estate Assessment conducted in 2019 by GRESB(Global Real Estate Sustainability Benchmark).

The ratio of properties certified as green
buildings to the entire portfolio is 68.7%(based on total floor space).

Properties certified
as green buildings

DBJ Green Building Certification: 9 properties in total

68.7%

BELS Assessment: 4 properties in total

DBJ Green Building Certification
The DBJ Green Building Certification is a third party certification systemestablished by Development Bank of Japan for real estate properties
that feature excellent environmental and social considerations. FRC has
acquired the certification for 9 of its owned properties as buildings withthe best class (or exceptionally high) environmental & social awareness.
• Canal City Hakata• Canal City Hakata·B

BELS Assessment
BELS (Building Energy-efficiency Labeling System) is a system inwhich third parties evaluate, indicate and certify the energy conservation performance of non-residential buildings, based on the Evaluation Guidelines for the Building Energy-efficiency Labeling System for
Non-Residential Buildings (2013). FRC has acquired the certification
for four of its owned properties.

• Higashi Hie Business Center• Higashi Hie Business Center II• LOGICITY Minato Kashii• LOGICITY Hisayama• Park Place Oita
• Canal City Business Center Building• Gofukumachi Business Center• Higashi Hie Business Center• Konoha Mall Hashimoto• LOGICITY Hisayama• Higashi Hie Business Center II

Establishment of Green Finance Framework
FRC has established the Green Finance framework, based on the Green Bond Principles 2018, Green Bond Guidelines 2017 by
the Ministry of the Environment and Green Loan Principles, in order to promote ESG activities and aim to enhancing fundraisingmeans by expanding the investor base in the future.
(1) Use of proceeds from Green Finance(3) Maximum amount of Green Finance

Proceeds from Green Finance will be used to fund acquisitions of Eligible Green
Assets, repay the borrowings needed to acquire such assets, or redeem alreadyissued investment corporation bonds.

The amount of liabilities calculated by multiplying the total acquisition price of
Eligible Green Assets by the LTV (based on total assets) at the end of the latest
fiscal period.

(2) Eligible Green Assets(4) Reportinga ) DBJ Green Building Certification: 3 Stars, 4 Stars or 5 Stars

After conducting Green Finance, FRC will announce the total amount of Eligible
Green Assets, the amount of liabilities related to Eligible Green Assets and theamount of funds from Green Finance as of the end of each fiscal period (Februaryand August each year). FRC will also announce the following indicators related to
the Eligible Green Assets as of the end of February each year.

b ) CASBEE (Comprehensive Assessment System for Built Environment Efficiency):
B+ Rank, A Rank or S Rankc ) BELS Assessment: 3 Stars, 4 Stars or 5 Stars• Number of properties classified as Eligible Green Assets, and the number andtype of obtained environmental certifications.
FUKUOKA REIT CORPORATION7FUKUOKA REIT CORPORATION

8

II. Semiannual Report

Overview of Asset Management

Overview of Asset Management

2. Management assessment(1) Brief history of the investment corporation

1. Changes in operating results and financial position
Fiscal Period(unit)

Operating revenues

mm yen[Leasing business revenues]

mm yen(March 1, 2019 toAugust 31, 2019)

mm yen9,231[9,231]
5,913[5,250]
3,318
2,939
2,939
195,106[(0.2)]
101,878[0.0]
98,938Operating income
Ordinary income
ProfitTotal assets

mm yenTotal number of investment
units outstanding
Net assets per unit
Total dividend
Dividend per unit

30th fiscal period(September 1, 2018 to
February 28, 2019)

9,242[9,242]
5,936[5,274]
3,306
2,935
2,934
195,433[1.2]
101,874[0.1]
98,938mm yenmm yen(a)

mm yen(b)

mm yen(c)

mm yen%%Unitholders’ equity

29th fiscal period(March 1, 2018 toAugust 31, 2018)

9,178[9,178]5,940[5,287]
3,238
2,861
2,860
193,112[8.9]
101,799[8.6]
98,938mm yen[Change from previous period]

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

8,194[8,194]
5,228[4,614]
2,965
2,624
2,623
177,283[(0.4)]
93,766[0.1]
91,142[Expenses related to leasing business]

Net assets

27th fiscal period(March 1, 2017 toAugust 31, 2017)

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

Operating expenses[Change from previous period]

26th fiscal period

(d)

units

747,000

747,000

796,000

796,000

796,000(c)/(d)yen(e)

mm yen(e)/(d)yen

125,5242,623
3,512[3,512][–]

127,888
2,860
3,593[3,593][–]

127,982
2,934
3,687[3,687][–]

127,987
2,939
3,693[3,693][–][Earnings dividend per unit]

yen[Dividend in excess of earnings per unit]

yen

125,434
2,556
3,422[3,422][–](Note 3)%

1.5 [2.9]

1.5 [3.0]

1.5 [3.1]

1.5 [3.0]

1.5 [3.0](Note 3)%

2.7 [5.4]

2.8[5.6]

2.9 [5.8]

2.9 [5.8]

2.9 [5.7](c)/(b)

%

52.6

52.9

52.7

52.1

52.2

%
(Note 3)%[(0.9)]
100.0

[0.3]
100.0

[(0.2)]
100.0[(0.6)]
100.0

[0.1]
100.0

properties

26

26

28

29

29

m2

548,564.96

548,564.93

576,907.98

580,665.27

580,664.27

%

99.8

99.6

99.6

99.7

99.6

mm yen

1,474

1,500

1,602

1,622

1,651

mm yen

741
4,998
184

600
5,079
181

657
5,493
184

947
5,591
181

476
5,633
184

Ratio of ordinary income tototal assets
Return on net assets
Ratio of net assets to total
assets[Change from previous period]

Payout ratio[Other reference information]
Number of investment
properties (at end of period)
Total leasable floor space(at end of period)

Occupancy rate
(at end of period)

Depreciation and amortization
expensesCapital expenditures
Leasing NOI
Days in fiscal period(Note 3) 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) 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
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

FUKUOKA REIT CORPORATION

9

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 30th fiscal period (August 31, 2019), FRC manages a total of 29 properties comprising 11
Retail, 8 Office buildings and 10 Others.

(2) Investment environment and portfolio performance
During the fiscal period under review (the 30th fiscal period), the Japanese economy showed a modest recovery despite recent
weakness surrounding exports. 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,
although weakness is expected to remain for some time.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy is expanding moderately. With regard
to the outlook, a mild expansion is expected to continue, although attention should be paid to the impact of the uncertainty about
overseas economies and the impact of a labor shortage on the supply side, among other factors.
As for land price trends, the national average price in combined average for residential and commercial land increased for thesecond consecutive year, reinforcing its upward trend, according to the 2019 Land Price Survey. By land type, residential land
price continued to show a decelerating pace of decrease and commercial land price rose for the third consecutive year. Meanwhile in Fukuoka City, the central area of FRC’s investment targets, land prices have risen for seven consecutive years, up 12.8%
year-on-year for commercial land and up 5.3% year-on-year for residential land, marking higher rates of increase than last year.
Under such circumstances, FRC continued its efforts to reinforce competitive advantages and customer drawing ability at Canal
City Hakata and other major retail properties. FRC achieved this by increasing the earning power of office buildings in Fukuoka
City through such measures as upward revision of rents, while focusing on maintaining and increasing 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 30th
fiscal period. When analyzing FRC’s portfolio (on an acquisition price basis) as of the end of the 30th fiscal period by investment
target area, the investment ratio in the Fukuoka metropolitan area accounted for 77.2%; when analyzing by property type, Retail,
Office buildings, and Others accounted for 59.2%, 26.9% and 13.9%, respectively.
On top of these efforts, FRC is engaged in promoting sustainability through environment, social and governance (ESG) considerations based on its Sustainability Policy. For this purpose, it has established the Sustainability Promotion Committee (comprising President/CEO and general managers, Property Management Department, Investment Department, Finance Department, Planning Department and Compliance Department of the Asset Manager), which investigates specific targets andmeasures and supervises the progress in implementation of the measures with regard to the internal system, cooperation withrelated parties outside the company and information disclosure policy, etc. Under this promotion system, FRC has been driving
sustainability initiatives, obtaining “Green Star” and “4 Stars” ratings in the GRESB (Global Real Estate Sustainability Benchmark)Real Estate Assessment since fiscal 2018 and becoming a signatory to the Principles for Responsible Investment (PRI) and thePrinciples for Financial Action for the 21st Century (PFA21) as of September 2019, among other achievements.

FUKUOKA REIT CORPORATION

10

II. Semiannual Report

II. Semiannual Report

Overview of Asset Management

Overview of Asset Management(3) Summary of fundraising[Changes in market price of investment certificates]

As FRC conducted refinancing in the 30th fiscal period, the balance of its interest-bearing debt outstanding (including investment corporation bonds) at the end of the period totaled 77,500 million yen, with the loan-to-value ratio (ratio of interest-bearing
debt (including investment corporation bonds) to total assets) at 39.7% 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 90.2% as ofthe same date.
Going forward, FRC will continue its endeavors to reduce refinancing risks by evenly dispersing debt repayment dates andextending debt duration. At the same time, FRC will work to mitigate risks of rising interest rates by shifting to fixed-interest rateborrowings and through other measures. Furthermore, FRC became the first corporation among those headquartered in Kyushu to raise funds with green loans in the 30th fiscal period. Going forward, FRC will promote fundraising through green financing in order to promote ESG activities and broaden fundraising means through expansion of the investor base.

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:Moreover, the credit ratings assigned to FRC as of the end of the 30th fiscal period are as follows:
Credit Rating Agency
Rating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)

Rating Type
Issuer Rating
Long-term Issuer Rating

RatingA+
AA−

Rating Outlook
StableStable(4) Summary of performance and dividend

Fiscal period
HighestLowestDate
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
March 1, 2018

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
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
49,000796,000

ProfitUnappropriated surplus
Undistributed earnings
Total dividends[Dividend per unit]

Earnings dividends[Earnings dividend per unit][Contribution refund per unit]

Unitholders’ capital(mm of yen) (Note 11)

Increase
125
41,4005,944
1,698
11,096
8,913
10,263–
11,701
7,795

Balance
125
41,52547,46949,16760,264
69,17779,441
79,441
91,142
98,938Remarks(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)11

30th fiscal period(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

183,400 yen
157,500 yen

177,600 yen
162,600 yen

176,100 yen
159,900 yen

182,500 yen
166,000 yen(Of the contribution refund per unit,
distribution per unit of the reserve
for temporary 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)

26th fiscal period

27th fiscal period

28th fiscal period

29th fiscal period

30th fiscal period(March 1, 2017 toAugust 31, 2017)(September 1, 2017 to
February 28, 2018)(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

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

2,623,635
2,623,917
453
2,623,464[3,512 yen]
2,623,464[3,512 yen]–[–]

2,860,088
2,860,542
514
2,860,028[3,593 yen]
2,860,028[3,593 yen]–[–]

2,934,877
2,935,391
539
2,934,852[3,687 yen]
2,934,852[3,687 yen]–[–]

2,939,139
2,939,679
51
2,939,628[3,693 yen]
2,939,628[3,693 yen]
–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

–
[–]

(Note 8)(Note 9)(Note 10)(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.
(Note 10) New investment units were issued through public offering at the issue price of 164,414 yen per unit (purchase price of 159,102 yen) for the purpose of procuring funds for acquiring new properties, etc.
(Note 11) 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.

FUKUOKA REIT CORPORATION

29th fiscal period(March 1, 2018 toAugust 31, 2018)

With respect to the dividend (excluding dividend in excess of earnings) for the 30th 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 3,693 yen.
(thousands of yen)Of the contribution refund,
distribution of the reserve
for temporary difference
adjustments

Changes in unitholders’ capital from the incorporation of FRC to the end of the 30th fiscal period are as follows:

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

4. Results of dividend, etc.

Contribution refund

3. Change in the number of investment units issued

27th fiscal period(March 1, 2017 toAugust 31, 2017)

182,800 yen
162,100 yen

Fiscal period

As a result of these management efforts, operating revenues totaled 9,231 million yen and operating income after excluding
operating expenses such as expenses related to leasing business and asset management fees totaled 3,318 million yen. Ordinary income was 2,939 million yen and profit amounted to 2,939 million yen. Management decided to make a dividend of 3,693
yen per 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 act, an investment corporation is allowed to deduct the maximum amount of dividends paid to investors from its taxable income.

26th fiscal period

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, and secure and maintain the stable operation of the properties 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 growth potential
markets.” By geographic location, of the Fukuoka and Kyushu areas, FRC will invest 60% to 90% of its assets in the Fukuoka
metropolitan area, since the Fukuoka metropolitan area is expected to have a high population growth rate in the future. In addition to the Fukuoka metropolitan area, management has decided to actively acquire properties in major cities, if there are regionsor properties 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 withassurance.
FUKUOKA REIT CORPORATION

12

II. Semiannual Report

II. Semiannual Report

Overview of the Investment Corporation

Overview of Asset Management
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraising and try to maintain a solid
financial structure.

6. Significant events that have occurred after the end of the 30th fiscal
period3. Matters related to directors(1) The names of FRC’s directors, etc. and their fees for the 30th fiscal period are as
follows:
Title

Name of directors, etc.

No relevant items.
CEO and Representative Director(Note 1)LOGICITY Wakamiya

Use

Location

Logistics

Shimoaruki, Miyawaka City, Fukuoka

SellerAcquisition price

Acquisition date

(Note 2)(planned) (Note 3)(planned)

Undisclosed

1,700 mm yen

June 30, 2020

Etsuo Matsuyuki

Independent Auditor

Yasuo Kawasho
PricewaterhouseCoopers
Aarata LLC

–

6,000
3,600
9,000

(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 30th fiscal period, and the fee to the Independent Auditor is the amount payable to it(estimate) for audits pertaining to the 30th fiscal period.

(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.

4. Names of asset management company, asset custodian and generaladministrators as of the end of the 30th fiscal period

Overview of the Investment Corporation

The following table sets forth the asset management company, asset custodian and general administrators of FRC as of August
31, 2019.

1. Summary of unitholders’ capital
Total number of authorized
investment units
Total number of investment
units outstanding
Number of unitholders

CEO and Representative Director, Fukuoka Realty
Co., Ltd.
Representative Council, Shindo Law Firm
Representative Partner, Kawasho Authorize
Accountant Office

Hiroyasu ShindoSupervisory Directors(Note 1) Property is operating under a different name as of the date of this report; however, its name will be changed to “LOGICITY Wakamiya” (the “Property”) after FRC acquires it.
(Note 2) The name of the seller is not disclosed as consent has not been obtained from the seller.
(Note 3) The acquisition price (planned) does not include acquisition expenses, the amount equivalent to the settlement of property taxes and city planning taxes, etc., consumption taxes on the building, estimated amount for renovation work scheduled to be conducted and other expenses.
(Note 4) The transaction agreement for the Property falls under the category of forward commitment, etc. (a postdated transaction agreement where the settlement and delivery are to take place one month ormore after the conclusion of agreement as well as other similar agreements) as provided by the “Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.” set by the
Financial Services Agency. In the transaction agreement for the Property, it is agreed that in the event of the cancellation of the agreement due to a breach by either the seller or the purchaser of its
contractual obligations, the breaching party shall pay to the counterparty a penalty fee equivalent to 20% of the acquisition price (excluding the amount equivalent to consumption tax and local consumption tax).

Fiscal period

Total fee for each title for the
30th fiscal period(thousands of yen) (Note 2)(Reference information)
On November 6, 2019, FRC concluded a sales agreement regarding acquisition of real estate.
Property name

Major concurrent assignments

26th fiscal period

27th fiscal period

28th fiscal period

29th fiscal period

30th fiscal period

as of August 31, 2017as of February 28, 2018as of August 31, 2018as of February 28, 2019as of August 31, 201910,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

747,000 units

747,000 units

796,000 units

796,000 units

796,000 units

10,1909,897

10,49910,47810,551Category of entrustment
Asset Management Company
Asset Custodian
General Administrator (accounting matters, etc.)
General Administrator (administration of unitholders’ list)
General Administrator (administration of investment corporation bonds registry)
General Administrator (administration of investment corporation bonds registry)Name
Fukuoka Realty Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Mitsubishi UFJ Trust and Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.

2. Matters related to investment units
The following table sets forth the major unitholders of FRC as of August 31, 2019.
Name

Investment units held (units)

Japan Trustee Service Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Fukuoka Jisho Co., Ltd.
The Nomura Trust and Banking Co., Ltd. (Investment trust account)
Trust & Custody Service Bank, Ltd. (Securities investment trust account)
Rakuten General Insurance Co., Ltd.
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
STATE STREET BANK WEST CLIENT – TREATY 505234
MetLife, Inc.
NORTHERN TRUST CO. (AVFC) RE HCR00
Total

157,261
79,36471,73633,084
21,65813,562
12,007
10,87910,2279,457
419,235

Percentage of total number ofinvestment units outstanding (%) (Note)
19.75
9.97
9.01
4.15
2.72
1.70
1.50
1.36
1.28
1.18
52.66

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

FUKUOKA REIT CORPORATION13FUKUOKA REIT CORPORATION

14

II. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Status of FRC’s Assets under Management

1. FRC’s asset structure
Type of asset

Use

3. Details of real estate properties in the portfolio

Area(Note 1)as of August 31, 2019

The following table provides details of the real estate properties owned by FRC as of August 31, 2019.

Percentage of
total assets

Total value of
properties held

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

75,88936,69846,035–
20,537
5,554
10,717

38.8
18.8
23.6
–
10.5
2.8
5.5

75,47336,46145,654–
20,437
5,506
11,574

38.7
18.7
23.4
–
10.5
2.8
5.9

195,433[184,723]

100.0[94.5]

195,106[183,547]

100.0[94.1]

Fukuoka metropolitan area
Other Kyushu areas
Fukuoka metropolitan area
Office buildings
Other Kyushu areas
Fukuoka metropolitan area
OthersOther Kyushu areas
Deposits and other assets
Total amount of assets (Note 4)

30th fiscal period

Total value of
properties held

RetailReal estate trust
beneficiary interest

29th fiscal period
as of February 28, 2019

(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 2015 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” conducted by 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 metropolitan 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) 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.

Real estate property name

Canal City Hakata
Canal City Hakata·B
Park Place Oita
SunLive City Kokura
Konoha Mall Hashimoto
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
Hanahata SC
Kurume Higashi Kushiwara SC
K’s Denki Kagoshima

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, 2019.

Marinoa City Fukuoka(Marina Side Building)Form ofownership

Location
2-22, 1-chome, Sumiyoshi, Hakata
Ward, Fukuoka City
2-1, 1- chome, Sumiyoshi, Hakata
Ward, Fukuoka City1, 2-chome, Koen Dori Nishi, Oita City,
Oita
14-1, 2-chome, Kami Kuzuhara,
Kokura Minami Ward, Kitakyushu City
27-2, 2-chome, Hashimoto, Nishi
Ward, Fukuoka City
2-18, 2-chome, Usuki, Kagoshima
City, Kagoshima
1-5, 1-chome, Kozono, Higashi- Ward,
Kumamoto City
9-12, 4-chome, Hanahata, Minami
Ward, Fukuoka City
370-3 Higashi Kushiwara, Kurume
City, Fukuoka
4-12, Tokai-cho, Kagoshima City,
Kagoshima
12-30, 2-chome, Odo, Nishi Ward,
Fukuoka City

Retail subtotal:
2-25, 1-chome, Sumiyoshi, Hakata

Real estate property name (Note 1)
Canal City Hakata
Canal City Hakata·B
Park Place Oita
Canal City Business Center Building
Konoha Mall Hashimoto
Gofukumachi Business Center
LOGICITY Minato Kashii
Taihaku Street Business Center
SunLive City Kokura
Marinoa City Fukuoka (Marina Side Building)
Total

Total leasable
floor space (m2)Book value(mm of yen)

29,911
29,001
19,44913,132
10,129
8,935
7,900
5,929
5,582
5,446
135,418

46,604.75
68,826.37
113,834.19
23,031.44
22,121.03
19,905.34
43,233.72
14,677.30
61,450.22
33,069.82
446,754.18

Total leased floor Occupancy rate(%) (Note 2)
space (m2)
46,604.75
68,437.78
113,834.19
21,749.32
22,121.03
19,905.34
43,233.72
14,622.25
61,450.22
33,069.82
445,028.42

100.0
99.4
100.0
94.4
100.0
100.0
100.0
99.6
100.0
100.0
99.6

(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.

Percentage of total
leasing businessrevenues (%) (Note 3)
13.5
17.1
12.9
6.8
9.0
5.9
Undisclosed (Note 4)
3.4
3.1
1.9
–

Canal City Business Center Building Ward, Fukuoka City
Main use
RetailRetailRetailOffice buildings
RetailOffice buildings
Others
Office buildings
RetailRetail–Gofukumachi Business Center
Sanix Hakata Building
Taihaku Street Business Center
Higashi Hie Business Center
Tenjin Nishi-Dori Center Building
Tenjin North Front Building
Higashi Hie Business Center II

10-10, Kami Gofukumachi, Hakata
Ward, Fukuoka City
1-23, 2-chome, Hakataeki Higashi,
Hakata Ward, Fukuoka City
3-21 Gokushomachi, Hakata Ward,
Fukuoka City
1-2, 3-chome, Higashi Hie, Hakata
Ward, Fukuoka City
5-28, 2-chome, Tenjin, Chuo Ward,
Fukuoka City
4-20, 4-chome, Tenjin, Chuo Ward,
Fukuoka City
5-13, 1-chome, Higashi Hie, Hakata
Ward, Fukuoka City

Office buildings subtotal:
Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha
Tosu Logistics Center
LOGICITY Minato Kashii
LOGICITY Hisayama

4-23, 2-chome, Maizuru, Chuo Ward,
Fukuoka City
16-21, 2-chome, Kego, Chuo Ward,
Fukuoka City
3-12, 4-chome, Chihaya, Higashi
Ward, Fukuoka City
10-38, 2-chome, Daimyo, Chuo Ward,
Fukuoka City
11-20, 1-chome, Hirao, Chuo Ward,
Fukuoka City
5-18, 1-chome, Chuo-cho, Oita City,
Oita
14-1, 2-chome, Nishi, Naha City,
Okinawa
1607 Momota, Himekata-cho Aza,
Tosu City, Saga
3-4, 2-chome, Minato Kashii, Higashi
Ward, Fukuoka City
2335-3 Oaza Yamada, Hisayamamachi, Kasuya County, Fukuoka

Others subtotal:
Total

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
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest

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

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

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

46,604.75

32,00029,911

68,826.37

30,10029,001

113,834.19

19,80019,449Japan Real Estate Institute61,450.22

8,340

5,582

Japan Real Estate Institute22,121.03

10,50010,129Tanizawa Sogo Appraisal
Co., Ltd.

14,602.88

5,630

4,380

Japan Real Estate Institute6,968.66

2,860

1,993

Japan Real Estate Institute2,801.15

1,250

984

6,467.80

2,790

2,059

7,296.17

3,710

2,997

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

33,069.82

6,080

5,446

384,043.04

123,060

111,934

23,031.44

15,90013,132

19,905.34

14,3008,935

6,293.75

6,360

3,805

Japan Real Estate Institute

14,677.30

8,640

5,929

Japan Real Estate Institute13,614.59

7,650

4,483

Tanizawa Sogo Appraisal
Co., Ltd.

3,339.32

3,170

2,685

Japan Real Estate Institute5,252.41

3,990

2,535

Japan Real Estate Institute6,214.77

4,440

4,146

92,328.92

64,45045,654

Tanizawa Sogo Appraisal
Co., Ltd.

4,821.25

1,840

1,702

2,710.86

1,140

917

5,619.69

1,780

1,194

7,187.59

3,570

2,692

2,496.06

1,310

1,118

5,785.44

1,860

1,418

Japan Real Estate Institute3,758.76

3,020

2,901

Tanizawa Sogo Appraisal
Co., Ltd.

4,173.29

1,430

1,186

Japan Real Estate Institute43,233.72

8,900

7,900

24,505.65

5,260

4,911

104,292.31
580,664.27

30,110217,620

25,943
183,532

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

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

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

(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 ofIncorporation and rules stipulated by The Investment Trusts Association, Japan.
FUKUOKA REIT CORPORATION15FUKUOKA REIT CORPORATION

16

II. Semiannual Report

II. Semiannual Report

Status of FRC’s Assets under Management

Real estate property name29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

Number ofOccupancy
tenants at end rate at end ofof period
period(Note 1)

Canal City Hakata
Canal City Hakata·B
Park Place Oita
SunLive City Kokura
Konoha Mall Hashimoto
Square Mall Kagoshima Usuki
Kumamoto Intercommunity SC
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
Higashi Hie Business Center II
Office buildings subtotal:

1 [49]
1 [46]
1 [104]
1
1 [127]
12
2
2
1
1
1
24 [346](Note 2)

1 [62]
35
16
1 [69]
1 [25]
1
11
2
68 [221](Note 2)(%) (Note 3)

Total leasing Percentage ofTotal leasing Percentage of
Number ofOccupancy
business
total leasing
business
total leasing
tenants at end rate at end ofrevenues
business
revenues
businessof period
periodduring periods
revenues
during periods
revenues(Note 1)(%) (Note 3)(mm of yen)(%) (Note 4)

100.0
99.0
99.8
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,294
1,618
1,178
289
838
258
90
41
88
111
178

14.0
17.5
12.7
3.1
9.1
2.8
1.0
0.4
1.0
1.2
1.9

99.7

5,986

64.8

100.0
100.0
100.0
99.1
100.0
100.0
100.0
100.0

633
537
199
306
336
86
140
165

6.9
5.8
2.2
3.3
3.6
0.9
1.5
1.8

99.9

2,405

26.0
0.7
0.4
0.6
1.2
0.4
0.7
0.4
Undisclosed(mm of yen)(%) (Note 4)

100.0
99.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1,247
1,582
1,188
284
835
257
90
40
88
111
177

13.5
17.1
12.9
3.1
9.0
2.8
1.0
0.4
1.0
1.2
1.9

99.9

5,902

63.9

94.4
100.0
100.0
99.6
100.0
100.0
100.0
100.0

626
545
201
310
345
86
142
166

6.8
5.9
2.2
3.4
3.7
0.9
1.5
1.8

98.6

2,424

26.3

1 [66]
1 [39]
1 [105]
1 [131]
1 [99]
1
1

98.5
92.3
100.0
94.0
100.0
100.0
100.0

1

100.0

67
36
60
113
38
63
88
Undisclosed

0.7
0.4
0.7
1.2
0.4
0.7
1.0
Undisclosed(Note 5)(Note 5)2

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)1

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)

99.3

904

9.8

99.6

9,231

100.0

1 [51]
1 [48]
1 [106]
1
1 [127]
12
2
2
1
1
1
24 [352](Note 2)

1 [60]
36
16
1 [70]
1 [26]
1
11
2
69 [222](Note 2)Amex Akasakamon Tower
City House Keyaki Dori
Aqualia Chihaya
D-Wing Tower
Granfore Yakuin Minami
Hotel FORZA Oita
Tissage Hotel Naha

1 [66]
1 [40]
1 [104]
1 [131]
1 [97]
1
1

98.8
95.6
99.3
95.0
98.0
100.0
100.0

Tosu Logistics Center

1

100.0

68
38
59
114
37
63
39
Undisclosed(Note 5)(Note 5)LOGICITY Minato Kashii

2

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)LOGICITY Hisayama

1

100.0

Undisclosed

Undisclosed(Note 5)(Note 5)

Others subtotal:

11 [444]

99.4

850

9.2

11 [446]

Total

103 [1,011]

99.7

9,242

100.0

104 [1,020](Note 2)
(Note 2)

Status of FRC’s Assets under Management(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 58 for the residence in the 30th fiscal period (12 for the office building and 57 for the residence in the 29th 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) 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.

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,
2019.
Category
Off-market transaction

Contract amount, etc. (mm of yen)
Of which, exceeding 1 year

Type

(Note 1)

Interest rate swap transaction(Receivable floating; Payable fixed)
Total

23,70021,200(325)

23,70021,200(325)(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.

8. Status of other assets
All real estate trust beneficiary interests owned by FRC have been entered under “3. Details of real estate properties in the portfolio” on page 16. There is no incorporation of other specified assets as of the end of the 30th fiscal period.

9. Status of owned assets by country and region
As of the end of the 30th fiscal period, no overseas real estate properties in countries or regions other than Japan are incorporated into FRC’s portfolio.

Capital Expenditures for Owned Real Estate
1. Planned capital expenditures
The following table provides major items of capital expenditures associated with currently planned renovations, etc. for real estate 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 and improve thecompetitiveness of properties in the market as well as tenant satisfaction, on top of the construction, facilities and replacement
work for which expenditures will be made regularly.
Planned construction cost
Real estate property
nameCanal City Hakata
Canal City Hakata·B

Location

PurposeTotal
Hakata Ward,
Fukuoka City
Hakata Ward,
Fukuoka City

Park Place Oita

Oita City, Oita

Park Place Oita

Oita City, Oita

Gofukumachi BusinessCenterTaihaku Street
Business Center

Hakata Ward,
Fukuoka City
Hakata Ward,
Fukuoka City

From August 2019 toJuly 2020
From August 2019 toRenovation of external walls
July 2020
From December 2019 toRenovation of external walls
February 2020
From January 2020 toRenovation of common spaces
April 2020
Enhancement of multilevel mechanical parking From June 2019 toequipment
November 2019
From January 2020 to
Replacement of air-conditioning units
March 2020

Renovation of external walls

No relevant items.
17(mm of yen)

Schedule

6. Securities incorporated in the portfolio
FUKUOKA REIT CORPORATION

Fair value(mm of yen) (Note 2)

FUKUOKA REIT CORPORATION

18

Construction
Amountcost
already paid

88

–

–

176

–

–

72

–

–

155

–

–

55

–

–

41

–

–

II. Semiannual Report

II. Semiannual Report

Capital Expenditures for Owned Real Estate

Expenses and Liabilities

2. Capital expenditures during the 30th fiscal period

1. Details of expenses related to asset management

Capital expenditures for the real estate properties owned by FRC totaled 476 million yen in the 30th period. Furthermore, FRC
incurred construction costs of 607 million yen in total in the period, including 123 million yen in repair and maintenance expenses 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 30th fiscal period.

Real estate property nameLocation

Purpose

PeriodCanal City Hakata

Hakata Ward, Fukuoka City

Water supply piping for guestrooms

Canal City Hakata·B

Hakata Ward, Fukuoka City

Replotting of floor sections

Park Place Oita

Oita City, Oita

Replacement of air-conditioning units

Park Place Oita

Oita City, Oita

Renovation of external walls

Higashi Hie Business Center

Hakata Ward, Fukuoka City

Replacement of outdoor unit compressors

Tenjin North Front Building

Chuo Ward, Fukuoka City

Renovation of common spaces

LOGICITY Minato Kashii

Higashi Ward, Fukuoka City

Formation of floor sections

From February 2019 to
May 2019
From February 2019 toApril 2019
From March 2019 toApril 2019
From April 2019 to
May 2019
From May 2019 to
May 2019
From April 2019 to
May 2019
From March 2019 toApril 2019

Construction cost
(mm of yen)

10
31
56

22
34

532,061
7,182
54,581
9,600
59,167
662,592

28th fiscal period

29th fiscal period

30th fiscal period(September 1, 2017 to
February 28, 2018)(March 1, 2018 toAugust 31, 2018)(September 1, 2018 to
February 28, 2019)(March 1, 2019 toAugust 31, 2019)

1,000
–
–
1,000

Balance as ofMarch 1,
2019

Balance as ofAugust 31,
2019

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note)

July 31, 2014

200
3,000
500

–
–
–

Current MUFG Bank
maturities
of long- The Nishi-Nippon City Bank
term debt
Mizuho Bank

September 25, 2014

500

February 1, 2013

Aozora Bank

Category

1,000
–
–
1,000

LenderRepayment
methodUse offunds

Description

0.538

July 31, 2019

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

500

0.520

September 25, 2019

2,500

2,500

0.775

February 29, 2020

February 28, 2013

1,700

1,700

0.569

February 29, 2020

June 28, 2013

–

1,000

0.468

June 30, 2020

Subtotal

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

Refinance fundAcquisition fund
Refinance fund
Refinance fundNo collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee
No collateral/
No guarantee

8,400

5,700

June 28, 2013

1,000

–

0.468

June 30, 2020

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Mizuho Bank
The Norinchukin Bank
The Hiroshima Bank
The Kitakyushu BankThe Iyo Bank
The Higo Bank

July 31, 2014

2,300
1,000
1,400
800
500
300

2,300
1,000
1,400
800
500
300

0.835

July 30, 2021

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

Development Bank of Japan

August 29, 2014

4,000

4,000

1.010

August 31, 2022

Sumitomo Mitsui Banking
Corporation

June 30, 2015

1,600

1,600

0.790

June 30, 2022

July 31, 2015

1,500

1,500

0.564

July 31, 2023

August 31, 2015

4,000

4,000

0.880

August 31, 2023

The Bank of Fukuoka

August 31, 2015

400

400

0.419

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

0.419

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

0.412

September 30, 2025

Aozora Bank

Sumitomo Mitsui Trust Bank

19

Repayment
date

Drawdown
date

Sumitomo Mitsui Trust Bank
Long-term
Development Bank of Japandebt

FUKUOKA REIT CORPORATION

540,190
7,388
55,6749,600
50,325663,178(Note) Aside from the amounts of the asset management fees shown above, 14,175 thousand yen was paid in the 29th fiscal period for asset management, capitalized in the acquisition costs, related to theacquisition of Tissage Hotel Naha.

Mizuho Bank
The Norinchukin Bank
The Bank of Saga

27th fiscal period

1,000
–
–
1,000

(a) Asset management fees(b) Asset custody fees(c) Administrative service fees(d) Directors’ compensations(e) Other operating expenses
Total

As of the end of the 30th fiscal period (August 31, 2019), FRC has the following debt from respective financial institutions.

(March 1, 2017 toAugust 31, 2017)

1,000
–
–
1,000

30th fiscal period(March 1, 2019 to August 31, 2019)13

26th fiscal period
1,000
–
–
1,000

29th fiscal period(September 1, 2018 to February 28, 2019)

2. Status of debt

FRC has deposited the following amounts from the cash flows generated during the 30th 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.
(millions of yen)Balance of deposits at beginning of period
Deposits during the period
Amounts used from deposits during the period
Deposits carried forward to the next period

Item

31

3. Reserves for long-term repair and maintenance plans

Fiscal period(thousands of yen)

FUKUOKA REIT CORPORATION

20

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
Lump-sum uponmaturity
Lump-sum uponmaturity

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
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
No collateral/
No guarantee
No collateral/
No guaranteeII. Semiannual Report

II. Semiannual Report

Expenses and Liabilities
Category
LenderDrawdown
date

Expenses and Liabilities

Balance as ofMarch 1,
2019

Balance as ofAugust 31,
2019

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note)

1,500
100
100
100
100
100
100

1,500
100
100
100
100
100
100

0.718

Repayment
date

Development Bank of JapanThe Oita Bank
The Kagoshima Bank
The Kitakyushu BankThe Eighteenth BankThe Shinwa Bank
The Hiroshima Bank

December 30, 2016

The Bank of Fukuoka

December 30, 2016

1,500

1,500

0.418

December 30, 2026

MUFG Bank

March 31, 2017

800

800

0.481

March 31, 2025

Resona Bank

March 31, 2017

600

600

0.658

March 31, 2027

The Higo Bank

March 31, 2017

300

300

0.481

March 31, 2025

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

June 30,2017

1,300
1,000
700
700
700
600
500
500

1,300
1,000
700
700
700
600
500
500

0.777

Development Bank of Japan

June 30, 2017

1,800

1,800

0.650

December 31, 2026

The Bank of Fukuoka

July 31, 2017

2,000

2,000

0.792

July 31, 2027

The Nishi-Nippon City Bank

July 31, 2017

2,000

2,000

0.892

July 31, 2027

The Nishi-Nippon City Bank
The Bank of Fukuoka
Long-term The Oita Bank
The Kitakyushu Bank
debt
The Eighteenth BankThe Shinwa Bank
The Hiroshima Bank

August 31, 2017

500
500
100
100
100
100
100

500
500
100
100
100
100
100

0.850

Resona Bank

September 29, 2017

2,000

2,000

0.494

September 30, 2027

The Bank of Fukuoka

December 29, 2017

1,500

1,500

0.812

December 30, 2027

Development Bank of Japan

December 29, 2017

500

500

0.680

December 30, 2027

The Nishi-Nippon City Bank

February 28, 2018

1,900

1,900

0.750

February 29, 2028

Sumitomo Mitsui Trust Bank

February 28, 2018

1,100

1,100

0.600

February 26, 2027

MUFG Bank

February 28, 2018

1,500

1,500

0.500

February 27, 2026

Resona Bank

February 28, 2018

600

600

0.567

February 29, 2028

Development Bank of Japan

March 1, 2018

2,500

2,500

0.720

March 1, 2028

MUFG Bank

March 30, 2018

600

600

0.480

March 31, 2026

The Nishi-Nippon City Bank

March 30, 2018

600

600

0.802

March 31, 2028

The Bank of Fukuoka

March 30, 2018

500

500

0.802

March 31, 2028

Mizuho Bank

March 30, 2018

500

500

0.630

March 31, 2028

Sumitomo Mitsui Banking
Corporation

March 30, 2018

500

500

0.504

March 31, 2025

MUFG Bank

March 30, 2018

500

500

0.490

March 31, 2027

Sumitomo Mitsui Trust Bank

March 30, 2018

400

400

0.576

March 31, 2027

The Oita Bank

March 30, 2018

400

400

0.646

March 31, 2028

The Hiroshima Bank

March 30, 2018

400

400

0.646

March 31, 2028

December 30, 2025

June 30, 2026

Repayment
methodLump-sum uponmaturity

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

Lump-sum uponmaturity

Use offunds

Refinance fund

Refinance fund
Refinance fund
Refinance fund
Refinance fund

Refinance fundCategory

Description

Drawdown
dateLenderNo collateral/
No guarantee

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

No collateral/
No guarantee

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

Averageinterest
rate(mm of yen)

(mm of yen)(%) (Note)

Repayment
date

Repayment
methodLump-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

Use offunds

Description
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

March 30, 2018

300

300

0.400

March 31, 2025

Sumitomo Mitsui Banking
Corporation

January 31, 2019

500

500

0.655

January 31, 2029

MUFG Bank

January 31, 2019

500

500

0.590

January 31, 2028

The Nishi-Nippon City Bank

January 31, 2019

400

400

0.419

January 31, 2029

The Bank of Fukuoka

January 31, 2019

300

300

0.419

January 31, 2029

The Oita Bank
Long-term
The Kagoshima Bank
debt

February 28, 2019

200

200

0.334

February 27, 2026

February 28, 2019

200

200

0.334

February 27, 2026

The Higo Bank

February 28, 2019

200

200

0.334

February 27, 2026

Resona Bank

February 28, 2019

200

200

0.488

February 28, 2029

Mizuho Bank
The Bank of Saga
The Higo Bank

July 31, 2019

–
–
–

1,200
500
500

0.521

July 31, 2029

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

The Norinchukin Bank

July 31, 2019

–

1,500

0.303

January 29, 2027

Lump-sum uponmaturity

Refinance fundNo collateral/
No guarantee

64,10072,50066,80072,500Subtotal

Refinance fund

Balance as ofAugust 31,
2019

Shinsei Bank

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

Balance as ofMarch 1,
2019

Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund

(Note) 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 conducted interest
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

3. Investment corporation bonds
As of the end of the 30th fiscal period (August 31, 2019), FRC has the following investment corporation bonds outstanding.

FUKUOKA REIT CORPORATION

21

August 31, 2027

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
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
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fundAcquisition fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
Refinance fund
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
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

Issue

Issue date

Decrease
Balance as of
Balance as ofMarch 1, during the fiscal August 31,
period
2019
2019

(%)

Maturitydate

Maturity
methodUse

Description

Coupon(mm of yen)

(mm of yen)

(mm of yen)

December 30, 2013

2,000

–

2,000

1.32

December 29, 2023

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

Second Series ofUnsecured Bonds

July 31, 2017

2,000

–

2,000

1.00

July 30, 2032

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

Third Series ofUnsecured Bonds

July 31, 2018

1,000

–

1,000

1.20

July 30, 2038

Lump-sum uponmaturity(Note 1)

Repayment ofdebt

No collateral/
No guarantee(Note 2)

5,000

–

5,000

First Series ofUnsecured Bonds

Total(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.

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

5. Subscription rights to shares
No relevant items.

FUKUOKA REIT CORPORATION

22

II. Semiannual Report

II. Semiannual Report

Acquisitions and Sales during the 30th Fiscal Period

Acquisitions and Sales during the 30th Fiscal Period

1. Acquisition and sale of real estate, asset-backed securities,
infrastructure assets, etc. and infrastructure-related assets, etc.

4. Transactions with interested parties, etc.

No relevant items.

No relevant items.

2. Acquisition and sale of other assets(2) Amount of fees paid, etc.

No relevant items.

(1) Transaction status

FRC paid the following fees to the interested parties, etc. during the 30th fiscal period. Furthermore, interested parties, etc. referto 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 below table indicates the business partners to which FRC paid fees, etc. during the 30th fiscal
period.

3. Survey on prices of specified assets, etc.
(1) Real estate, etc.
No relevant items.

Category(2) Other
Other than the transactions described in “(1) Real estate, etc.” above, FRC carried out no transaction that was required to havethe value, etc. reviewed pursuant to the provisions of Article 201 of the Investment Trusts Act.

Total paid fees (A)(thousands of yen)
(Note 1)

Property leasing brokerage fees (Note 2)

22,422

Property management fees (Note 3)

351,284

Outsourcing fees (Note 2) (Note 4)

1,559,624

Other operating expenses (Note 2)

1,462,237

Breakdown of transactions with interested parties, etc.
Paid amount (B)Paid party

Percentage of total
amount(B) / (A)(thousands of yen)

Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.
Sunlife Co., Ltd.
Fukuoka Jisho Co., Ltd.
FJ. Entertainment Works Ltd.

13,642
3,005
178,444
163,642938,720
448,685
112,722
221,166
286,574

(%)

60.8
13.4
50.8
46.6
60.2
28.8
7.2
15.1
19.6

(Note 1) Aside from the paid fees shown above, FRC paid the following amounts for repairs, etc. that were ordered to interested parties, etc. during the 30th fiscal period. The amounts include construction work
fees paid to third parties through interested parties, etc.
Fukuoka Jisho Co., Ltd.
306,576 thousand yen
FJ. Entertainment Works Ltd. 189,887 thousand yen
Sunlife Co., Ltd.
73,948 thousand yen(Note 2) 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 3) 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 included in
the acquisition cost of the relevant real estate.
Fukuoka Jisho Co., Ltd.
10,029 thousand yen
FJ. Entertainment Works Ltd.
7,725 thousand yen(Note 4) 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.

5. Transactions with the asset management company regarding
concurrent work conducted by the asset management company
The asset management company (Fukuoka Realty Co., Ltd.) does not concurrently conduct any class 1 financial instruments
transaction business, class 2 financial instruments transaction business, land and building transaction business or real estatesyndication business, and has no such transactions with FRC.

FUKUOKA REIT CORPORATION23FUKUOKA REIT CORPORATION

24

II. Semiannual Report

III. Independent Auditor's Report

Overview of Accounting
1. Assets, liabilities, principal and profits/loss
Please 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
No relevant items.

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

IV. Balance Sheet

IV. Balance Sheet(thousands of yen)Account

29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)(thousands of yen)Account

29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)

Liabilities

AssetsCurrent liabilities

Current assets
Cash and deposits

3,570,388

3,962,695

Operating accounts payable

Cash and deposits in trust

4,796,296

5,290,603

Current maturities of long-term debt

676,783

704,699

Accounts payable-other

20,908

10,313297,375

271,613

Accrued expenses

368,137

371,617

4,182

5,090

Income taxes payable

Operating accounts receivable
Prepaid expenses
OthersTotal current assets

9,345,026

10,234,701

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

100,692,867*1

101,114,666

905,301

428,285

8,400,000

5,700,000

1,047

726

199,254261,879

Advances received

1,043,991

1,054,458

Deposits received

1,103,147

1,361,488

Total current liabilities

12,041,787

9,188,769

Accrued consumption taxes

Non-current liabilities

Accumulated depreciation(28,811,313)(30,359,294)

Buildings in trust, net

71,881,554

70,755,371

Investment corporation bonds

5,000,000

5,000,000

Structures in trust

1,873,277

1,883,393

Long-term debt

64,100,000

66,800,000

Tenant leasehold and security deposits

375,482392,641

Accumulated depreciation(729,404)(758,444)

Structures in trust, net

1,143,873

1,124,948

Machinery and equipment in trust

1,400,813

1,414,614

Accumulated depreciation(462,805)(505,053)

Machinery and equipment in trust, net

938,007909,560

Vehicles and transport equipment in trust

747

747

Accumulated depreciation

(533)

(581)

Vehicles and transport equipment in trust, net

214

166

Tools and fixtures in trust

1,378,452

1,382,487

Accumulated depreciation(1,117,165)(1,144,897)

Tools and fixtures in trust, net

261,286

237,589

Lands in trust*1

104,918,451

Construction in progress in trust
Total property, plant and equipment*1

104,918,451

7,088

15,164

179,150,475

177,961,252

5,545,883

5,545,883

Tenant leasehold and security deposits received in trust*1

Total non-current liabilities

12,041,779

Other intangible assets in trust

26,654

40,467

5,572,537

5,586,351

17

3

Lease and guarantee deposits

10,00010,000

Lease and guarantee deposits in trust

327,135

327,135

Long-term prepaid expenses

972,221937,627

1,309,374

1,274,765

186,032,387

184,822,369

Investment corporation bond issuance expenses

40,44938,346

Investment unit issuance expenses

15,342

11,506

Total deferred assets

55,79149,853

195,433,205

195,106,924

Total intangible assets

93,559,049

93,228,480

98,938,764

98,938,764

Unappropriated surplus

2,935,391

2,939,679

Total surplus

2,935,391

2,939,679

Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus

Total unitholders’ equity
Total net assets

101,874,156*3

Total liabilities and net assets

101,874,156
195,433,205

Investment and other assets
Deferred tax assets

Total investment and other assets
Total non-current assets
Deferred assets

Total assets

FUKUOKA REIT CORPORATION

27

11,847,068
84,039,710

Intangible assets
Leasehold right in trust*1

81,517,261

FUKUOKA REIT CORPORATION

28

101,878,444*3

101,878,444
195,106,924

V. Statement of Income

VI. Statement of Changes in Net Assets

(thousands of yen)Account

29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)29th fiscal period (September 1, 2018 to February 28, 2019)

Operating revenues
Leasing revenues – real estate*18,604,955*1

8,530,902

Other leasing revenues – real estate*1

637,878*1

700,755

Total operating revenues

9,242,834

9,231,657

Operating expenses
Expenses related to leasing business*1 *2

5,274,003

Asset management fees

532,061*1 *2

5,250,066
540,190

Unitholders’ Equity
Item
Balance as of September 1, 2018
Dividend of surplus(2,860,028)(2,860,028)(2,860,028)

Profit2,934,877

2,934,877

2,934,877–

74,84974,84974,84998,938,764

2,935,391

101,874,156

101,874,156

54,581

55,674

Total of changes in the current fiscal period

Director’s compensations

9,600

9,600

Balance as of February 28, 2019

Other operating expenses

59,16750,325

Total operating expenses

5,936,596

5,913,244

3,306,238

3,318,413

39

41

Others2,162593

Total non-operating revenues

2,202

634

30th fiscal period (March 1, 2019 to August 31, 2019)

250,590

Interest expenses on investment corporation bonds

29,20029,200

Amortization of investment corporation bond issuance
expenses

2,102

2,102

Amortization of investment unit issuance expenses

3,835

3,835

Financing related expenses

91,53593,396

Others3737

372,511

379,162

Ordinary income

2,935,928

2,939,885

Profit before income taxes

2,935,928

2,939,885

1,053

730

Total non-operating expenses

Income taxes-current
Income taxes-deferred

(2)

14

Total income taxes

1,051

745

Profit2,934,877

2,939,139

Surplus brought forward

514

539

Unappropriated surplus

2,935,391

2,939,679

FUKUOKA REIT CORPORATION

29(thousands of yen)
Unitholders’ Equity

Item

Non-operating expenses
245,801

Total net assets

Changes in the current fiscal period

Administrative service fees

Interest expenses

Total unitholders’ equity

101,799,306

7,388Interest received

98,938,764

Surplus
Unappropriated surplus

101,799,306

7,182

Non-operating revenues

Unitholders’ capital

2,860,542

Asset custody fees

Operating income(thousands of yen)

Balance as of March 1, 2019

Unitholders’ capital
98,938,764

Surplus
Unappropriated surplus

Total unitholders’ equity

Total net assets

2,935,391

101,874,156

101,874,156

Dividend of surplus(2,934,852)(2,934,852)(2,934,852)

Profit2,939,139

2,939,139

2,939,139

–

4,287

4,287

4,287

98,938,764

2,939,679

101,878,444

101,878,444

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of August 31, 2019

FUKUOKA REIT CORPORATION

30

VII. Cash Flow Statement

VIII. Notes to Financial Statements(thousands of yen)Account

29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)(Significant accounting policies)
1. Depreciation method for non-current assets

Net cash provided by (used in) operating activities
Profit before income taxes

2,935,928

2,939,885

Depreciation and amortization expenses

1,622,792

1,651,902

Amortization of investment corporation bond issuance expenses

2,102

2,102

Amortization of investment unit issuance expenses

3,835

3,835

Interest received

(39)

(41)

Interest expenses

275,001

279,790

Decrease (increase) in operating accounts receivables(134,143)(27,916)

Decrease (increase) in consumption taxes refund receivable

598,560–

Increase (decrease) in accrued consumption taxes

199,254

62,625

Increase (decrease) in operating accounts payable(10,519)(88,546)

Increase (decrease) in accounts payable-other

2,530(10,882)

Increase (decrease) in accrued expenses

5,784

1,276

Increase (decrease) in advances received(5,858)

10,466

Increase (decrease) in deposits expenses(224,102)

258,341

Decrease (increase) in prepaid expenses(43,231)

25,762

Decrease (increase) in long-term prepaid expenses(121,575)

34,593

3,668(1,501)

5,109,987

5,141,693

Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

39

41(276,266)(277,586)(998)(1,052)

4,832,761

4,863,095(3,601,665)(846,296)(15,881)(18,665)

60

28,976(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.
2. Accounting for deferred assets

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 over theperiod through redemption.

3. Standards for recognition of revenues and expenses

Accounting treatment of property taxes, etc.
In connection with property taxes, city planning taxes and depreciated asset taxes, FRC uses the methodof 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 real estate, etc. was
52 thousand yen for the 29th fiscal period.

4. Method of hedge accounting(1) Method of hedge accounting
Deferred hedge accounting is applied for interest rate swap transactions. However, special accounting isapplied 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.

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–(11,817)

Proceeds from tenant leasehold and security deposits in trust

149,480

183,512

Repayments of tenant leasehold and security deposits in trust(135,190)(378,222)

Proceeds from restricted trust deposits

5,343

6,544

Payments for restricted trust deposits(6,268)(7,094)(3,604,122)(1,043,063)

Proceeds from short-term debt

4,800,000–

Repayments of short-term debt

(4,800,000)–

Proceeds from long-term debt

2,500,000

3,700,000

Repayments of long-term debt

(500,000)(3,700,000)

Net cash provided by (used in) investment activities
Net cash provided by (used in) financial activities

Dividends paid

(2,859,795)(2,933,970)

Net cash provided by (used in) financial activities(859,795)(2,933,970)

Net increase (decrease) in cash and cash equivalents

368,843886,061

Balance of cash and cash equivalents at beginning of period
Balance of cash and cash equivalents at end of period

7,950,972
8,319,815*1

FUKUOKA REIT CORPORATION

318,319,815*1

9,205,877(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 – 65 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

5. Scope of funds (cash and cash equivalents) in cash flow The funds (cash and cash equivalents) in the cash flow statement consist of cash on hand and cash in trust;statement
deposits that can be withdrawn at any time and deposits in trust; and short-term investments with amaturity 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.
6. Other significant items fundamental to preparing thefinancial statements(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 the entrusted 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.
➀ Cash and deposits in trust➁	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 trust➂ Leasehold right in trust➃ Other intangible assets in trust➄ Lease and guarantee deposits in trust➅ 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

32

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to accounting standards not yet adopted)• Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 issued by the Accounting Standards Board ofJapan (ASBJ) on March 30, 2018)• Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30 issued by ASBJ on
March 30, 2018)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) jointly developed a comprehensive accounting standard for revenue recognition, and issued it as Revenue from Contracts with Customers (IFRS 15 issued by IASB and Topic 606 issued by FASB) in May 2014. IFRS 15 is applicable for accounting periods beginning on January 1, 2018 and thereafter, and Topic 606 is applicable for accounting periods beginning after December 15,
2017. In accordance with this, the ASBJ has developed a comprehensive accounting standard for revenue recognition andissued it together with its implementation guidance. In developing the accounting standard for revenue recognition, the ASBJ
made it a basic policy to adopt the basic principles of IFRS 15 as a starting point. By doing so, the ASBJ established theaccounting standard from the viewpoint of comparability, which is a benefit for securing consistency with IFRS 15, between
financial statements based on Japanese GAAP and those based on other accounting standards. Alternative treatments werealso added, to the extent that they do not harm the comparability, in cases where there are items to be considered in theactual practices conducted in Japan to date.
(2) Scheduled date of adoption
FRC will adopt the Accounting Standard and Implementation Guidance from the beginning of the fiscal period ending February 2022.
(3) Impact of adoption of the accounting standard and implementation guidance
The amount of impact on the financial statements by the adoption of the Accounting Standard and Implementation Guidancefor Revenue Recognition is being assessed at present.

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

Buildings in trust
Lands in trust
Total

29th fiscal period

30th fiscal period

as of February 28, 2019as of August 31, 2019

6,155,043
16,101,020
22,256,064

Secured liabilities are as follows:	(thousands of yen)

Tenant leasehold and security deposits received in trust

29th fiscal period

30th fiscal period

as of February 28, 2019as of August 31, 2019

1,414,298[Committed line of credit agreement 1]
	(thousands of yen)

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of period

29th fiscal period

30th fiscal period

as of February 28, 2019as of August 31, 2019

6,000,000–
6,000,000[Committed line of credit agreement 2]
	
29th fiscal period

30th fiscal period

as of February 28, 2019as of August 31, 2019

7,000,000–
7,000,000

29th fiscal period

30th fiscal period

as of February 28, 2019as of August 31, 201950,0006,000,000–
6,000,000(thousands of yen)

*3. Minimum net assets designated in Article 67- 4 in the Act on Investment Trusts and Investment Corporations.
	(thousands of yen)33

1,268,243

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.

Credit limit
Outstanding debt at end of period
Unused committed line of credit at end of period

FUKUOKA REIT CORPORATION

6,072,749
16,101,020
22,173,769

50,000FUKUOKA REIT CORPORATION

34

7,000,000–
7,000,000

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to statement of income)(Notes to financial instruments)*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 business		 Outsourcing 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)(thousands of yen)
29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

7,045,595
1,111,443
447,916

8,604,955

616,581
21,296

637,878
9,242,834

1,908,842
221,346
661,774
55,689569,325
1,622,792
234,232

5,274,003
5,274,003
3,968,831*2. Transactions with affiliated companies.
	

6,961,827
1,101,386
467,689
664,715
36,0391,910,909
123,202734,315
49,910550,418
1,651,902
229,406

8,530,902

700,755
9,231,657

5,250,066
5,250,066
3,981,591(thousands of yen)Item29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

Expenses related to real estate leasing business

1,493,926

1,395,796(Notes to statement of changes in net assets)
Total number of authorized investment units and total number ofinvestment units issued
Total number of authorized investment units
Total number of investment units issued

29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)10,000,000 units
796,000 units

10,000,000 units
796,000 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)
29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

Cash and deposits
Cash and deposits in trust
Restricted trust deposits (Note)
Cash and cash equivalents

3,570,388
4,796,296(46,870)8,319,815

3,962,695
5,290,603(47,420)
9,205,877

1. Matters concerning status of financial instruments(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 for property
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 and liquidity 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 forthe 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-handliquidity.
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 to totalborrowings 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 futurefluctuations in the rates of interest payable. Furthermore, assessment of the effectiveness of these interest rate swaps isomitted as it has been determined that they have met the requirements for special accounting. FRC executes and manages
its derivative transactions in accordance with its financial derivative transaction management policies and, it does so only withfinancial institutions it determines to have a certain level of creditworthiness, by reference to their credit ratings, to reducecounterparty 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.
(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.

(Note) Restricted trust deposits are trust deposits reserved for refunding tenant leasehold and security deposits deposited by tenants and for other purposes.

(Notes to leases)
The future lease revenues under the non-cancellable operating leases [as lessor] are as follows:	

Due within 1 year
Due after 1 year
Total

(thousands of yen)

29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)

5,456,188
19,862,497
25,318,685

5,491,855
17,646,621
23,138,477

FUKUOKA REIT CORPORATION35FUKUOKA REIT CORPORATION

36

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

2. Matters concerning fair value of financial instruments(Note 3) Amount of redemption of monetary claims scheduled to be due after closing of accounts (as of February 28, 2019)

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 February 28, 2019. 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
3,570,388
4,796,296
8,366,685–
8,400,000
5,000,000
64,100,000
614,280
78,114,280––

Fair value(Note 1)

Difference

3,570,388
4,796,296
8,366,685–
8,408,528
5,338,493
66,509,457
613,876
80,870,357
–
–

–
–
–
–
8,528
338,4932,409,457(403)
2,756,077––

	(thousands of yen)Due in 1 year or less
3,570,388
4,796,296
8,366,685

Cash and deposits
Cash and deposits in trust
Total

Amount of redemption of monetary claims scheduled to be due after closing of accounts (as of August 31, 2019)	(thousands of yen)Due in 1 year or less
3,962,695
5,290,603
9,253,298

Cash and deposits
Cash and deposits in trust
Total(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, 2019)	(thousands of yen)
Long-term debt
Investment corporationbonds

Due in 1 year or less
8,400,000

1 to 2 years
1,000,000

2 to 3 years
6,300,000

3 to 4 years
6,000,000

4 to 5 years
10,400,000

Due after 5 years
40,400,000

–

–

–

–

2,000,000

3,000,000

Amount of repayment of long-term debt and investment corporation bonds scheduled to be due after closing of accounts (as of August 31, 2019)

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, 2019. 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
3,962,695
5,290,603
9,253,298–
5,700,000
5,000,000
66,800,000
573,573
78,073,573––

Fair value(Note 1)(thousands of yen)
Long-term debt
Investment corporationbonds

Due in 1 year or less
5,700,000

1 to 2 years
6,300,000

2 to 3 years
6,000,000

3 to 4 years
5,900,000

4 to 5 years
5,200,000

Due after 5 years
43,400,000

–

–

–

–

2,000,000

3,000,000

Difference

3,962,695
5,290,603
9,253,298–
5,705,799
5,387,800
70,182,759
573,573
81,849,933
–
–

–
–
–
–
5,799
387,800
3,382,759–
3,776,360––(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) andthus 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)(Note 2) Financial instruments for which determination of fair value is considered extremely difficult.

		(Notes to investment securities)
29th fiscal period (as of February 28, 2019)
Not applicable.

30th fiscal period (as of August 31, 2019)
Not applicable.

(Notes to derivative transactions)
1. Derivatives to which hedge accounting is not applied
29th fiscal period (as of February 28, 2019)
Not applicable.

30th fiscal period (as of August 31, 2019)
Not applicable.

(thousands of yen)
29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)

Tenant leasehold and security deposits received in trust (*)

11,427,498

11,273,495(*) 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 the possibility of cancellation, renewal and re-execution of lease contracts bylessees even if the contract terms are fixed, and because the past rate of tenants moving out of the properties owned by FRC may not be indicative of future move out rates as they are too specific toindividual circumstances.

FUKUOKA REIT CORPORATION37FUKUOKA REIT CORPORATION

38

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Notes to equity method income and earnings)
2. Derivatives to which hedge accounting is applied

29th fiscal period (from September 1, 2018 to February 28, 2019)29th fiscal period (as of February 28, 2019)

Not applicable as FRC does not have any affiliated companies.

The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing of accounts
for each method of hedge accounting.
(thousands of yen)Type of derivative transactions,etc.

Main hedged
itemInterest rate swap transaction
Special accounting for interest rate swaps
Receivable floating; Payable fixedLong-term debt

Method of hedge accounting

Contract amount, etc.
Of which,exceeding 1 year
25,200,000

19,000,000

Fair
value

Calculation
method for thefair value(*)–

30th fiscal period (from March 1, 2019 to August 31, 2019)
Not applicable as FRC does not have any affiliated companies.

(Notes to transactions with related parties)
1. Transactions with related parties(*) 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)).

(1) Parent company and major corporate unitholders
29th fiscal period (from September 1, 2018 to February 28, 2019)30th fiscal period (as of August 31, 2019)
The following is the contract amount or amount equivalent to the principal provided in the contract as of the closing of accounts
for each method of hedge accounting.
Classification

Name

Other
affiliates

Fukuoka
Jisho Co.,Ltd.

CapitalBusiness
description

Hakata Ward,
4,000,000
Fukuoka City

General realestatebusiness

Location(thousands of yen)
Method of hedge accounting
Special accounting for interest rate swaps

Type of derivative transactions,etc.

Main hedged
itemInterest rate swap transaction
Receivable floating; Payable fixedLong-term debt

Contract amount, etc.
Of which,exceeding 1 year
23,700,000

21,200,000

Fair
value

Calculation
method for thefair value(*)–(*) 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)(Note 2)

FRC’s share of
voting rights, etc.

Descriptionofrelationship(thousands of yen)

Descriptionoftransaction

Transaction
amountCategory

Balance at
end ofperiodConsignment Consignment
Ownership in FRC
of real estate of real estate
Direct [8.55%]
management, management,
Indirect [0.94%]
etc.
etc. (Note 1)

1,493,926

Operatingaccounts
payable101,575[or ownership of suchin FRC](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.

30th fiscal period (from March 1, 2019 to August 31, 2019)

29th fiscal period (as of February 28, 2019)
Not applicable as FRC does not have any retirement benefit system.

Classification

Name

Other
affiliates

Fukuoka
Jisho Co.,Ltd.

30th fiscal period (as of August 31, 2019)
Not applicable as FRC does not have any retirement benefit system.

CapitalBusiness
description

Hakata Ward,
4,000,000
Fukuoka City

General realestatebusiness

Location(Note 2)

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

29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)

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

17
17
17

3
3
3

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 effect accounting.
(%)
29th fiscal period

30th fiscal period(as of February 28, 2019)(as of August 31, 2019)

Effective statutory income tax rate
Deductible dividend amount
Other
Effective income tax rate after application of tax effect accounting

FUKUOKA REIT CORPORATION

31.30(31.29)
0.02
0.04

39

(Note 3)

FRC’s share of
voting rights, etc.

Descriptionofrelationship(thousands of yen)
Descriptionoftransaction

Transaction
amountCategory

Balance at
end ofperiodConsignment Consignment
Ownership in FRC
of real estate of real estate
Direct [9.01%]
management, management,
Indirect [0.86%]
etc.
etc. (Note 1)

1,395,796

Operatingaccounts
payable63,199[or ownership of suchin FRC](Note 3)(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.

(2) Affiliated companies, etc.
29th fiscal period (from September 1, 2018 to February 28, 2019)
Not applicable.

30th fiscal period (from March 1, 2019 to August 31, 2019)
Not applicable.

31.30(31.30)0.02
0.03

FUKUOKA REIT CORPORATION

40

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(3) Sister companies

2. Parent company and major affiliated companies

29th fiscal period (from September 1, 2018 to February 28, 2019)

Classification

Name

Location

Subsidiaries
of otheraffiliates

FJ.
Entertainment Hakata Ward,
Works Ltd. Fukuoka City

Subsidiaries
of otheraffiliates

Fukuoka
Realty Co.,Ltd.

Capital

20,000(Note 2)

Hakata Ward,
Fukuoka City

200,000

FRC’s share ofBusiness voting rights, etc. Description of Description of Transaction
description [or ownership of relationship transaction
amountsuch in FRC]
Consignment Consignment
Real estateof real estate of real estate
961,363–(Note 5)businessmanagement, management,
etc.
etc. (Note 1)
Asset
Asset
management Payment ofmanagementof FRC, etc.
asset
532,061of FRC and–andmanagement(Note 5)otherconcurrent
fees(Note 4)businesses
service ofofficer (Note 3)(thousands of yen)
Category

Operatingaccounts
payableBalance at
end ofperiodClassification

Subsidiaries
of otheraffiliates

Subsidiaries
of otheraffiliates

Name

Location

FJ.
Entertainment Hakata Ward,
Works Ltd. Fukuoka City

Capital

20,000(Note 2)

Fukuoka
Realty Co.,Ltd.

Hakata Ward,
Fukuoka City

200,000

FRC’s share ofBusiness voting rights, etc. Description of Description of Transaction
description [or ownership of relationship transaction
amountsuch in FRC]
Ownership in FRC Consignment Consignment
Real estate
Direct [0.08%] of real estate of real estate
954,962(Note 5)business
Indirectmanagement, management,[–]
etc.
etc. (Note 1)
Asset
Asset
management Payment ofmanagementof FRC, etc.
asset
540,190of FRC and–andmanagement(Note 5)otherconcurrent
fees(Note 4)businesses
service ofofficer (Note 3)(Note 5)29th fiscal period (from September 1, 2018 to February 28, 2019)
Not applicable.

30th fiscal period (from March 1, 2019 to August 31, 2019)
Not applicable.

(Notes to asset retirement obligations)
29th fiscal period (from September 1, 2018 to February 28, 2019)

Accruedexpenses

264,355

Not applicable.

(Note 5)30th fiscal period (from March 1, 2019 to August 31, 2019)
Not applicable.

(Notes to properties for lease)
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)(thousands of yen)
Category

Operatingaccounts
payableBalance at
end ofperiodUse

Retail176,544(Note 5)

Office buildings
Accruedexpenses

264,201(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 with FJ. Entertainment Works Ltd. a real estate lease and management consignment agreement for Park Place Oita and a building lease and management consignment agreementfor Konoha Mall Hashimoto. The agreements are 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 properties covered by the said type of the agreements, 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 CEO & Representative 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.

(4) Directors and major individual unitholders

Not applicable.

180,017(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 with FJ. Entertainment Works Ltd. a real estate lease and management consignment agreement for Park Place Oita and a building lease and management consignment agreementfor Konoha Mall Hashimoto. The agreements are 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 properties covered by the said type of the agreements, 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 CEO & Representative 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.

30th fiscal period (from March 1, 2019 to August 31, 2019)29th fiscal period (from September 1, 2018 to February 28, 2019)

OthersTotal

29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

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
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

Not applicable.

41

112,590,150(645,558)
111,944,592
123,060,000

46,364,435(328,948)
46,035,486
63,510,000

46,035,486(380,734)
45,654,752
64,450,000

23,291,933
2,805,442
26,097,376
29,980,000

26,097,376(149,117)
25,948,258
30,110,000

182,465,732
2,257,280
184,723,013
216,520,000

184,723,013(1,175,409)
183,547,603
217,620,000(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 29th fiscal period, the amount of increase is primarily attributable to acquisition of Tissage Hotel Naha (2,936 million yen in total) and capital expenditures (947
million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,622 million yen). Of the amount of change during the 30th fiscal period, the amount of
increase is primarily attributable to capital expenditures (476 million yen), and the amount of decrease is primarily attributable to depreciation and amortization expenses (1,651 million yen).
(Note 3) The fair value at end of period is the appraisal value provided by outside real estate appraisers.

30th fiscal period (from March 1, 2019 to August 31, 2019)

FUKUOKA REIT CORPORATION

112,809,363(219,213)
112,590,150
123,030,000

FUKUOKA REIT CORPORATION

42

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

The following table provides the income (loss) from properties for lease.
(thousands of yen)
Use

RetailOffice buildings

OthersTotal

29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

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

5,986,689
3,658,315
2,328,374

5,902,826
3,635,432
2,267,394

2,405,402
1,229,333
1,176,068

2,424,297
1,233,244
1,191,052

850,742386,354464,387

904,533
381,388523,144

9,242,834
5,274,003
3,968,831

9,231,657
5,250,066
3,981,591(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 andamortization 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.

(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.

(3) Information by major customer
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)
29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

Net assets per unit (yen)Profit per unit (yen)127,982
3,687

127,987
3,692(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:

29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

2,934,877–
2,934,877
796,000

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)(Notes to segment information)[Segment information]
Descriptions omitted as FRC has a single business segment of real estate leasing business.

2,939,139–
2,939,139
796,000(Notes to cash distributions)[Related information]



29th fiscal period (from September 1, 2018 to February 28, 2019)(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.

Account(thousands of yen)
29th fiscal period

30th fiscal period(September 1, 2018 to February 28, 2019)(March 1, 2019 to August 31, 2019)

I. Unappropriated surplus
II. Total dividend[Dividend per investment unit]

2,935,391
2,934,852[3,687 yen]

2,939,679
2,939,628[3,693 yen]

539

51

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 must exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15-1of the Special Taxation Measures Act.
Following the above policy, FRC shall decide to distribute
2,934,852 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.

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 must exceed 90% of
FRC’s distributable profits as stipulated in Article 67-15-1of the Special Taxation Measures Act.
Following the above policy, FRC shall decide to distribute
2,939,628 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.

(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.

III. Surplus brought forward

Method for calculating dividends(3) Information by major customer
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.

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

30th fiscal period (from March 1, 2019 to August 31, 2019)(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.

(Notes to significant subsequent events)
No relevant items.

(Schedule of securities)
Not applicable.
FUKUOKA REIT CORPORATION43FUKUOKA REIT CORPORATION

44

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements(Schedule of contract amount, etc. and fair value of derivative transactions
andforward exchange transactions)(thousands of yen)
Category

Type(Note 1)

Interest rate swap transaction
Receivable floating; Payable fixed

Off-market transaction

Contract amount, etc.
Of which, exceeding 1 year

Total

(Note 2)

21,200,000(325,119)

23,700,000

21,200,000(325,119)(thousands of yen)

Buildings in trust
Structures in trust
Machinery and equipmentin trust
Total
Vehicles and transport
property, equipment in trust
plant andequipment Tools and fixtures in trust
Land in trust
Construction in progressin trust
Subtotal
Leasehold right in trust
Total
Other intangible assets inintangible
trust
assetsSubtotal
Total

421,798
10,115

Balance as ofAccumulated Depreciation
August 31,
depreciation for the period
2019– 101,114,666
30,359,294
1,547,981–
1,883,393
758,444
29,0401,400,813

13,801–

1,414,614

505,053

42,248909,560

747

–

–

747

581

47

166

1,378,452
104,918,451

4,035
–

–
–

1,382,487
104,918,451

1,144,897–

27,731–

237,589
104,918,451

7,088

8,742

666

15,164––

15,164210,271,697
5,545,883

458,493–666–

210,729,524
5,545,883

32,768,272–

1,647,050–

177,961,252
5,545,883

62,752

18,665–

81,41740,9504,852

40,467

5,608,635
215,880,333

18,665477,159–666

5,627,301
216,356,825

40,95032,809,222

4,852
1,651,902

5,586,351
183,547,603

Increase

Decrease

Net property
andRemarks
equipment(Note)
70,755,371(Note)
1,124,948(Note)(Note)(Note)(Note) The main increase in the 30th fiscal period is due to construction work at properties.

(Schedule of other specified assets)
Not applicable.

(Schedule of investment corporation bonds)
Issue

Issue date

Balance as ofMarch 1,2019

Decreaseduring the
fiscal period

Balance as ofAugust 31,
2019(thousands of yen)(thousands of yen)(thousands of yen)–

2,000,000

First Series ofUnsecured Bonds

December 30,
2013

2,000,000

Second Series ofUnsecured Bonds

July 31, 2017

2,000,000

Third Series ofUnsecured Bonds

July 31, 2018

Total

1,000,000
5,000,000–––

Increase

Decrease

Balance as of
Average
August 31, interest rate(%) (Note 1)
2019

200,000–

200,000–

3,000,000–

3,000,000–

500,000–

500,000–

500,000––

2,500,000–

1,700,000

Use of funds

Description

0.538

July 31, 2019

Refinance fundNo collateral/
No guarantee

500,000

0.520

September 25, 2019

Refinance fund–

2,500,000

0.775

February 29, 2020

Acquisition fund––

1,700,000

0.569

February 29, 2020

Refinance fund–

1,000,000–

1,000,000

0.468

June 30, 2020

Refinance fund

Subtotal

8,400,000

1,000,000

3,700,000

5,700,000

Aozora Bank

1,000,000–

1,000,000

–

0.468

June 30, 2020

Refinance fundNo collateral/
No guarantee

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

The Kitakyushu Bank

800,000––

800,000

0.835

July 30, 2021

Refinance fundNo collateral/
No guarantee

The Iyo Bank

500,000––

500,000

The Higo Bank

300,000––

300,000

Development Bank of Japan

4,000,000––

4,000,000

1.010

August 31, 2022

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui Banking
Corporation

1,600,000––

1,600,000

0.790

June 30, 2022

Refinance fundNo collateral/
No guarantee

Sumitomo Mitsui Trust Bank

1,500,000––

1,500,000

0.564

July 31, 2023

Refinance fundDevelopment Bank of Japan

4,000,000––

4,000,000

0.880

August 31, 2023

Refinance fund

The Bank of Fukuoka

400,000––

400,000

0.419

August 31, 2022

Refinance fund

The Nishi-Nippon City Bank

400,000––

400,000

0.870

August 31, 2023

Refinance fund

The Bank of Fukuoka

2,000,000––

2,000,000

0.419

February 29, 2024

Refinance fund

The Nishi-Nippon City Bank

2,000,000––

2,000,000

0.440

February 29, 2024

Refinance fundLong-term Development Bank of Japan
debt
Mizuho Bank

2,000,000––

2,000,000

0.620

February 28, 2025

Refinance fund

500,000––

500,000

0.440

February 29, 2024

Refinance fund

Shinsei Bank

700,000––

700,000

0.400

July 31, 2024

Refinance fund

Sumitomo Mitsui Trust Bank

300,000––

300,000

0.412

September 30, 2025

Refinance fundDevelopment Bank of Japan

1,500,000––

1,500,000

The Oita Bank

100,000––

100,000

The Kagoshima Bank

100,000––

100,000

The Kitakyushu Bank

100,000––

100,000

0.718

December 30, 2025

Refinance fund

The Eighteenth Bank

100,000––

100,000

The Norinchukin Bank
The Bank of Saga
Current
MUFG Bank
maturities
of long- The Nishi-Nippon City Bank
term debt
Mizuho Bank
Aozora Bank

Maturity date

Maturity
methodUse

Description

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(Note 2)The Shinwa Bank

100,000––

100,000

July 30,
2038

Lump-sumupon maturity

Repayment ofdebt

No collateral/
No guarantee

The Hiroshima Bank

100,000––

100,000

The Bank of Fukuoka

1,500,000––

1,500,000

0.418

December 30, 2026

Refinance fund

MUFG Bank

800,000––

800,000

0.481

March 31, 2025

Refinance fundResona Bank

600,000––

600,000

0.658

March 31, 2027

Refinance fund

The Higo Bank

300,000––

300,000

0.481

March 31, 2025

Refinance fund

The Bank of Fukuoka

1,300,000––

1,300,000

The Nishi-Nippon City Bank

1,000,000––

1,000,000

0.777

June 30, 2026

Refinance fund

2,000,000
1,000,000

1.00
1.20

(Note 1)

(Note 1)

(Note 1)

(Note 2)

(Note 2)5,000,000

(thousands of yen)Due in 1 year or less–

Balance as ofMarch 1,
2019

Coupon(%)(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 3) Amount of redemption of investment corporation bonds scheduled to be due within 5 years after period end.

Category
Investment corporation bonds(thousands of yen)
Repayment
date

LenderMizuho Bank

23,700,000(Schedule of property, plant and equipment, and intangible assets)
Balance as ofMarch 1,
2019
100,692,867
1,873,277

Category

Fair value(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.

Type of asset(Scheduleof debt)

1 to 2 years–

FUKUOKA REIT CORPORATION

2 to 3 years–

45

3 to 4 years–

4 to 5 years
2,000,000

FUKUOKA REIT CORPORATION46

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
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
No collateral/
No guarantee
No collateral/
No guarantee

VIII. Notes to Financial Statements

VIII. Notes to Financial Statements

Balance as ofMarch 1,
2019

Increase

Decrease

The Oita Bank

700,000––

700,000

The Kitakyushu Bank

700,000––

700,000

The Miyazaki Bank

700,000––

700,000

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 fund

The Bank of Fukuoka

2,000,000––

2,000,000

0.792

July 31, 2027

Refinance fund

The Nishi-Nippon City Bank

2,000,000––

2,000,000

0.892

July 31, 2027

Refinance fund

The Nishi-Nippon City Bank

500,000––

500,000

The Bank of Fukuoka

500,000––

500,000

The Oita Bank

100,000––

100,000

Category
LenderBalance as of
Average
August 31, interest rate(%) (Note 1)
2019

The Kitakyushu Bank

100,000––

100,000

The Eighteenth Bank

100,000––

100,000

The Shinwa Bank

100,000––

100,000

The Hiroshima Bank

100,000––

100,000

Resona Bank

2,000,000––

The Bank of Fukuoka

1,500,000–

Development Bank of Japan

500,000

The Nishi-Nippon City Bank
Long-term
Sumitomo Mitsui Trust Bank
debt
MUFG Bank
Resona Bank

0.777

Repayment
dateJune 30, 2026

Use of funds

Refinance fundAugust 31, 2027

Refinance fund

2,000,000

0.494

September 30, 2027

Refinance fund–

1,500,000

0.812

December 30, 2027

Refinance fund––

500,000

0.680

December 30, 2027

Refinance fund

1,900,000––

1,900,000

0.750

February 29, 2028

Refinance fund

1,100,000––

1,100,000

0.600

February 26, 2027

Refinance fund

1,500,000––

1,500,000

0.500

February 27, 2026

Refinance fund

600,000––

600,000

0.567

February 29, 2028

Refinance fund

2,500,000––

2,500,000

0.720

March 1, 2028

Acquisition fund

MUFG Bank

600,000––

600,000

0.480

March 31, 2026

Refinance fund

The Nishi-Nippon City Bank

600,000––

600,000

0.802

March 31, 2028

Refinance fund

The Bank of Fukuoka

500,000––

500,000

0.802

March 31, 2028

Refinance fundMizuho Bank

500,000––

500,000

0.630

March 31, 2028

Refinance fund

Sumitomo Mitsui Banking
Corporation

500,000––

500,000

0.504

March 31, 2025

Refinance fund

MUFG Bank

500,000––

500,000

0.490

March 31, 2027

Refinance fund

Sumitomo Mitsui Trust Bank

400,000––

400,000

0.576

March 31, 2027

Refinance fund

The Oita Bank

400,000––

400,000

0.646

March 31, 2028

Refinance fund

The Hiroshima Bank

400,000––

400,000

0.646

March 31, 2028

Refinance fund

Shinsei Bank

300,000––

300,000

0.400

March 31, 2025

Refinance fund

Sumitomo Mitsui Banking
Corporation

500,000––

500,000

0.655

January 31, 2029

Refinance fund

MUFG Bank

500,000––

500,000

0.590

January 31, 2028

Refinance fund

The Nishi-Nippon City Bank

400,000––

400,000

0.419

January 31, 2029

Refinance fund

The Bank of Fukuoka

300,000––

300,000

0.419

January 31, 2029

Refinance fund

The Oita Bank

200,000––

200,000

0.334

February 27, 2026

Refinance fund

The Kagoshima Bank

200,000––

200,000

0.334

February 27, 2026

Refinance fund

FUKUOKA REIT CORPORATION47

No collateral/
No guarantee

Balance as ofMarch 1,
2019

Increase

Decrease

The Higo Bank

200,000––

200,000

Resona Bank

200,000––

200,000–

1,200,000–

1,200,000–

500,000–

500,000–

500,000–

500,000–

1,500,000–

1,500,000

64,100,000

3,700,000

1,000,000

66,800,000

72,500,000

4,700,000

4,700,000

72,500,000

Category
LenderMizuho Bank
Long-term
The Bank of Saga
debt
The Higo Bank
The Norinchukin Bank

0.850

Development Bank of Japan

Description

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

No collateral/
No guarantee

Subtotal
Total

Balance as of
Average
August 31, interest rate(%) (Note 1)
2019

Repayment
date

Use of funds

0.334

February 27, 2026

Refinance fund

0.488

February 28, 2029

Refinance fund

0.521

July 31, 2029

Refinance fundNo collateral/
No guarantee

0.303

January 29, 2027

Refinance fundNo collateral/
No guarantee

Description
No collateral/
No guarantee
No collateral/
No guarantee(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 conducted interest
rate swap transactions is the weighted-average figure during the fiscal period taking into consideration the effect of interest rate swaps.
(Note 2) 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
6,300,000

2 to 3 years
6,000,000

3 to 4 years
5,900,000

4 to 5 years
5,200,000

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

FUKUOKA REIT CORPORATION

48