Fukuoka REIT Corporation(8968)

http://www.fukuoka-reit.jp

Overview of the Seventh Fiscal Period Performance(September 1st, 2007 - February 29th, 2008)

1
The Floor Expansion of Park Place Oita (April 24th, 2008 OPEN)

Profile

REIT Overview
ProfileProfileInvestment
Investment Unit
Unit Price
Price【Name】

Fukuoka REIT Corporation【Asset Manager】

Fukuoka Realty【Sponsors】

Fukuoka Jisho, Kyushu Electric Power, The
Bank of Fukuoka, The Nishi-Nippon City
Bank, Nishi-Nippon Railroad, Saibu Gas,
Kyudenko, Kyushu Railway Company,
Royal Holdings【Listed date】

June 21, 2005 (TSE and FSE)

【Current Price】
664,000 yen (as of February 29, 2008)
107,050【Outstanding Units 】【Market Cap】
71.0 billion yen【High (since IPO)】
1,300,000 yen (February 26, 2007)【Low (since IPO)】
647,000 yen (January 23, 2008)【Net Asset Value Per Share】
580,104 yen (as of February 29, 2008)【Market Net Asset Value Per Share】 774,397 yen (as of February 29, 2008)*‘Market Net Asset Value Per Share’ ={(‘Total Appraisal Value at end of period based on appraisal reports’ – ‘Total Book Value at the end of
period based on Balance Sheet) + ‘Net Asset at end of period’} / ‘Outstanding units’ above

Financial
Financial Highlights
Highlights【Total Assets】

121.6 billion yen (as of February 29, 2008)【Total Debt】

48.0 billion yen (as of February 29, 2008)【Debt Rating】

S&P A- (stable)
R&I A+ (stable)【LTV (Interest-bearing liabilities/total assets)】 39.5%

Portfolio
Portfolio Summary
Summary【Asset Types】

Retail 63.8%,
Office 33.4% and Residential 2.8%
【Asset Location】
Fukuoka metropolitan area 70.8%,
other Kyushu 29.2%【Total Leasable Area at End of Period】 340,061.83m2【Occupancy Rate at End of Period 】
98.8%*Figures have been calculated owned properties as of February 29, 2008, but the preferredinterest in silent partnerships.

Dividend
Dividend Information
Information【 Previous Fiscal Period (7th) End 】

February 29, 2008 (semi-annual periods ending every February and August)【 Cash Dividend for 7th Fiscal Period (actual) 】

18,499 yen per unit

【 Yield 】

5.59% (Annualized dividend for the 7th period / the investment unit price as of February 29, 2008)【 Spread vs. JGB 】

4.22 % (Comparison with 10-year JGB as of February 29, 2008)

2

Profile

J-REAT Specialized in Fukuoka / Kyushu Area
Supported by Kyushu Business World

Investment Policy

3Table of Contents

1

Financial Statements

5

2

Portfolio

123Financial Strategy

24

4Growth Strategy

30

5Compliance34

6

AppendixⅠ

37

7

AppendixⅡ

52

8

AppendixⅢ

58

These materials may contain future performance, plans, management targets and strategies. These forward-looking descriptions are based onpresent assumptions on future events and trends in the business environment, but such assumptions may not necessarily be accurate. Actual results
may differ materially due to various factors. Neither Fukuoka REIT Corporation nor Fukuoka Realty shall be liable for the accuracy, rationality andcompleteness of information contained in these materials, whether they were prepared by Fukuoka REIT Corporation or Fukuoka Realty or provided
by a third party. These materials have not been prepared to entice investment. When applying to purchase investment units issued by Fukuoka REIT
Corporation, do so based on your own judgment and responsibility.

4中表紙：第7期決算報告

Financial Statements

1

Financial Statements

Settlement Highlights of the 7th Fiscal Period (ended February 2008)
Category

3th Fiscal Period

4th Fiscal Period

5th Fiscal Period

6th Fiscal Period (1)7th Fiscal Period(2)September 1, 2005February 28, 2006

March 1, 2006 –August 31, 2006

September 1, 2006 February 28, 2007

March 1, 2007 –August 31, 2007

September 1, 2007Febrauary 29,2008

variation（2)-(1）

Operating Revenues

（mm）

4,050

4,496

4,870

5,232

5,179

-53

NOI (*1)

（mm）

2,654

2,855

3,171

3,395

3,441

＋46

Depreciation

（mm）

562

619

688

741

763

＋22

Operating Profit

（mm）

1,751

1,983

2,210

2,362

2,382

＋20

Ordinary Profit

（mm）

1,698

1,716

1,866

1,966

1,981

＋15

Net Profit

（mm）

1,697

1,715

1,856

1,965

1,980

＋15

18,438 yen

18,632 yen

17,341 yen

18,360 yen

18,499 yen＋139 yen

92,05092,050107,050

107,050

107,050Dividend per unit
Number of investment units(as of end of period )Total Assets(as of end of period )Net Assets(as of end of period )(*1) ”NOI by properties” is calculatedby “Leasing Business Income - Leasing
Business Expenditure + Depreciation ”.

（mm）
（mm）

94,593

104,183

117,259

117,815

121,654(*2) It excludes figures for the preferred

50,86550,75462,022

62,13962,100(*3) The number of tenants are based

interest in silent partnerships.
on total division number of stores fixedby the leasing contract. Also, theLengthProperties, which have ‘Pass- through’181 days

184 days

181 days

184 days

182 days

Properties (as of end of period )(*2)

7 Properties

8 Properties

11 Properties

11 Properties

14 Properties

Tenants (as of end of period )(*3)

181

250

314

327

325

(*4)’Occupancy’ is the rate of

262,979.61 ㎡

277,580.44 ㎡

304,024.87 ㎡

328,071.73 m2

340,061.83 m2

total leased area as of the end of

99.0 %

99.4 %

99.4 %

99.7 %

98.8 %

Leaseable floor space(as of end of period)

Occupancy (as of end of period )(*4)

Continuing High Dividend’s Results over 18,000 yen

master lease, are based on total
division number of stores fixed by
the leasing contract.
total leasable area considering
Period.

6

1Financial Statements

Profit and Loss Statement for the 7th Fiscal Period (ended February 2008)（unit：thousand）

7th Fiscal Period(①)
September 1, 2007-Febrauary 29,2008
Category

Value

Investment unit issuance fee write off

5,179,178
4,871,952
171,225
136,000
2,796,387
2,365,097
321,104
10,25233,8289,510
56,594
2,382,791
7,149
7,149
408,594
345,043
5,595
8,412

Expenses related to debt financing

46,564

I. Operating revenues
Real estate leasing revenues
Other revenues from real estate leasing
Gains from sale of real estate
Silent partnership distribution
II. Operating expenses
Real estate leasing expenses
Asset management fees
Asset custodian fee
General administration fees
Director compensation
Other operating expenses
Operating profit
III. Non-operating revenues
Interest received
Other non-operating revenues
IV. Non-operating expenses
Interest payment
Amortization of establishment cost

Other non-operating expenses
Ordinary profit
Net profit before tax
Corporation, inhabitant and business tax
Adjustment to corporation tax
Net profit
Profit earnings brought forward
Unappropriated retained earnings for the period

Percentage
(%)

100.0

54.0

46.0
0.1

7.9

Variation

March 1, 2007 – August 31, 2007

（①－②）

Value
5,232,084
4,874,882
216,627
4,574
136,000
2,869,239
2,437,428
325,517
10,34433,3009,600
53,0472,362,845
5,598
5,394
203
401,641
333,144
5,595
8,412

Percentage
(%)

100.0

Value
(52,905)

Primary Factors for Period-on-Period Variation (mm yen)

Percentage(%)

A
A Factor
Factor forfor NOINOI Variation
Variation

(1.0)

NOI

54.8

(72,851)

(2.5)

7th

6th

variation

3,441

3,395

＋46

①Contribution of 3 new properties（Hanahata SC、City House Keyaki Dori、Kurume
Higashi Kushiwara SC）＋52②Decrease Canal City Hakata Marketing Expenses＋37③Paid off receivable penalty and profit on donation④Loss on disposition from Park Place Oita
45.2
0.1

19,946
1,551

0.8
27.7

7.7

6,952

1.7

38.2

1,966,802
1,966,802
1,436
(37)
1,965,403
84
1,965,487-1
NOI ：＋46：＋46

A
A factorfactor forfor operating
operating profit
profit (except(except NOI)
NOI)
①Increase depreciation by new 3 properties above②Decrease gains from sale of KCM- 21.5- 4.5

Operating Profit：＋
20
Profit：＋20

2,257
38.2
38.2

-38
-4

⑤Others

52,231

2,978
1,981,346
1,981,346
1,029
19
1,980,297
49
1,980,347

6th Fiscal Period (②)

37.6
37.6

37.6

14,544
14,544

0.7
0.7

(349)
14,894(34)
14,859(25.0)
0.8

A
A Factor
Factor forfor non-operating
non-operating profit
profit①Increase financial cost

-6
Ordinary Profit：＋
14
Profit：＋14

7

1

Financial Statements

Balance Sheet for the 7th Fiscal Period (ended February 2008)（unit：thousand）

7th Fiscal Period(as ofFebruary29,2008）

Category
AssetsI. Current assets

compar
ison
(%)

Value

6th Fiscal Period

Variation(as of August 31, 2007)
compa
rison
(%)

Value

(as ofFebruary29,2008）

1,649,844

2,369,396

Cash and deposits in trust

Category

Percentage(%)

Value

282,910295,862(12,951)

2,900,000

8,500,000(5,600,000)

Long-term debt payable due
within one year

6,600,000

6,600,000-

22,458306,176

33,529310,417(11,071)(4,240)3,979,594

55,209232,783

275,251(42,467)

Deferred tax assets
Consumption tax
receivables
Other current assets

18

37

(19)

Accounts payable

50,608-50,608

Expenses payable

Total current assets

273,658
5.0

6,897,937

Income taxes payable(146,283)
5.9

Percentage(%)

Value

Short-term debt

Accrued business fees

(719,551)

4,034,804

127,375

compa
rison
(%)

Value

Variation

I. Current liabilities

Operating receivables

6,095,433

compa
rison
(%)

Value

6th Fiscal Period(as of August 31, 2007)

Liabilities

Park Place Oita Expansion Construction

Cash and cash equivalents（unit：thousand）

7th Fiscal Period(802,503)(11.6)

Consumption taxes payable

287

591

(304)

-

101,182(101,182)

II. Fixed assets

Rent received in advance

657,928

629,392

28,536

1. Tangible fixed assets

Deposits held

489,977

705,736(215,758)

11,259,739

Total current liabilities

Buildings

483,728-

483,728

Structures

43,734,843

42,225,480

1,509,363

Land493,273423,282

69,991Long-term debt

Buildings in trust

283,946

289,014(5,068)Structures in trust

339,276

279,354

59,922

66,666,541

64,120,972

2,545,569

Deposits and guarantees on
DepositDeposits and guarantees on
deposit in trust

Machinery and equipmentin trust
Tools and fixtures in trust

112,001,609

92.1

107,338,104

91.1

4,663,505

4.3

2. Investment and other assets

3,421,633

3,421,633

Guarantees and deposits

10,00010,000-Long term pre-paid
expenses
Total investment and other
AssetsTotal fixed assets

89,80997,739(7,930)Investment securities-

Investment unit issuancefees
Total deferred assets

1. Total capital

3,529,373

3.0(7,930)(0.2)

115,523,052

95.0

110,867,477

94.1

4,655,575

4.2

Total assets

25,237(8,412)36,4280.0

50,4360.0(14,007)(27.8)

121,654,914

100.0

117,815,851

100.0

3,839,063

3.3

Acquisition of New 3 Properties（Hanahata SC、City House Keyaki Dori、Kurume Higashi Kushiwara SC）(34.4)

29,000,000

9,500,000

80,288-80,2889,570,159

9,409,271

160,887

90,405

54,10948,294,963

39.7

38,499,677

32.7

9,795,286

25.4

59,554,702

49.0

55,676,389

47.3

3,878,312

7.0

60,264,380

60,264,380-

1,980,347
1,980,347
62,244,727

1,965,487
1,965,487
62,229,867

14,85914,85914,859

2. Reserves
Unappropriated profit
Total reserves
Total unit holders’ capital
II. Difference of valuation andconversion(5,595)33,650(5,916,973)

I. Unit holders’ capital

2.9

16,786

14.6

Net Assets

3,521,443

11,19017,176,712

38,500,000

144,515

Derivative liabilities
Total fixed liabilities
Total liabilities

III. Deferred assets
Founding fees

9.3

II. Fixed liabilities

51.1

52.8

(90,405)

0.0

1. Deferred hedge profit/loss(144,515)

Total difference of valuationand conversion
Total net assets(54,109)(144,515)(0.1)(90,405)(0.1)(54,109)-

62,100,212

51.0

62,139,462

52.7(39,249)(0.1)

Total liabilities and net assets

121,654,914

100.0

117,815,851

100.0

3,839,063

3.3

Short-term debt andDebt for acquisition properties 9,500 mm yen
8

1

Financial Statements

The 7th Fiscal Period (February, 2008) Differences between Forecasts and Results

Announcement of October 15, 2007

Variation(1) - (2)5,179 mm yen

5,160 mm yen＋19 mm yen

Operating profit

2,382 mm yen

2,303 mm yen＋79 mm yen

Ordinary profit

1,981 mm yen

1,897 mm yen＋84 mm yen

Net profit

1,980 mm yen

1,895 mm yen＋85 mm yen

18,499 yen

17,700 yen＋799 yen

Category

7th Fiscal Period Results (1)Operating revenue

Dividend per unit

7th Fiscal Period Forecast (2)A primary factor for the differences between forecast and results （unit：mm yen）
Ordinary profit （in comparison to forecasts）＋84

・Achieve excess of +2%NOI in comparison to the existing properties
budget＋56

・Contributed NOI of new acquisition of property（Kurume Higashi Kushiwara SC）＋14

・Differences between forecast and results on interest rate

＋10・Other differences＋49

Financial Statements

1

Forecasts for 8th and 9th Fiscal Periods
Category

3rd Fiscal
Period

4th Fiscal
Period

5th Fiscal
Period

6th Fiscal
Period

7th Fiscal
Period

8th Fiscal
Period

9th Fiscal
PeriodFebruary 2006

August 2006

February 2007

August 2007

February 2008

August 2008

February 2009

Results

Results

Results

Results

Results

Forecasts

Forecasts

Operating Revenues

(mm)

4,050

4,496

4,870

5,232

5,179

5,466

5,392

Operating Profit

（mm）

1,751

1,983

2,210

2,362

2,382

2,392

2,353

Ordinary Profit

（mm）

1,698

1,716

1,886

1,966

1,981

1,907

1,864

Net Profit

（mm）

1,697

1,715

1,856

1,965

1,980

1,905

1,863

181 days

184 days

181 days

184 days

182 days

184 days

181 days

Dividend per unit results

18,483 yen

18,632 yen

17,341 yen

18,360 yen

18,499 yen――

Forecasts

16,700 yen

18,200 yen

17,000 yen

17,600 yen

17,700 yen

17,800 yen (*)

17,400 yen

Differences+1,783 yen+432 yen+341 yen+760 yen+799 yen――

Length(*)Dividend forecast per unit of 8th fiscal period is 17,200 yen as of the 6th fiscal period announcement.

(Reference) Results / Forecasts Analysis of Differences
Category

NOI

Depreciation

7th(Results)

8th(Forecasts)

8th Fiscal Period (Forecasts)－7th Fiscal Period (Results)

3,441

-763

Other Operating
Profit / Loss
Operating Profit

2,382

Finance Expenses-392

Other non-operating
Profit / Loss
Ordinary Profit

1,981

-296

1. Contribution of new acquisition of properties(City House Keyaki Dori・Kurume Higashi KushiwaraSC・K’s Denki
Kagoshima)
2. Payment start for property and city planning taxes(Hara SATY･Hanahata SC・City House Keyaki Dori)
3. Others (reserves for unexpected vacancies and maintenance expenses,
etc.)
1. Acquisition of properties(City House Keyaki Dori・Kurume Higashi KushiwaraSC・K’s Denki
Kagoshima)
2. The floor expansion of Park Place Oita
1. Asset management fees
2. IR expenses and other+10
Increase debt in regard to the floor expansion of Park Place Oita andacquisition of properties(City House Keyaki Dori, Kurume Higashi Kushiwara SC,
K’s Denki Kagoshima)

-9

+187
-26

3,565

1. Contribution of the floor expansion of Park Place Oita
2. Others (reserves for unexpected vacancies and maintenanceexpenses, etc.)

+40
-61

3,544

-844

Full contribution of the floor expansion of Park Place Oita

-16

-860

-2

-331

-37

-81

-33

-329
2,392

-90

+6
-74

(mm yen)
9th(Forecasts)

9th Fiscal Period (Forecasts) - 8th Fiscal Period (Forecasts)

-39

-482

-2

-3
1,907

2,353

-2
-43

(Note) The above forecast values were calculated based on set premises. There is the possibility that the actual operating revenues, ordinary profit, net profit and dividend per unit will change and these values are not guaranteed bybeing entered here.

-484

-5
1,864

10

MEMO

メモ

中表紙：ポートフォリオ

Portfolio

2

Portfolio

Portfolio Map(As of March 31, 2008)(*) Figures have been calculated by owned properties as of February 29, 2008, but excluding figures for the preferred interest in silent partnerships.

13

2

Portfolio

Portfolio Table
Age

Property Name

(Note 1)

AcquisitionPrice(mm yen) (Note 2)

Acquisition
TimingTenants at
End of Period

SourcePrimary Tenants at End of Period

SponsorSponsor

23
79
1
11

Washington Hotel and Comme ca Store(Note 3)(2 top tenants for each property)

Total
Leasable Occupancy
Area at End at End of
Periodof Period(m2)

Square Mall Kagoshima Usuki

11yr105yr11m2yr11m1yr5m

32,00015,7006,633
5,300

11.9.2004
11.9.2004
7.1.2005
9.28.2006

Kumamoto Intercommunity SC

1yr3m

2,400

11.30.2006

SponsorCanal City Hakata
Park Place Oita
SunLiveCity Kokura

SponsorExternal

RetailSports Depo/Golf 5 and Best Denki

47,858.71
100,925.97
61,450.22
14,661.72

99.4%
99.8%
100.0%
100.0%

2

Sports Depo/Golf 5 and Starbucks Coffee

6,968.66

100.0%

1

SATY

27,580.75

100.0%JUSCO and K’s Denki
SunLive

31yr4m5,410

3.1.2007

Sponsor

Hanahata SC（Acquisition in 7th Fiscal Period )

7m

1,130

9.3.2007

Sponsor2

BON REPAS and Matsumotokiyoshi

2,801.15

100.0%

Kurume Higashi Kushiwara SC（Acquisition in 7th Fiscal Period )

2m

2,500

2.1.2008

Sponsor1

Sports Depo/Golf 56,467.80

100.0%

K’s Denki Kagoshima（Acquisition in 8th Fiscal Period )（3m）（3,550）3.27.2008

External（1）

K’s Denki－
11yr10m
4yr4m
6yr11m

71,073
14,600
11,2004,400－
11.9.2004
11.9.2004
9.30.2005

－

－
43
18
12

－
TOTO .Bell System24

Hara SATY

Total of Retail
Canal City Business Center Building
Gofukumachi Business Center
OfficeSanix Hakata Building

SponsorSponsorExternal（7,296.17） (100.0%)

SANIX and Idemitsu－
23,028.29
19,906.21
6,293.67－
98.7%
100.0%
93.3%

14,652.68

96.9%

Sanyo Shinpan and NTT West Japan – Kyushu

5yr11m7,000

3.16.2006

Sponsor62

NTT Comware and Tokyo Kaijo & Nichido Jimu
Outsourcing－

37,200

－

－

－

－

－

－

3m

1,111

12.20.2007

External

8－2,710.86

19.9%

2yr7m

9.1.2006

External

62

95.0%

－

－

－

－
－

4,755.14

－

2,060
3,171

－

－

8yr9m

111,444

－

－

325

－

340,061.83

98.8％

Issue

Price
(mm yen)Acquisition
date

Preferred interest in silent partnership whose operator
Other
is CCH Bridge Y.K.

3,400

2006.2.27

Portfolio Total

114,844

Taihaku Street Business Center
Total for Office

Residential

City House Keyaki Dori（Acquisition in 7th Fiscal Period )Amex Akasakamon Tower
Total for Residential

Total or Weighted Average for All Properties(Note 4)(Note 1) Figures in the Age column are the building ages as of the end of the 7th fiscal period.

Assumed IRR (Note 2) All values in the Acquisition Price column exclude fees, public charges and expenses.
(Note 5)8.0%

(Note 3) Properties acquired through arrangement by sponsors have been indicated as “sponsor”
in the source column.
(Note 4) The weighted average age has been obtained by dividing the total Ages of each of the above-listed
properties by the weight of their respective Acquisition Prices.
Figures in the Occupancy column have been obtained dividing the total leased areasby the total leasable areas of the above-listed properties as of February 29, 2008.
(Note 5) The figure in the Assumed IRR column is based on the "Survey on Investment Profitability Value ofPreferred Equity" by Japan Real Estate Institute.

14

Portfolio

2

List of Property Prices
Property Name

AcquisitionPrice(mm yen)(Note 1)

Amounts
Recorded on
the Balance
Sheet at End
of Period

Most Recent
Appraisal(mm yen)Acquisition
CAP

Appraisal
CAP(NCF base)(Note 2)

(NCF base)(Note 3)

Appraisal Company(mm yen)Most Recent DCF Method
Appraisal (mm yen) (Note 5)

Most Recent
Capitalization
MethodAppraisal

Appraisal(mm yen) (Note 4)(mm yen)

Discount
Rate

Final
CAP
Rate

RetailOfficeCanal City Hakata

32,00031,797

38,200

6.0％

4.8％

Tanizawa Sogo Appraisal

39,30037,700

4.9％

5.1％

Park Place Oita

15,70016,67820,000

6.6％

5.5％

Japan Real Estate Institute20,10019,900

5.2％

5.6％

SunLive City Kokura

6,633

6,533

8,770

6.6％

5.6％

Japan Real Estate Institute

8,790

8,740

5.0％

5.4％

Square Mall Kagoshima Usuki

5,300

5,221

5,930

6.2％

5.8％

Japan Real Estate Institute

5,950

5,910

5.5％

6.0％

Kumamoto Intercommunity SC

2,400

2,376

2,550

6.5％

6.3％

Japan Real Estate Institute

2,580

2,520

6.1％

6.6％

Hara SATY

5,410

5,619

5,550

6.8％

6.5％

Japan Real Estate Institute

5,610

5,500

5.5％

7.6％

Hanahata SC

1,130

1,141

1,210

6.4％

5.8％

Tanizawa Sogo Appraisal

1,240

1,190

5.8％

6.1％

Kurume Higashi Kushiwara SC

2,500

2,525

2,600

6.1％

5.7％

Tanizawa Sogo Appraisal

2,670

2,570

5.7％

6.0％

K’s Denki Kagoshima （note6）（3,550）－（3,600）（5.7％）（5.6％）

Tanizawa Sogo Appraisal（3,640）（3,580）

5.3％

5.9％

Total of Retail

71,07371,89484,810－－－86,24084,030--Canal City Business Center Building

14,60014,464

17,100

6.3％

5.0％

Tanizawa Sogo Appraisal

17,40017,000

5.0％

5.3％

Gofukumachi Business Center

11,20010,83814,000

6.3％

5.0％

Tanizawa Sogo Appraisal

14,10013,900

5.1％

5.3％

Sanix Hakata Building

4,400

4,511

5,590

5.9％

4.8％

Japan Real Estate Institute

5,640

5,540

4.6％

5.0％

Taihaku Street Business Center

7,000

7,043

8,090

6.0％

5.2％

Japan Real Estate Institute

8,150

8,020

4.9％

5.4％

37,20036,85844,780－－－45,29044,460--City House Keyaki Dori

1,111

1,156

1,140

5.5％

5.2％

Daiwa Real Estate Appraisal

1,170

1,120

5.0％

5.4％

Amex Akasakamon Tower

2,060

2,091

2,070

5.4％

5.2％

Daiwa Real Estate Appraisal

2,110

2,050

5.0％

5.4％

3,171

3,248

3,210

－

－

－

3,280

3,170

-

-

111,444

112,001

132,800

6.23％

5.29％

Total for Office
Residential

Total for Residential
Total or Weighted Average for All
Properties(Note 1) All values in the acquisition price column exclude fees, public charges and expenses.
(Note 2) Figures in the acquisition CAP (NCF basis) column have been calculated by dividing the direct capitalization method NCFs in the appraisal at thetime of property acquisition by the acquisition price.
(Note 3) The appraisal CAP (NCF basis) figures are the cap rates under the direct capitalization method in the appraisal at the end of period as ofFebruary 29, 2008
(Note 4) Figures in the most recent capitalization method appraisal are evaluation values based on the direct capitalization method in appraisal reports
for each owned property (includes K’s Denki Kagoshima) as of February 29, 2008.
(Note 5) The figures in the most recent DCF method appraisal are based on the DCF method in appraisal reports for each owned property (includes K’s Denki
Kagoshima) as of February 29, 2008.
(Note 6) K’s Denki Kagoshima, which had not been acquired yet at the end of the 7th fiscal period, has not been included in the total
calculations in the above table.

15

2

Portfolio

History of Occupancy Rate by Property (Retail)(Note 1) The occupancy is the percentage the leased area comprises of the leasable area.
(Note 2) The information used for each datum is that for the end of each month.

16

2Portfolio

History of Occupancy Rate by Property

Occupancy is
expected to100% by theend of 2008

Portfolio occupancy of
99.2%
during the
7th fiscal period(Note 1) The occupancy is the percentage the leased area comprises of the leasable area.
(Note 2) The information used for each datum is that for the end of each month.
(Note 3) City House Keyaki Dori was acquired in December 20 , 2007, however, the figures are calculated by the number of occupancy after January 2008 due to the move-in date.

17

2

Portfolio

The 3rd–7th Fiscal Period History of NOI by Property (Retail)18

2

Portfolio

The 3rd–7th Fiscal Period History of NOI by Property (Office, Others)

19

2

Portfolio

Risk Management for Retail Properties- Daily property management activities(including tenant replacement and guidance of selling floor) in accordance with consumer needs
Ex. 1: Canal City Hakata: 42 shops out of 212 shops replaced during the past 18 months
Ex. 2: Park Place Oita: 50 shops out of 142 shops replaced through the latest renewal and floor expansion
Ex. 3: SunLiveCity Kokura: Tenant invitation is conducted jointly with property manager while operations are conducted by SunLive in principle- Conduct sales promotion to create a "place" that attracts and entices customers- Analyze "rent on sales" ratio through daily management of tenants' sales- Gain benefits from strategic renewals, floor expansions and development of adjacent land
Ex. 1: Canal City Hakata II projectEx. 2: Change in use of land adjacent to Park Place Oita
Ex. 3: Rush of various category killer shop openings around SunLiveCity Kokura

On property acquisition- Enhance binding capabilities of tenant contracts by use of fixed-term leasehold contracts (no early cancellation, no decrease in rent allowed)- Analyze site potential (study possibilities of alternative use and redevelopment of sites after contract periods expire)- Implement detailed analysis of traffic volume, trade zone surveys, possibilities of retail concentration inneighboring areas and future city plans
After property acquisition- Grasp "rent on sales" ratio of tenants through building tenant relations- Conduct credit investigation of tenants (records of corporate sales and financial foundations) every fiscal period- Monitor trends of real estate development in surrounding areas and changes in consumers‘ circulation
20

2

Portfolio

History of Retail Property Sales(mm yen)(*) This represents a monthly tally of sales for each store at Canal City Hakata.

(*) This represents a monthly tally of sales for each store at Park Place Oita.

(*)This represents a monthly tally of sales for SunLiveCity Kokura without
showing the actual figures. The figures for SunLiveCity Kokura are notindicated because we have not obtained approval from SunLiveCity
Kokura for their disclosure.

21

2

Portfolio

Overview of Leased Area’s Top 10 Tenants(As of February 29, 2008)

Store

Rank

Property

Total
LeasedAreas(m2)

Park Place Oita

58,588.34

Hara SATY

27,580.75

SunLiveCity Kokura

61,450.22

Square Mall Kagoshima Usuki

6,684.81

TenantJusco Park Place Oita
AEON Kyushu

1

25.6%

SATY
2

3

SunLiveCity Kokura

Sports Depo/Golf 5

SunLive

Alpen

Share
(%)

Kumamoto Intercommunity SC

6,838.16

Kurume Higashi Kushiwara SC

6,467.80

18.3%

Rent
Structure

Contract
Type (*1)

Remaining
contract
years (*2)

FixedOrdinary
Lease

14.2

Fixed +
Floating

Fixed-term
Lease

11.0

Fixed +
Floating

Ordinary
Lease

17.3

Fixed
6.0%

Fixed

18.6
Fixed-term
Lease

Fixed

18.8
19.8

4

K’s Denki andMr. consent

K’s Denki Holdings

Park Place Oita

13,705.32

4.1%

Fixed

Ordinary
Lease

14.1

5

Washington Hotel

Canal City
Fukuoka Washington Hotel

Canal City Hakata

12,831.17

3.8%

Fixed +
Floating

Ordinary
Lease

8.1

Canal City Hakata

4,557.26

Fixed +
Floating

Fixed-term
Lease

3.7

Fixed

Ordinary
Lease

4.1

6

Sports Authority

MegaSports

2.5%Park Place Oita

3,717.04

7

Comme ca StoreFIVE FOXes

Canal City Hakata

7,859.12

2.3%

Fixed

Ordinary
Lease

3.7

8

United Cinema Canal City
13

United Cinemas

Canal City Hakata

7,303.80

2.2%

Fixed +
Floating

Ordinary
Lease

8.1

9

Sanyo Shinpan

Sanyo Shinpan

Gofukumachi Business Center

5,862.87

1.7%

Fixed

Ordinary
Lease

0.7

10

T Joy

T Joy

Park Place Oita

5,729.25

1.7%

Fixed +
Floating

Ordinary
Lease

14.2

Outside top 10 tenants

106,773.26

31.8%

Entire portfolio

335,949.17

100.0%(*1) Fixed-term lease agreements are the contract of no early cancellation allowed, no decrease in rents allowed.
Ordinary lease agreements are the contract other than fixed-term lease agreements.
(*2) Remaining years are written by Leasing Contract as of February 29, 2008.

22

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中表紙：財務戦略

Financial Strategy

3

Financial Strategy

Diversification and Stability of Debt Finance48.0 Billion
2.2Billion

39.5 Billion

15.3Billion

11.3Billion

26.6 Billion
28.2Billion

30.5Billion25

3

Financial Strategy

Fixed / Floating Ratio and Duration

Targeting
2.5-3.0 years

26

3

Financial Strategy

Dispersion of Repayment Period and Interest Payment

Planning to increase
0.1%-0.2% by fixing Debt
from Short-tem to Long-term.
(The dividend forecast
already includes the cost)27

3

Financial Strategy

Results of the 7th Financial Activities28

3

Financial Strategy

Itemization of Borrowings(As of February 29, 2008)

Type

Long-term Debt payable
due within one year

LenderAozora Bank, The Bank of Fukuoka, NishiNippon City Bank, Oita Bank, Iyo Bank, The
Bank of Saga, Eighteenth Bank, Miyazaki
Bank, Yamaguchi Bank, Shinwa Bank,
Chikuho Bank
Subtotal
Development Bank of Japan
Mizuho Corporate Bank, Norinchukin Bank,
Shinkin Central Bank, Hiroshima Bank, Iyo
Bank, The Bank of Saga, Yamaguchi Bank,
Higo Bank, Shinwa Bank

Long-term Debt

Annual Interest

Interest

Description
No collateral
No guarantee

Amount (JPY)

Borrowing Date

6,600,000,000

June 29, 2005

June 23, 2008

Lump sumupon maturity

1.37250%(*1)

Floating

12,000,000,000

November 9, 2004

August 31, 2009

Lump sumupon maturity

1.39000%

Fixed

10,000,000,000

August 25, 2006

July 30, 2010

Lump sumupon maturity

1.92250% (*2)

6,600,000,000

Fixed
(*2)

The Bank of Fukuoka

2,000,000,000

August 25, 2006

July 29, 2011

Nishi-Nippon City Bank

2,000,000,000

August 25, 2006

July 29, 2011

The Dai-ichi Mutual Life Insurance

1,000,000,000

August 25, 2006

July 29, 2011

Shinsei Bank

1,000,000,000

August 25, 2006

July 29, 2011

Sumitomo Trust and Banking

1,000,000,000

September 29, 2006

July 29, 2011

Nishi-Nippon City Bank

2,500,000,000

February 27, 2008

February 28, 2013

Sumitomo Trust and Banking

2,000,000,000

February 27, 2008

February 28, 2013

Mizuho Corporate Bank

2,000,000,000

February 29, 2008

February 28, 2013

Mitsubishi UFJ Trust and Banking

2,000,000,000

February 29, 2008

February 28, 2013

Aozora Bank

1,000,000,000

February 29, 2008

February 28, 2013

Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity
Lump sumupon maturity

Subtotal

38,500,000,000
2,000,000,000

February 29, 2008

March 31, 2008

Lump sumupon maturity

0.97417% (*5)

Fixed

900,000,000

February 29, 2008

March 31, 2008

Lump sumupon maturity

0.97417% (*5)

Fixed

The Bank of Fukuoka（*3）
Commitment Line

Payment
MethodRepayment Maturity

The Bank of Fukuoka、 Resona Bank,
Kumamoto Family Bank, Shinwa Bank（*4）
Subtotal
Total

2.05174%
2.05174%
2.05174%

No collateral
No guarantee

2.00174%
1.80296%
1.69226%

Fixed

1.69226%
1.69226%
1.59226%
1.54226%
No collateral
No guarantee
No collateral
No guarantee

2,900,000,000
48,000,000,000

Status of Forming of Commitment LinesType
Commitment line agreement (1)LenderThe Bank of Fukuoka

The Bank of Fukuoka, Resona Bank,
Kumamoto Family Bank and Shinwa Bank(*1) From December 26, 2007 to March 24,
2008 (inclusive of that day)Total
Commitment line agreement (2)Credit Limit (JPY)

Commitment Period
Start
End

3,000,000,000

Jul 2, 2007

Jun 30, 2008

5,000,000,000

Aug 24, 2007

Jul 31, 2008

Description
No collateral
No guarantee
No collateral
No guarantee

8,000,000,000(*2) Fukuoka REIT has concluded a swap agreement to fix interest rates on borrowings with floating interest and the interest rate at which the swap agreement was included is entered.
(*3) This is the borrowings for commitment line agreement 1.
(*4) These are the borrowings for commitment line agreement 2.
(*5) From February 29, 2008 to March 31, 2008 (exclusive of that day)29

中表紙：外部成長戦略

Growth Strategy

4Growth Strategy

Growth Roadmap[IPO period]
・ Listing with incorporatinglarge-scale flagshipproperties into theportfolio[The first PO period]
・ Implemented PO toexpand the portfolio[Use LTV allowance]
・ Increase dividend throughproperties acquired byutilizing the LTV allowance.

[The second PO period]
・ Incorporate largescale properties into
the portfolio via a PO.

31

4

Growth Strategy

Growth Strategies: Asset SideSponsors’ pipelines

Asset size of
160 billion yen(Enhance liquidity of our stocks
through expansion of market
capitalization)

”
l
a
c
o
Properties owned or developed by
L“Act
Fukuoka Jisho Group
Leaseback properties from other sponsors(including industrial assets)

Continued paymentof high dividends(Firmly maintain the highest level ofdividends among J-REITs)

Property acquisitions
from markets (non-sponsors)(1) Recognition on market
Actual real estate market always come lateto events in financial market

Real estate pricestill remains high(2) Target sources ofacquisition
Foreign and Tokyo-based funds(Sale of properties in local areas caused bycredit crunch)(3) Target assets
Middle- to large-sized properties located in
the center of Fukuoka(4) Target prices
Sustainable cash flows divided byappropriate cap rates

J-REIT prices
near their bottom

32

4

Growth Strategy

Growth Strategies: Debt and Equity Side

”
l
a
b
o
l
G
k
n
i
h
“T
LTV Allowance
Capable of additionallyborrowing approximately
15 to 20 billion yen evenafter the acquisition of
K’s Denki Kagoshima

LTV at the End of
the 7th Fiscal Period: 39.5%

Public Offering

OthersIncrease capitalwhile suppressing dilution

New financing methods including
CBs and mezzanine loans
Bridge fund (SPC) scheme(Keep an eye on the investment unit
price/conduct dialogue with capital markets)33中表紙：コンプライアンス

Compliance5Compliance

Organizational Structure of Asset Manager
Organizational Chart of Fukuoka Realty
Full-time directors and employees: 37(as of April 1, 2008)

General Meeting of Shareholders
Auditor (1)Board of Directors (3 full-time, 3 part-time)Compliance Assessment Committee (3)Compliance Department

President and Representative Director
Full-time Directors

(3)

(1)

(2)

Risk Management Committee (6)Investment Management Committee (7)Real Estate Management Department(9)

Business Management Meeting

Investment Department(8)

Finance Department

(6)

(7)

Planning Department(8)■ Investment Management Committee (7)President, Vice President, Managing Director, Investment Department General Manager, Management Department General
Manager, Planning Department General Manager, and Compliance Officer (1 each)■ Compliance Assessment Committee (3)Compliance Department General Manager (1) and Outside Compliance Committee Members (lawyer and real estate appraiser; 1 each)○ Certifications of Full-time Staff (total number per certificate)*Real estate agents (10)*Condominium manager (1)*SME analysts (4)*Real estate appraisers (2)*Japanese securities analysts (2)*MBA holders (4)* Building managers (2)* Lawyer (1)*Tax attorney (1)*Real estate consultant (1)355ComplianceDecision-Making Process of Fukuoka REIT

Internal staff●Real estate appraisers (2 people)●Building managers (2 people))●Japanese securities analysts(2 people), etc.

Real estate appraisals【Outsourced】● Japan Real Estate Institute (8 properties)● Tanizawa Sogo Appraisal (6 properties)● Daiwa Real Estate Appraisal (2 properties)36中表紙：市場分析「商業施設・オフィストピックス」

AppendixⅠ

6

AppendixⅠ

Strategies for Operating Retail Facilities
Commercial (retail) sales volume
is not impacted much byeconomic boom and recession cycles

Fukuoka REIT’s strategies on retail properties“Place for Fun” strategy
The most enjoyable place: more than justshopping.
The pie has a sufficient volume

Direct operations“In the end, retail is a local battle”

Diversify tenant risks through direct leasing to
The key of investing in retail properties is thatthey are not commodities and differentiation from dozens of tenants.
the competitors is possible(Source) Financial Statements Statistics of Corporations by Industry by The
Policy Research Institute, the Ministry of Finance, and Commercial Sales
Statistics issued by the Ministry of Economy, Trade and Industry

Even the principal retail facilities
and department stores in Fukuoka
have market shares of only 2 to 5% respectively

Floor expansion and developmentof adjacent land
Pursue the advantages of size and make thefacilities “re-born” through expansion.

“No. 1 store in the area” strategy
Become an indispensable life-supporting
infrastructure with an attractive fresh foodmarket.

Fixed-term leasehold strategy
Definition of market size:
Inhabitants within the zone have been calculated by extracting expenses for fashion, restaurants and leisure-related items from Family
Income and Expenditure Surveys, and multiplying them with the covered population and adjustments
Inhabitants outside the zone have been calculated by multiplying the number of people visiting Fukuoka with the amount of money spenton shopping, souvenirs, food and others (such as fares)
Sales on commercial statistics (excluding automobiles) in Fukuoka City total approximately 1.6 trillion yen
Source: National Census, Family Income and Expenditure Surveys, Survey on the Movement of Tourists in Fukuoka, quantitative survey in2006 (N=2800) and quantitative survey in 2007 (N=1000)

Bind tenants of properties for passive
management by concluding long-term, fixedterm leasehold contracts (no early cancellation
allowed, no decrease in rents allowed)

38

6

AppendixⅠ

Direct Operations
1. Portfolio effects

2. Capabilities to renovate zones andleasing capabilities

Diversification of risks through leasing
to multiple tenants
Lease a single property in sections to many tenants(Example: Park Place Oita has 79 tenants)

Fukuoka REIT Corporation

Pass-through type master lessee andproperty manager

Example of rents set with Percentage of sales
Sales x 10%
Minimum guarantee is set at 80% of past sales results

Manage monthly sales ofeach tenant in detail (thenumber of customers on a
cash register basis, unit
price per customer)

Those desiring to become
tenants wait their turn in line
Have the upper hand innegotiating with tenants

Actively replace
unpopular tenants

Keep retail properties “fresh” throughzone renovation→Properties that are “always new” withstrong ability to attract customers

Pursue upside potential while securing minimum
guarantee rents.
Tenant risks are limited (a lease to dozens of tenantsfrom different industries does not allow simultaneous
defaults, cancellation or claims for rent reduction)

39

6

AppendixⅠ

Plan to Expand Floors at Park Place Oita

40

6

AppendixⅠ

Park Place Oita: Changes in use of Land Adjacent

The change from category 1 district for medium-rise and high-rise
residential buildings to a category 2 residential district makes it possible to build
hotels, restaurants, sporting facilities, retail tenants, and offices for general use
41

6

AppendixⅠ

Strength of SunLiveCity Kokura

Achieved sales increases for three consecutive years since
opening, attracting customers with its “fresh food market”
market”
that is indispensable for the inhabitants in the local community

Won recognition as “No. 1 shop” in the area
Fukuoka REIT also enjoys the store’s good performancethrough a rent that includes a percentage of sales

The figures for SunLiveCityKokura are not indicated because we have not obtained approval from
SunLiveCityKokura for their disclosure.
(Note) The Appraisal Cap Rate on Acquisition (NCF basis) figures are the cap rates under the direct capitalization methodin the appraisal reports on acquisition.
The NOI yield (for the 7th fiscal period) is the figure obtained by dividing the actual NOI amount of the property forthe 7th fiscal period by the acquisition price of the property.

42

6

AppendixⅠ

Fixed-term Lease Strategies: Properties Acquired in & after 7th Fiscal Period

Property Acquired in the 7th Fiscal Period

Property Acquired in the 7th Fiscal Period

Property Acquired in the 8th Fiscal Period

Hanahata SC

Kurume Higashi Kusiwara SC

K’s Denki Kagoshima- Synergy of a high quality gourmet supermarket and a
popular drug store- Established in a new housing area where population
growth is expected to occur- Excellent location near the center of Kurume City at theintersection of National Highway Route 3 and Route 210- The first major sports specialty stores in Kurume City

- Located close to Aeon Kagoshima Shopping Center, thecity’s largest commercial facility- Features shop areas that are the largest in Kagoshima

Tenants
Hallo Day Co., Ltd.: Ranks in top 3 by sales in Fukuoka
Prefecture
Matsumoto Kiyoshi: Boasts sales larger than any other drug
store in Japan

Property overview- Address: 4-chome, Hanahata, Minami Ward, Fukuoka City
- Total leasable area: 2,801.15m2-Built: July 10, 2007
Acquisition overview
Acquisition date: September 3, 2007
Acquisition price: 1.13 billion yen

Tenants
Alpen Co., Ltd.: Listed on the first section of the Tokyo Stock
Exchange. Boasts largest sales among sports specialty
shops in Japan

Property overview- Address: Higashi Kushiwara, Kurume City
- Total leasable area: 6,467.80m2- Built: December 3, 2007
Acquisition overview
Acquisition date: February 1, 2008
Acquisition price: 2.5 billion yen

Tenants
Kyushu K’s Denki Co.: Wholly-owned subsidiary of K’s
Holdings Co., which is listed on the first section of theTokyo Stock Exchange.

Property overview- Address: Aza Tokai, Tokai-cho Kagoshima City
- Total leasable area: 7,296.17m2- Built: November 17, 2007
Acquisition overview
Acquisition date: Mar 27, 2008
Acquisition price: 3.55 billion yen(Note) The phrase “in principle” is used as there exists a provisional exception that allows early cancellation in the case the tenant introduces a succeeding tenant that concludes a contract on better conditions for us.

43

6

AppendixⅠ

Canal City Hakata: Targets Tourists from Asia
Cruise Ships will call
At The Port of Hakata
22 times this year

A port of call of Luxury Liners◆ Luxury passenger cruisers start to call at the Port ofHakata in the spring of 2008

That’s Canal
City Hakata!

(from April to October; 22 times in total)◆Most of the passengers are well-to-do Chinese◆Canal City Hakata starts to accept China Union Pay Card

Passenger:2,435 people■Appeal Canal City
Rhapsody of the Seas, a large
passenger ship (78,500 tons serving
2,435 people) owned by Royal
Caribbean International of the U.S., willcall at the Port of Hakata six times in
April and May in total, while Costa
Allegra (28,430 tons serving 954
people) of Italy’s Costa Cruises will visit
16 times in total in July throughOctober this year.

Royal Caribbean Co. (USA)“Rhapsody of The Seas”
Exceed (passenger: 800 people )“ASUKA” which is well-known
as Japanese Luxury Liners.
Source：Royal Caribbean International

There are two promotion videos being
produced – “Underground City ofTenjin” and “Canal the Waterborne
City.”
The former will appeal Tenjin as aplace where shopping is made easy
with three department stores, a massmerchandizing shop for homeelectronics and other facilities
connected via an underground town,
which is rare for Chinese tourists.
The latter appeals Canal City Hakata,a retail facility enjoying high popularity
among foreign tourists. These videos
are currently being filmed, and will be
used in publicizing to travel agencies in
China, etc.
Retail facilities planned as a destinationof the cruiser passengers for shopping
are starting to accept China Union Pay
Card. Canal City and Marinoa City
Fukuoka, located in Nishi Ward of
Fukuoka City, will introduce the card in
March – April.

Source: Nishi-Nippon Shinbun March 8, 2008

Source: Immigration Bureau of Japan

Number of People Arriving at Ports in Fukuoka, Mainly from Asia, Totals 0.6 Million a Year - Almost Half the Population of Fukuoka City of 1.36 Million

44

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6

AppendixⅠ

Future Perspective of Office Market in Fukuoka“Fukuoka City” is a “market with un-volatile”“Fukuoka REIT” is acquiring and managing large-scale, well-located and high-grade properties at “high cap rates”

46

6

AppendixⅠ

Office Market in Fukuoka

Vacancy Rate

Changes in Average Rent of Office Buildings(excluding common expenses)(Note) Each of the above graphs was prepared by Fukuoka Realty based on data provided by CBRE and Ikoma Data Service System(Reference) “Vacancy (%)”: (vacancy area within zones/total area of leased rooms within zones) x 100“Offering rent”: unit price per tsubo of monthly rent (excluding common expenses)

Vacancy Rate Drops at a Slower Rate

47

6

AppendixⅠ

Office Space Supply Trends in Fukuoka*Rent: unit price per tsubo of monthly
offering rent (not including common expenses)(Source) For above line graphs: CBRE and Ikoma Data Service System /CBRE Office Market Report vol.43 2007 Autumn

48

6

AppendixⅠ

Category Analysis of Large Office Buildings (Total Floor Area of 3,000 Tsubos or More)(Source)
CBRE and
Ikoma
Service(Source:
CBRE
andData
Ikoma
DataSystem
Services)(Note) The above graph was prepared by Fukuoka Realty based on data provided by CB
Richard Ellis and Ikoma Data Service System
Volume of new demand in the above indicates the increase between the floor areas
actually used by tenants for the fiscal year and that actually used by tenants for thepreceding fiscal year. The floor areas are obtained by multiplying the total floor areasof rental offices in Fukuoka City by the occupancy rate (100% - vacancy rate) for the
fiscal year.

Large-scale Office Category, on which Fukuoka REIT Focuses, Enjoys Comparatively Good Balance of Supply and Demand49

6

AppendixⅠ

Analysis of Real Estate Market in Fukuoka

50

6

AppendixⅠ

Fukuoka's 2011 Dynamism: Mega-projects for Redevelopment Simultaneously Proceed in Line with Full Opening of Kyushu Shinkansen

Souce:
Souce: Nishi
Nishi Nippon
Nippon Shinbun
ShinbunTenjin 2-chome district:
Given the application of loose requirementin FAR, Fukuoka City and major companies
started a study session Thirteen re-developmentbuildings are scheduled to be built in thefinancial district(Source) Nishinippon Shimbun (front page) dated
December 22, 2007

Tenjin Meiji DoDo-ri Ave.
Ground Area:
About 15,000㎡
15,000㎡
New Hakata Stn.
Ground Area:
About 22,000㎡
22,000㎡

Canal City Hakata II
Ground Area:
About 10,000㎡
10,000㎡

Around Kyushu Electronic Power Area

Source: Kyushu Railway Co.

Source: Kyushu Railway Co.

Source:Source: Kyushu
Kyushu Electronic
Electronic PowerPower
Source:Source: Urban
Urban Renaissance
Renaissance Agency
AgencyWatanabedori Ekikita district:
Areas around Kyushu Electric Power
headquarters (Denki Building) will be
re-developed under a land lot arrangement
project.
(Source) Nikkei Sangyo Shimbun(Nikkei Industrial) dated November 7, 2005
and the website of Urban Renaissance Agency

Kyushu Electronic Power
Headquarters

Ground Area: About 24,000㎡
24,000㎡

Souce: Nishi Nippon Shinbun

51中表紙：福岡・九州マクロ経済

AppendixⅡ

7

AppendixⅡ

Population Growth in Fukuoka Metropolitan Area

Population Change in Principal Metropolitan Areas in Japan(Indicated by index with figures in 1985 as 100)

Fukuoka City with Growing Population(Note) Population growth rate of major cities in past 5 years.
Total rate of move-ins = Total number of move-ins (’03-‘07)/ population(‘03.3.31) based on basic resident register

Exceed the Population Growth into Fukuoka Metropolitan Area toward to opening Kyushu Shinkansen in 2011

53

7

AppendixⅡ

Automobile Industry in Kyushu
Long-term Trend of Capital Investment
Capital investment in Kyushu continues strongly

Graph formed after establishing the capital investment value of all industries in 2002 as 100 and indexing based on this(Source) “Capital Investment Trend in Kyushu Region 2007” by Development Bank of Japan(source) Development Bank of Japan “Shifts and Changes in the Cluster Coalescence Age”

TOYOTA MOTOR KYUSHU Miyata Plant

15% of Hybrid Cars in worldwide areproduced in Miyata Plant

TOYOTA MOTOR KYUSHU Kanda Plant

The First Domestic Engine Factory
except Aichi

Nissan Motor Co Kyushu Plant

Daihatsu Motor Co Kyushu Oita Nakatsu Plant

The largest production base of
Nissan Motor Co.
A production Base of low mileage Diesel
The largest production
base in Daihatsu Group

Production Bases for Low Fuel Consumption Cars including Hybrid Cars are effected by High Oil Prices

54

7

AppendixⅡ

Semiconductor Industry in Kyushu
Locations of Major Plants Related to Automobiles andSemiconductors Large manufacturers actively continue
investment in Kyushu
DENSO Kitakyushu Plant(Kitakyushu City)
Toyota Motors Kyushu(Wakamiya City, Fukuoka Prefecture)
Power Device Division,
Mitsubishi Electronic(Fukuoka City)

Toyota Motors Kyushu, Kanda Plant(Kanda-machi, Fukuoka Prefecture)

Fujitsu Integrated
Micro technology, Kyushu Plant(Satsuma-Sendai City, Kagoshima
Prefecture)

Automobile
IT

Display Panel（Fujitsu Hitachi Plasma Display

Nissan Motor, Kyushu Plant(Kanda-machi, Fukuoka Prefecture)〔Miyazaki〕、Pioneer Plasma Display 〔Kagoshima〕）

ROHM Fukuoka(Yukuhashi City, Fukuoka Prefecture)
Daihatsu Auto Body
(Nakatsu City, Oita Prefecture)
Oita Canon(Kunisaki City, Oita Prefecture)

Tokyo Electron Kyushu(Tosu City, Saga Prefecture)

Nagasaki Technology Center,Sony Semiconductor Kyushu(Isahaya City, Nagasaki
Prefecture)
Aishin Kyushu(Jonan Town,
Kumamoto
Prefecture)

Panel（Sony Semiconductor Kyushu 〔Kagoshima〕、
Miyazaki Oki Electronic 〔Miyazaki〕）

NEC Kyushu(Kumamoto Prefecture)

Honda Motor,
Kumamoto
Plant
Fuji Photo Film
(Kikyuyo Town,
Kumamoto
Prefecture)

Digital TV
Mobile Phone

Control LSI（Tosiba Oita Plant 〔Oita〕、Kyushu Nihon
Electronic 〔Kumamoto〕）

Antenna （Panasonic CC
Miyazaki 〔Miyazaki〕）

Toshiba, Oita
Plant
(Oita City)

Memory（Renaissance Technology〔Kumamoto〕, Isahaya Electronic〔 Nagasaki〕）
Lenses Sensor （Sony Semiconductor Kyushu

Asahi Kasei
Microsystems
Kyushu(Nobeoka City,
Miyazaki Prefecture)〔Kumamoto、Kagoshima〕, Toshiba Semiconductor〔Oita〕）
Key（Kagoshima Koki Electronic 〔Kagoshima〕）

Digital Video, Camera

Miyazaki Oki Electric(KiyotakeTown, Miyazaki Prefecture)
KYOCERA Corporation
Kagoshima Kokubu Plant(Kirishima City, Kagoshima Prefecture)

Game

Control Board（Toshiba North Kyushu Plant 〔Fukuoka〕
Sony Semiconductor Kyushu Nagasaki〕）
Printing Circuit Board（Omuta Electronic Industry 〔Fukuoka〕）

Source: Kyushu Semiconductor Innovation Association based on “Kyushu Silicone Cluster ”

IC Production Share in Kyushu is about 26% of Domestic Production

55

7

AppendixⅡ

Fusion of Automobile and Semiconductor Clusters
Progress in Applying Electronics to Automobiles

Future Semiconductor Market (share on a value basis)

Source: Nikkei Electronics (March 18, 2004)

Source: made by Fukuoka Realty based on Development Bank of Japan “The age of Coalescence of Cluster”

Kyushu becomes the Mecca of New Car Electronics Industry

56

7

AppendixⅡ

Formation of Automobile Cluster over Northern Kyushu and South Coast of Korea
A cluster of automobile manufacture formed beyond the national boundary

Northern
KyushuSouth Korea

Production base of
Ecological cars

Strong competitivenessin component industry

Advantages overSouth Korea

Increase the parts’export to Japan

Development by System
for Division of Work
A4littleovermillion4 million
carscars

Mayor of Fukuoka City and Busan City agree
concerning promotion of “Super-wide Economic
Zone” comprising Kyushu and South Korea(March 8, 2008)

Fukuoka – Busan established Economic
Corporation Council in 2008 Autumn
57中表紙：その他

AppendixⅢ

8

AppendixⅢ

Leasing Business Income and Expenditure by Properties(unit: million yen)

Category

Canal Gofukuma
KurumeSquare Mall Kumamoto Hara Hanahata Higashi
Sanix
City
chi
Canal City Park Place SunLive
City
Kagoshima
IntercommBusiness
Business Hakata
Kushiwara
HakataOita
SATY
SC
KokuraUsuki
unity SC
Building
Center Center
SC
Building Building

Taihaku
Amex City House
StreetBusiness Akasakam Keyaki
DoriCenter on Tower
Building

7th Fiscal Period (September 1, 2007～February 29, 2008）

Total

7th

6th

72days182days184days

Variation(Length)Total Leasing businessincome ①

182days 182days 182days 182days 182days 182days 180days 29days 182days 182days 182days 182days 182days
1,380

909

292

255

89

212

40

14

708

553

192

319

70

1

5,043

5,091

(48)

Rent

1,357

887

292

225

89

212

40

14

692

493

179

319

64

1

4,871

4,874

(3)

Other Income

23

21

-

29

0

-

-

-

15

60

12

0

6

-

171

216

(45)

Total leasing business
expenses ②

610

535

95

130

29

35

9

4

345

269

89

159

40

8

2,365

2,437

(72)

Outsourcing fees

340

260

8

33

2

6

1

0

201

72

17

61

4

0

1,020

1,052

(32)

Maintenanceexpenses

8

6

-

0

-

-

-

-

2

3

1

2

0

-

25

46

(21)

Expenses forrestoration toformer state

-

-

-

-

-

-

-

-

-

-

-

-

2

-

2

1

＋1

Tax and publiccharges

71

77

37

17

6

-

-

-

46

38

16

25

4

-

345

339

＋6

Insurance premiums
and trustcompensation

7

5

2

1

0

0

0

0

5

3

1

1

0

0

30

31

(1)

Depreciation

178

128

45

46

18

26

7

3

84

94

35

65

21

6

763

741

＋22

Other expenses

1

51

0

30

1

0

0

-

3

55

14

2

3

1

177

223

(46)

Real estate rental businessprofit (loss) ③（=①－②）

770

374

197

125

59

177

30

10

363

284

103

160

29

(6)

2,678

2,654

＋24

ＮＯＩ ④
（=③＋depreciation）

948

503

243

171

78

204

38

14

448

378

139

225

51

0

3,441

3,395

＋46

ＮＯＩ yield（Annual conversion of ④
/Acquisition price）

6.0%

6.5%

7.4%

6.5%

6.6%

7.6%

6.9%

7.1%

6.2%

6.8%

6.3%

6.5%

5.0%

-0.2%

6.3%

6.3%

(*1)Payment of Property and City Planning Taxes about 3million yen on Kominedai Community Mall which was sold out in previous period. The figures was included in total.
(*2)Payment of Property and City Planning Taxes of ”Hara SATY” ”Hanahata SC” “City House Keyaki Dori” will start from the 8th Fiscal Period.

59

8

AppendixⅢ

Rental Portfolio (including common expenses)(Note 3)(Note 1)

(Note2)(Note 1) Ratios indicated in the pie graphs are figures obtained by dividing the actual for the 7th fiscal period, as totaled for eachremaining contract period of residents at Amex Akasakamon Tower and City House Keyaki Dori, by total rents for the 7th fiscal period from the properties.
(Note 2) Ratios indicated in the pie graphs are figures obtained by dividing the rents for the 7th fiscal period, as totaled for eachremaining contract period of tenants at Canal City Business Center Building, Gofukumachi Business Center, Taihaku Street Business Center and Sanix Hakata
Building, by total rents for the 7th fiscal period from those properties.
(Note 3) Ratios indicated in the pie graphs are figures obtained by dividing the rents for the 7th fiscal period, as totaled for eachremaining contract period of tenants at Canal City Hakata, Park Place Oita, SunLiveCity Kokura, Square Mall Kagohima Usuki and Kumamoto Intercommunity
SC, Hara SATY, Hanahata SC, and Kurume Higashi Kushiwara SC by total rents for the 7th fiscal period from those properties.

60

8

Breakdown of Tenant Rent Types for Retail Properties

・SunLive
・SATY
・Washington Hotel・United Cinema Canal City 13
・Sports Authority(*4)

・Comme ca Store・Jusco Park Place Oita
・K’s Denki
・Sports Depo/Golf 5・Canal City OPA
(*1)

(*5)

(*6)

・Dining and retail tenants
within Park Place Oita(*2)(*5) This represents the total for the fixed rent of “Fixed rent
tenants" minimum guarantee for “Percentage of sales withminimum guarantee tenants” and fixed rents for “Fixed rent
+percentage of sales tenants”(*6) This represents the total for the rent of “Entirely percentage
of sales tenants" amount in excess of the minimum guarantee
for “minimum guarantee rent with percentage of sales tenants”
and the percentage of sales rents for the “Fixed rent” percentage
of sales tenets.”

・Club Sega
・Gap/Gap kids
・Dining and retail tenants(*3)(*1) "Fixed rent tenants" are tenants whose monthly rent are fixed. Moreover, the indicated ratios are figures obtained by dividing the actual rent for the 7th fiscal period from the tenants with fixed rent housed in retail properties owned by
Fukuoka REIT as of February 29, 2008. by the total of actual rents for the 7th fiscal period from those properties.
(*2) Entirely percentage of sales tenants are tenants whose monthly rents shall be calculated by multiplying their monthly sales amount by a certain percentage. Moreover, the indicated ratios are figures obtained by dividing the actual rent
for the 7th fiscal period from the tenants with rent entirely linked to sales housed in retail properties owned by Fukuoka REIT as of February 29, 2008. by the total
amount of actual rent the 7th fiscal period from those properties.
(*3) Percentage of sales with minimum guarantee tenants are tenants whose monthly rents are fixed and who are required by contract to pay extra rents that are calculated by multiplying the excess sales amounts, when their sales
exceed certain amounts, by percentage. The indicated ratios are figures obtained by dividing the actual rent for the 7th fiscal period from the tenants with percentage of sales and minimum guarantee housed in in retail properties
owned by Fukuoka REIT as of February 29, 2008 by the total amount of actual rent for the 7th fiscal period from those properties.
(*4) Fixed rent + percentage of sales tenants are tenants whose monthly rents are fixed and who are (except for certain tenants) required by contract to pay extra rents that are calculated by multiplying their sales amounts by thepercentage of sales. The indicated ratios are figures obtained by dividing the actual rent for the 7th fiscal period from the tenants with fixed + percentage of sales housed in by the total amount of actual rent for the 7th fiscal period
from those properties.

61

8

AppendixⅢ

Cash Flow Statement for the 7th Fiscal Period (ended February 29, 2008)
Ⅰ Cash flows from operating activities
Net Profit before tax
Depreciation
Amortization of founding fees
Investment unit issuance fee depreciation
Interest received
Interest payment
Gains from sale of real estate
Increased/decreased amount of operations receivables
Increased/decreased amount of uncollected consumption tax
Increased/decreased amount of consumption taxes payable
Increased/decreased accrued business payments
Increased/decreased unpaid fees
Increased/decreased unpaid expenses
Increased/decreased advanced rents
Increased/decreased deposits held
Increased/decreased advance payments
Increased/decreased long-term advance payments
Other
SubtotalInterest received
Interest payment
Corporation tax payment, etc.
Net cash provided by operating activities
Ⅱ Cash flow from investment activities
Gains from selling tangible fixed assets
Expenses for acquiring tangible fixed assets placed in trust
Expenses for paying security deposits and guarantees on deposit
Income from security deposits and guarantees on deposit intrust
Expenses from returning security deposits and guarantees on
deposit in trust
Expenses for investment unit issuance fees
Expenses for depositing entrusted deposits with use limitations
Net cash provided by investment activities
Ⅲ Cash flow from financing activities
Proceeds from short-term debt
Expenses from repayment of short-term debt
Proceeds from borrowing long-term loans
Dividend payment
Net cash provided by financing activities
Ⅳ Increased/decreased cash and cash equivalents
Ⅴ Cash and cash equivalents at start of period
IV Cash and cash equivalents at end of period

7th period (182 days)

6th period (184 days)

September 1st, 2007 – February 29, 2008

March 1, 2007 – August 31, 2007

1,981,346
763,679
5,595
8,412(7,149)345,043
42,467(50,608)(101,182)(1,499)(17,077)(1,061)
28,536(215,758)
30,932
7,930
12,874
2,832,481
7,149(348,222)(15,388)2,476,020

1,966,802
741,902
5,595
8,412(5,394)
333,144(4,574)(26,960)
99,443
101,182
7,769(19,157)
14,74739,528211,278(43,339)(18,397)(7,947)
3,404,034
5,394(323,334)(1,727)3,084,367(477,708)(4,837,312)

783,223(5,796,651)

80,288--(98,595)

285,856(124,969)(5,073,844)

353,104(172,487)(4,931,407)

15,300,000(20,900,000)
9,500,000(1,966,518)
1,933,481(664,341)
5,860,328
5,195,986

4,000,000(4,000,000)(1,859,306)(1,859,306)(3,706,347)
9,566,675
5,860,328（unit: thousand)62

8

AppendixⅢ

Relation between Depreciation Expense and Capital Expenditures (incl. Repairing Expenses)

63

8

AppendixⅢ

Construction Confirmation Inspection Agencies
Property Name

Canal City Hakata

Construction
Name

New construction
and renovation
work

Completion Date

April 15, 1996

March 26, 2002
Park Place Oita

New construction
April 17, 2002
and expansion
work
April 28, 2004

Design Companies

Contractor

Construction
Confirmation
AgencyFukuoka Jisho First Class Architect’s Canal City Hakata New
Construction Zone 1
Office, FJ Urban Development,
Construction Joint
Fukuoka City
Takenaka Corporation and Zenitaka
Venture and Takenaka
Corporation Design Consortium(* 2)
Corporation

Asanuma Corporation Kyushu
Branch, First Class Architect’s Office
Asanuma Corporation, Oita City
Fujita Corporation Kyushu Branch
Fujita Corporation
Japan ERI Co., Ltd
First Class Architect’s OfficeConstruction
PML Value
Confirmation(*3)
Inspection AgencyA) 8.0Fukuoka CityC) 5.3D)11.1
A) 14.5

Oita City
Japan ERI Co., Ltd
B) 11.2

March 17, 2005
SunLiveCity KokuraB) 7.6

New construction October 16, 2003

Matsui and Kono Joint Design
VenturePenta-Ocean
Construction Co., Ltd.

Japan ERI Co., Ltd

Japan ERI Co., Ltd

6.7

Gofukumachi Business Center

New construction April 15, 1996

Institute of New Architecture Inc.

Takenaka Corporation

Fukuoka City

Fukuoka City

4.0

Canal City Business Center Building

New construction
and renovation
March 31, 2001
work

Fukuoka City

Fukuoka City

6.9

Sanix Hakata Building

New construction March 7, 2002

Fukuoka City

Fukuoka City

4.3

Taihaku Street Business Center

Canal City Hakata New
Fukuoka Jisho First Class Architect’s Construction Zone 2
Office, FJ Urban Development First Construction Joint
Venture, Zenitaka
Class Architect’s Office
Corporation
Maeda Corporation First Class
Maeda Corporation
Architect’s Office
Kyushu Branch

New construction September 28, 2006

Yamashita Sekkei, Inc.

Takenaka Corporation

Fukuoka City

Fukuoka City

7.5

Square Mall Kagoshima Usuki

New construction November 30, 2006

Yamashita Sekkei, Inc.

Fujita Corporation

Kagoshima City

Kagoshima City

9.6

Kumamoto Intercommunity SC

New construction July 26, 2005

Kajima Corporation

Kajima Corporation

Japan ERI Co., Ltd.

Japan ERI Co., Ltd.

16.3

Amex Akasakamon Tower

New construction March 26, 2002

Masaki Architect & Associates

Japan ERI Co., Ltd.

Japan ERI Co., Ltd.

11.6

City House Keyaki DoriNew construction November 17, 2007

Planning Office LECS Co., Ltd.

Japan ERI Co., Ltd.

Japan ERI Co., Ltd.

1.9

Hara SATY

New construction October 26, 1976

Pal Corporation

Fukuoka City

Fukuoka City

13.2

Japan ERI Co., Ltd.

6.0

Kurume City

9.9

Hanahata SC

New construction July 10, 2007

Nishimatsu Construction Co., Ltd

Kurume Higashi Kushiwara SC

New construction December 3, 2007

Azusa Sekkei Co., Ltd

Tada Corporation
Kyushu Branch
Daiho Corporation
Kyushu Branch
Obayashi Corporation

Nishimatsu Construction
Japan ERI Co., Ltd.
Co., Ltd
Toyo Construction Co.,
Kurume City
Ltd

Portfolio

4.9(*1) Of multiple assumed earthquake scenarios, the portfolio PML values of Fukuoka REIT have been calculated by assuming the central part of Fukuoka City as the earthquake epicenter.
(*2) This consortium is the joint design venture by the designers of each zone.
(*3) Zones A through D of Canal City Hakata are classified by building status surveys. A indicates the Washington Hotel building, and B the amusement building, C the mega store building and D the common areas.
Parkplace Oita A and B are classified by building status surveys. B indicates Seven Eleven, A indicates the area other than B.

64

8

AppendixⅢ

Composition of Asset Management Fees

Calculation （Payment Period）{3 months from the date following the end of the latest settlement period }Total Assets at end of latest settlement period * 0.3% * Length / 365 days
AM Fees①(Assets Linked)

AM Fees②(Revenues Linked)

AM Fees③(Profits Linked)

AM Fees④(Acquisition Price Linked){From the date following the end of the period indicated above}（ Total Asset at end of latest settlement period + values of acquired assets – value of disposed
assets）*0.3%*number of days / 365 days

Operating Revenues for latest settlement period * 2%

（Distributable amounts before payment of management fees ③ for the latest settlement Period）*2%

Values of acquired assets*0.5% （Values of acquired assets*0.25% if acquired from sponsors）

65

8

AppendixⅢ

Analysis of Investor Attributes and Volume Ownership Reports
Distribution by Investor Category (Breakdown of Investment Units)

Major Investors (End of 7th Fiscal Period)*Number of units

*

*

*

*

*

*

owned by trust banks

Filing of Volume Ownership Report (as of March 31, 2008)

66

8

AppendixⅢ

History of Investment Unit PriceHistory of Investment Unit Price67

8

AppendixⅢ

Size of the Fukuoka Metropolitan Area

Populations of Major Japanese Metropolitan Areas

Fukuoka Metropolitan Area
Fukuoka City and municipalities from which 10% or more of the population
commutes to school or work in Fukuoka City

Tokyo
Metropolitan Area
33.64 million people

Osaka
Metropolitan Area
11.44 million people

Fukuoka
Metropolitan Area
2.47 million people

NagoyaMetropolitan Area
6.42 million people

Source：Tabulated by the Japan Economic Research Institute basedon the 2005 National Census conducted by the Ministry of Internal
Affairs and Communications

Fukuoka is the Fourth Largest Metropolitan Area in Japan following Tokyo, Osaka and Nagoya

68