Provisional translation only
April 7, 2011EARNINGS BRIEFING
FOR THE PERIOD ENDED FEBRUARY 2011
Real estate investment trust: Fukuoka REIT Corporation (FRC)
Code number: 8968
Representative: Masayasu Saki CEO &Representative
Director

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

Asset manager: Fukuoka Realty Co., Ltd.
Representative: Masayasu Saki CEO & Representative Director
Contact: Yoichi Nishio
Managing Director, and Head of Finance Department
Phone: +81-92-272-3900
Expected date for submitting securities report:
May 27, 2011
Expected commencement date of dividend payments: May 18, 2011
(Figures rounded down to nearest million yen.)

1. PERFORMANCE AND SITUATION OF ASSETS FOR THE PERIOD ENDED FEBRUARY
2011 (September 1, 2010 to February 28, 2011)(1) Performance
Operating revenues
Millions of%yen
Period ended
February 2011
Period ended
August 2010

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

5,662

(0.0)

2,317

(4.0)

1,763

(1.9)

1,762

(1.9)

5,663

0.4

2,412

0.2

1,797

(3.5)

1,796

(3.5)

Net income
per unit
Period ended
February 2011
Period ended
August 2010

Ratio ofordinary income to total
assetsReturn on
net assets

Ratio ofordinary income tooperating revenues

16,465 yen

2.8%

1.3%

31.1%

16,782 yen

2.9%

1.4%

31.7%

(2) Dividends
Dividend
per unit(excl. dividendin excess ofearnings)
Period ended
February 2011
Period ended
August 2010

Total
dividend

Dividendin excess ofearnings
per unit

Total
dividendin excess ofearnings

Payoutratio

Ratio ofdividend to
net assets

16,465 yen

1,762 million yen

0 yen

0 million yen

100.0%

2.8%

16,783 yen

1,796 million yen

0 yen

0 million yen

100.0%

2.9%(3) Financial condition
Total assets
Period ended
February 2011
Period ended
August 2010

132,497
million yen
132,349
million yen

Net assets

Ratio ofnet assets to total assets

Net assets per unit

62,026 million yen

46.8%

579,420 yen

62,061 million yen

46.9%

579,738 yen(4) Cash flows condition
Cash flows fromoperatingactivities
Period ended
February 2011
Period ended
August 2010

Cash flows frominvesting activities

Cash flows fromfinancing activities

Balance of
cash and cash equivalents at
end of period

2,545 million yen(162) million yen(1,871) million yen

6,440 million yen

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

56 million yen

5,928 million yen

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

2. FORECAST OF PERFORMANCE FOR THE PERIOD ENDING AUGUST 2011
(March 1, 2011 to August 31, 2011) AND THE PERIOD ENDING FEBRUARY 2012
(September 1, 2011 to February 29, 2012)
Operatingrevenues
Millionsof yenOperatingincome%Millionsof yenOrdinary income%

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

Periodending7,030(24.2)
2,695(16.3)
2,043(15.9)
2,042
August2011
Periodending
7,014
(0.2)
2,650
(1.7)
2,006
(1.8)
2,005
February
2012(Reference)Forecast net income per unit: Period ending August 2011 16,600 yen
Period ending February 2012 16,300 yen(15.9)

16,600 yen

0 yen

(1.8)

16,300 yen

0 yen

3. Other(1) Changes in accounting policies(i) Changes due to revisions of accounting standards, etc.:(ii) Changes other than above (i):YesNo(2) Number of investment units issued and outstanding(i) Number of investment units issued and outstanding at end of period (including treasury investment units):
107,050 units at end of February 2011
107,050 units at end of August 2010(ii) Treasury investment units at end of period:—
units at end of February 2011—
units at end of August 2010
(Note) Regarding the number of investment units, a basis for calculating net income per unit, please refer to “Perunit information,” on page 13.

* On the adequate use of performance forecasts and other items warranting special mention
Forecast figures are calculated based on information available on the date of release of the forecast andcontain uncertain factors to a large extent. Actual operating revenues, operating income, ordinary
income, net income, and dividend per unit may differ due to changes in the business environment. The
forecast should not be construed as a guarantee of actual dividend. Concerning details of thepreconditions for the above forecast figures please refer to “2. Portfolio Management Policy andManagement Situation, (2) Management situation – Preconditions for the performance forecast for theperiod ending August 2011 (March 1, 2011 to August 31, 2011) and the period ending February 2012
(September 1, 2011 to February 29, 2012),” on page 6.

2

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

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

1. Investment Corporation-Related Organizations
The disclosure is omitted, since there are no significant changes from the “Structure of the investment corporation”
disclosed by the latest securities report (submitted on November 24, 2010).

2. Portfolio Management Policy and Management Situation(1) Portfolio management policy
The disclosure is omitted, since there are no significant changes from “Investment policy,” “Investment target” and“Dividend policy” disclosed by the latest securities report (submitted on November 24, 2010).
(2) Management situation(i) Summary of the current fiscal period(a) Brief history of the investment corporation
FRC was established on July 2, 2004 based on the “Investment Trust and Investment Corporation Law ofJapan” (Law No. 198 in 1951 including later revisions, hereinafter the “Investment Trust Law”) and listedon the Tokyo Stock Exchange and Fukuoka Stock Exchange on June 21, 2005 as the nation’s first realestate investment trust specializing in regional properties (code number: 8968). FRC invests in real estatethroughout all of Kyushu (including Okinawa Prefecture), with a central focus on Fukuoka City, and in
Yamaguchi Prefecture by turning regionality, characteristics in the real estate industry, into strengths.
FRC started asset management activities on November 9, 2004 after acquisition of four properties such ascommercial facilities in Canal City Hakata (excluding some areas of specialty shops, hotels, theaters,
offices and common space), a commercial complex where specialty shops, cinema complex, theaters,amusement facilities, hotels and offices are integrally developed (hereinafter “Canal City Hakata”). FRC
now has a total of 16 properties (excluding anonymous partnership equity interests)—nine commercial
facilities, five office buildings, and two residential properties—in its portfolio as of the end of the current
fiscal period (February 28, 2011).
(b) Investment environment and portfolio performance
In the thirteenth fiscal period, the Japanese economy showed signs of escaping an economic standstill witha recovery in exports and production, despite continuous severe conditions such as the continued high rateof unemployment.
Even in Kyushu – the prime investment area for FRC – a recovery was seen in production as well as intrade and capital investment, spurred by foreign demand, even though future prospects remained opaque.
In addition, the number of corporate bankruptcies decreased and in terms of the employment environment,
the area’s ratio of job openings to applicants showed improvement. Thus as a whole, the region iscontinuing in its track of a gradual recovery.
According to the land price trends indicated by the 2011 Land Price Survey, the national average forcommercial land prices decreased by 3.8%, while the same for residential land prices decreased by 2.7%
compared to the previous year. Although prices are continuing to decline, the rate of decrease iscontracting in general. In Fukuoka City, a core investment target area for FRC, commercial land prices
decreased by 3.9% and residential land prices decreased by 1.9% compared to the previous year, for thethird consecutive year of decrease for both commercial and residential land. However, the rate of decreaseis contracting compared to the previous survey.
Under such circumstances, FRC poured continuous efforts into operations to enhance competitiveness andcustomer drawing power at major commercial facilities such as Canal City Hakata. FRC also endeavoredto maintain and raise the occupancy rates of owned properties. As a result, it successfully maintained anaverage occupancy of 98.6% for all properties FRC owns as of the end of the thirteenth fiscal period.
When analyzing FRC’s portfolio (on an acquisition value basis) by geographic location, properties in the
Fukuoka urban area occupy 70.2% of its portfolio; when analyzing by property type, commercial facilities,
office buildings, and residential properties account for 61.7%, 35.7% and 2.6%, respectively.
(c) Summary of fundraising
In the current fiscal period, FRC refinanced its short-term debt under committed line of credit (300 million
yen) into long-term debt from the viewpoint of diversification of debt maturities and prolonged residual3

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

maturity of borrowings in September 2010. For the 1,500 million yen in long-term debt that matured in
December 2010, FRC conducted refinance with a loan period of 6 years. The balance of debt outstandingat the end of the current fiscal period totaled 59,075 million yen, with the loan-to-value ratio at end of
period at 44.6%. To reduce refinancing risks, FRC will continue to disperse the debt repayment date andincrease the average length of time until debt maturity.
Moreover, FRC made a resolution concerning the issuance of new investment units (16,000 units) on
February 7, 2011 for the purpose of allocating the proceeds to acquire new specified assets.
Furthermore, FRC was newly assigned a credit rating of AA− (stable) by Japan Credit Rating Agency, Ltd.
on February 8, 2011. The credit ratings assigned to FRC as of the end of the current fiscal period are as
follows.
Credit Rating Agency
Standard & Poor's Ratings
Japan K.K. (S&P)
Rating and Investment
Information, Inc. (R&I)
Japan Credit Rating Agency,
Ltd. (JCR)

Rating Type
Long-term Corporate Credit Rating

Rating Outlook
StableShort-term Corporate Credit Rating
Issuer Rating

RatingA−
A−2
A+

Long-term Senior Debts Rating

A A−

StableStable(d) Summary of performance and dividend
As a result of these management efforts, operating revenues totaled 5,662 million yen and operating
income after excluding operating expenses such as real estate rent expenses and asset management fees
totaled 2,317 million yen. Ordinary income was 1,763 million yen and net income was 1,762 million yen.
Management decided to make a dividend of 16,465 yen per investment unit to meet the requirements ofspecial tax measures for an investment corporation (as stipulated in Article 67-15 of the Special Taxation
Measures Law of Japan [Law No. 26 in 1957 including later revisions, hereinafter the “Special Taxation
Measures Law”]). Under this law, an investment corporation is allowed to deduct the maximum amount ofdividends paid to investors from its taxable income.
(ii) Forecast for the next fiscal period(a) Portfolio management policy
FRC will increase management and rent capabilities by cooperating with property management companies
including sponsor companies even in a worsening consumer spending environment and maintain the stable
operation of the properties by making the most use of their advantages.
FRC will invest based on the basic policy stipulated in its Articles of Incorporation and its basic
philosophy: focusing on “specialized areas in which FRC can demonstrate its competitive edge” that are in“high growth potential markets.” By geographic location, of all of Kyushu and Yamaguchi Prefecture,
FRC invests 60% to 90% of its assets in the Fukuoka urban area, since the Fukuoka urban area is expected
to have a high population growth rate in the future. In addition to the Fukuoka urban area, management
has decided to actively acquire properties in major cities, if there are regions or properties where FRC cangenerate investment merits from community-oriented viewpoints. FRC will acquire high quality properties
with adequate use of its advantages, such as information gathering ability in the areas, good knowledge ofregional properties and close relations with the local business community and governments, so thatinvestors can continue to invest in FRC with assurance.
Meanwhile, FRC will build stronger relationships with financial institutions to realize stable fundraisingand try to maintain a solid financial structure.
(b) Significant events that have occurred after the end of the current fiscal period
Concerning property acquisition
Based on the basic asset investment policy stipulated in the Articles of Incorporation, FRC acquired thefollowing property:
Property acquired: Real estate trust beneficiary interest
Property name: Canal City Hakata B
Location: Fukuoka City, Fukuoka
Acquisition price: 28,700 million yen
Acquisition date: March 2, 2011
Seller: CCH Bridge Y.K.
4

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011(c) Performance forecast for the next fiscal period
FRC aims to achieve the following performance goals for the period ending August 2011 (March 1, 2011
to August 31, 2011) and the period ending February 2012 (September 1, 2011 to February 29, 2012).
Concerning preconditions for the forecast, please refer to “Preconditions for the performance forecast forthe period ending August 2011 (March 1, 2011 to August 31, 2011) and the period ending February 2012
(September 1, 2011 to February 29, 2012),” on page 6.
Period ending August 2011
Operating revenues
Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

7,030 million yen
2,043 million yen
2,042 million yen
16,600 yen
0 yen

Period ending February 2012
Operating revenues
Ordinary income
Net income
Dividend per unit
Dividend in excess of earnings per unit

7,014 million yen
2,006 million yen
2,005 million yen
16,300 yen
0 yen(Note) The above forecast figures are calculated based on certain preconditions. The forecast should not
be construed as a guarantee of actual performance since actual operating revenues, ordinary
income, net income, dividend per unit and dividend in excess of earnings per unit may differ due
to changes in the business environment.
(3) Investment risks
The disclosure is omitted, since there are no significant changes from the “Investment risks” disclosed in the latest
securities report (submitted on November 24, 2010).

5

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

Preconditions for the performance forecast for the period ending August 2011 (March 1, 2011 to August 31, 2011) andfor the period ending February 2012 (September 1, 2011 to February 29, 2012)
Item

Preconditions
14th fiscal period: from March 1, 2011 to August 31, 2011 (184 days)
Calculation period
15th fiscal period: from September 1, 2011 to February 29, 2012 (182 days)
 It is assumed that there will be 17 properties which is the sum of 16 properties FRC owned
as of February 28, 2011 plus Canal City Hakata B it acquired on March 2, 2011.
Assets underMoreover, 6.4 billion yen was received on March 2, 2011 as the amount equivalent tomanagement
senior anonymous partnership equity interests.
 In practice, they may fluctuate due to changes in assets under management.
 It is assumed that there will be 123,050 investment units which is the result of adding new
Number ofinvestment units whose payment was completed as of March 1, 2011 (16,000 units) to theinvestment units
outstanding investment units as the end of the previous fiscal period.
issued and outstanding The balance of interest-bearing debt outstanding on February 29, 2012 is expected to total
69,425 million yen, an increase of 10,350 million yen from the end of the current period(February 28, 2011). The loan-to-value ratio (interest-bearing debt  total assets  100) is
expected to stand at around 44.8% (as of February 28, 2010, the loan-to-value ratio stands
at 44.6%).
Interest-bearing debt  In the period ending August 2011, FRC has borrowed short-term debt of 4,500 million yen
and refinancing
and long-term debt of 6,000 million yen on March 1, 2011. Furthermore, it is assumed that
FRC will refinance long-term debt of 7,000 million yen that will become due forrepayment in July 2011 into long-term debt.
 In the period ending February 2012, it is assumed that FRC will refinance short-term debt
of 4,500 million yen into long-term debt and that it will refinance long-term debt of 1,500
million yen that will become due for repayment in December 2011 into long-term debt.
 Of real estate rent revenues, revenues from properties FRC has already acquired are
calculated based on tenancy agreements that are valid as of today by taking into accountthe competitiveness of the properties and the market environment.
Operating revenues
Of real estate rent revenues, revenues from percentage lease contracts are calculated basedon past results by taking into account sales fluctuation factors of the relevant tenants.
 Concerning real estate rent revenues, tenant vacancies are taken into account to a certain
extent. It is assumed that there will be no rent arrears or non-payments by tenants.
 When acquiring assets under management, the fixed property tax and city planning tax forthe assets will be proportionally calculated according to the holding period and adjustedwith the former owner. FRC will not write them off since it will include the relevant
adjusted amount in the acquisition cost.
 FRC writes off estimated repair costs for buildings for the calculation periods, the periods
ending August 2011 and February 2012. Actual repair costs may differ significantly fromthe estimated amounts since there is the possibility that repair costs are incurred urgently
Operating expenses
due to damages to buildings caused by unforeseeable factors, repair costs generally differ
largely from period to period, and repair costs are not regularly incurred.
 Concerning outsourcing expenses, FRC anticipates 1,668 million yen for the period
ending August 2011 and 1,620 million yen for the period ending February 2012.
 Concerning taxes and other public charges, FRC anticipates 414 million yen for the period
ending August 2011 and 414 million yen for the period ending February 2012.
 Concerning depreciation and amortization expenses, FRC anticipates 1,203 million yen forthe period ending August 2011 and 1,226 million yen for the period ending February 2012.
 Concerning interest payment and expenses related to financing, FRC anticipates 611
million yen for the period ending August 2011 and 641 million yen for the period ending
February 2012.
Non-operating It is assumed that expenses pertaining to issuance of new investment units whose payment
expenses
was completed on March 1, 2011 will be posted as deferred assets and that they will beamortized using the straight-line method by 4 million yen for the period ending August
2011 and 4 million yen for the period ending February 2012.
 Dividend (dividend per unit) is calculated based on the dividend policy stipulated in
FRC’s Articles of Incorporation.
Dividend per unit
 Dividend per unit may fluctuate due to fluctuations in rent revenues caused by changes in
assets under management and tenants or various factors including unexpected occurrencesof repair.
Dividend in excess
 Dividend in excess of earnings (dividend in excess of earnings per unit) is not planned atof earnings per unit
the moment.
 It is assumed that there will be no significant revisions to laws and regulations, the tax
system, and accounting standards that may influence the forecast figures.
Other It is also assumed that there will be no significant unexpected changes in general
economic conditions and the real estate market.

6

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

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

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

13th fiscal period(as of February 28, 2011)

AssetsCurrent assets
Cash and deposits

1,777,071

2,437,057

Cash and deposits in trust

4,151,899

4,003,389

Operating account receivable

525,677

482,755

Prepaid expenses

243,283

207,244

Deferred tax assets

19

19

13,724

41,594

6,711,676

7,172,061

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

54,837,442(8,005,082)

55,323,513
46,832,360

840,847(208,096)

632,750

Lands in trust
Total property, plant and equipment(233,389)

639,509343,702240,063784,053(378,562)

46,451,463

872,899342,282(102,218)(8,872,050)(112,365)

231,337

947,475
405,490(433,769)

513,706

68,810,414

68,810,414

116,921,080

116,646,430

1,765,318

1,765,318

1,765,318

1,765,318

6,437,933

6,437,933

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

10,00010,000

Lease and guarantee deposits in trust

100,000

100,000

Long-term prepaid expenses

403,003

365,570

Total investment and other assets

6,950,937

6,913,504

125,637,336

125,325,253

132,349,012

132,497,314

Total noncurrent assets
Total assets

7

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

(thousands of yen)Account

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

13th fiscal period(as of February 28, 2011)

Liabilities
Current liabilities
Operating accounts payable

247,437

854,716

Short-term debt

300,000—

8,650,000

8,650,000

Account payable-other

69,07420,995

Accrued expenses

272,093258,934

Current maturities of long-term debt

Income taxes payable

730

745

Accrued consumption taxes

42,88029,669Advances received

669,251

664,399

Deposits received

775,693518,916

Total current liabilities

11,027,162

10,998,377

50,200,000

50,425,000

331,455

331,515

8,729,372

8,715,440

59,260,827

59,471,955

70,287,989

70,470,333

60,264,380

60,264,380

1,796,642

1,762,601

Total surplus

1,796,642

1,762,601

Total Net Assets

62,061,022

62,026,981

Total net assets

62,061,022

62,026,981

Total liabilities and net assets

132,349,012

132,497,314

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

8

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011(2) Statements of income(thousands of yen)Account

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

13th fiscal period(September 1, 2010 to
February 28, 2011)

1. Operating revenues
Rent revenue- real estate

5,282,359

5,281,795

Other rental revenue-real-estate

172,938

172,400

Anonymous partnership distribution

208,000

5,663,297

208,000

5,662,195

2. Operating expenses
Expenses related to rent business

2,771,269

2,874,581

Asset management fees

349,892

346,129

Asset custody fees

11,5304,922

Administrative service fees

38,93937,656

Director’s compensations

9,600

9,600

Other operating expenses

69,282

Operating income

3,250,514

71,9332,412,783

3,344,823
2,317,372

3. Non-operating revenues
Interest received

999

Other

340

708
1,340

512

1,220

4. Non-operating expenses
Interest payment

481,861458,556

Financing related expenses

89,27896,362

Other

45,271

Ordinary income

616,411—

1,797,712

Net income before tax

1,763,674

1,797,712

Income taxes-current

1,092

Income taxes-deferred0

Net income

554,918
1,763,674

1,094
1,092

(0)

1,094

1,796,619

1,762,579

Retained earnings brought forward

22

22

Unappropriated retained earnings

1,796,642

1,762,601

9

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011(3) Statement of changes in Net Assets
12th fiscal period (March 1, 2010 to August 31, 2010)(thousands of yen)
Net Assets
Item

Balance as of February 28, 2010

Shareholders’capitalRetained earnings
Unappropriatedretained earnings

Total
Net Assets

Total
net assets

60,264,380

1,862,371

62,126,751

62,126,751

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

Net income—

1,796,619

1,796,619

1,796,619—(65,729)(65,729)(65,729)

60,264,380

1,796,642

62,061,022

62,061,022

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of August 31, 2010

13th fiscal period (September 1, 2010 to February 28, 2011)(thousands of yen)
Net Assets
Item

Balance as of August 31, 2009

Shareholders’capitalRetained earnings
Unappropriatedretained earnings

Total
Net Assets

Total
net assets

60,246,380

1,796,642

62,061,022

62,061,022

Dividend of retained earnings—(1,796,620)(1,796,620)(1,796,620)

Net income—

1,762,579

1,762,579

1,762,579—(34,040)(34,040)(34,040)

60,264,380

1,762,601

62,026,981

62,026,981

Changes in the current fiscal period

Total of changes in the current fiscal period
Balance as of February 28, 201010

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

(4) Dividend statement
Account

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

13th fiscal period(September 1, 2010 to
February 28, 2011)

I. Unappropriated retained earnings

1,796,642 thousand yen

1,762,601 thousand yen

II. Total

1,796,620 thousand yen

1,762,578 thousand yen(16,783 yen)

(16,465 yen)

22 thousand yen

23 thousand yen(Dividend per investment unit)

III. Retained earnings brought forward

The amount of dividends shall be
The amount of dividends shall bedecided in accordance with thedecided in accordance with thedividend policy stipulated in Article dividend policy stipulated in Article
38-1-1 of FRC’s Articles of38-1-1 of FRC’s Articles ofIncorporation and must exceed 90% Incorporation and must exceed 90%
of FRC’s distributable profits asof FRC’s distributable profits as
stipulated in Article 67-15 of the
stipulated in Article 67-15 of theSpecial Taxation Measures Law ofSpecial Taxation Measures Law ofJapan. Following the above policy,
Japan. Following the above policy,
FRC shall decide to distribute
FRC shall decide to distribute
1,762,578 thousand yen, which is
1,796,620 thousand yen, which isalmost the entire amount ofalmost the entire amount of
unappropriated retained earnings, as unappropriated retained earnings, asearnings dividends. Moreover,earnings dividends. Moreover,dividend in excess of earnings as
dividend in excess of earnings as
stipulated in Article 38-2 of FRC’s
stipulated in Article 38-2 of FRC’s
Articles of Incorporation will not be Articles of Incorporation will not beprovided.
provided.
(Note) Concerning amounts other than dividend per investment unit, fractions of 1,000 yen are omitted.
Method for calculating dividends

11

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

(5) Cash flows statements(thousands of yen)
12th fiscal period(March 1, 2010 toAugust 31, 2010)

Account

13th fiscal period(September 1, 2010 to
February 28, 2011)

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

1,797,712
953,000(999)
481,861(158,004)(125,985)(167,537)
53,420(244)
15,299239,952(105,007)(129,798)
4,331
2,858,001
999(477,293)(14,500)
27,1262,394,333

1,763,674
958,204(708)
458,556
42,922(13,211)71,045(47,605)(7,820)(4,852)(256,776)
36,03837,433
1,229
3,038,128
708(463,894)(42,471)
13,4372,545,908

II. Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Repayment of tenant leasehold and security deposits in trust
Purchase of investment securities
Net cash provided by (used in) investment activities(170,692)—(120)
31,081(242,837)(3,016,300)(3,398,867)(148,945)
120(60)
34,494(48,426)—(162,817)

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

15,000,000(17,900,000)
14,900,000(10,075,000)(1,868,953)
56,046—(300,000)
1,800,000(1,575,000)(1,796,614)(1,871,614)

IV. Net increase (decrease) in cash and cash deposits(948,487)

511,476

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

6,877,458

5,928,970

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

5,928,970

6,440,447(6) Notes on the going concern assumption
No relevant items(7) Significant accounting policies
The disclosure is omitted, since there are no significant changes from contents disclosed by the latest securities
report (submitted on November 24, 2010).
(8) Changes in accounting policy
FRC has begun to apply the Accounting Standard for Asset Retirement Obligations (ASBJ Statement No. 18,
12

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

March 31, 2008) and the Guidance on Accounting Standard for Asset Retirement Obligations (ASBJ Guidance
No.21, March 31, 2008) starting from the current fiscal period.
Moreover, this event has no impact on profits and losses.
(9) Notes to financial statements
FRC omits the disclosure of notes to balance sheets, statements of income, statements of changes in Net Assets, andcash flows statements, as well as notes on lease transactions, financial instruments, securities, derivativetransactions, related-party transactions, tax-effect accounting, retirement benefits, asset retirement obligations andrental properties, since it does not find substantial need for disclosure in the earnings briefing.
(Per unit information)
12th fiscal period(March 1, 2010 to August 31, 2010)
Net assets per investment unit:
579,738 yen
Net income per investment unit: 16,782 yen

13th fiscal period(September 1, 2010 to February 28, 2011)
Net assets per investment unit:
579,420 yen
Net income per investment unit: 16,465 yen

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

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

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

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

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

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

13th fiscal period(September 1, 2010 to
February 28, 2011)

1,796,619

1,762,579——

1,796,619

1,762,579

107,050

107,050(Significant subsequent events)
12th fiscal period(March 1, 2010 to August 31, 2010)

No relevant items

13th fiscal period(September 1, 2010 to February 28, 2011)

Based on the basic asset investment policy stipulated in the
Articles of Incorporation, we acquired the following property:
Property acquired: Real estate trust beneficiary interest
Property name: Canal City Hakata B
Location: Fukuoka City, Fukuoka
Acquisition price: 28,700 million yen
Acquisition date: March 2, 2011
Seller: CCH Bridge Y.K.

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

13

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

4. Change in Directors(1) Change in directors in FRC(October 31, 2010) Resignation of Atsushi Nagano as Supervisory Director(November 1, 2010) Appointment of Hiroyasu Shindo as Supervisory Director
Hiroyasu Shindo was appointed as Deputy Supervisory Director at the 4th General Unitholders’ Meeting (held on
May 26, 2010)
Directors of FRC are as follows as of April 7, 2011.
Title

Name

CEO and
Representative
Director

Masayasu Saki

Career Summary
April 1969

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

April 1985

Assistant Branch Manager of London
Branch of the Nippon Credit Bank, Ltd.

June 1987

President of Nippon Credit International(a securities company incorporated inEngland)June 1992

Member of the Board and Tokyo BranchManagerJune 1996

Executive Director

June 1998

Senior Executive Director

November 1999

Director at CSK KK

November 2000

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

July 2003

CEO of Fitch Ratings Japan

April 2006

Advisor of Fukuoka Realty Co., Ltd.

June 2006

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

July 2006

CEO & Representative Director of
Fukuoka REIT Corporation (current
position)

14

Number ofshares held
0

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

Title

Supervisory
Director

Supervisory
Director

Name
Takashi
Shinohara

Hiroyasu
ShindoCareer Summary
March 1980

Registered as an accountant.

January 1982

Opened Shinohara Consulting Firm
(current position)

May 1984

Registered as a tax accountant.

April 2004

Supervisor at Kyushu University (current
position)

May 2007

Auditor of Best Denki Co., Ltd. (current
position)

October 2007

Supervisory Director of Fukuoka REIT
Corporation (current position)

January 2010

Founder and Representative Partner of
Shinohara and Ueda Tax
Accounting Firm (current
position)

June 2010

President of the Hokubu Kyushu Chapter
at the Japanese Institute ofCertified Public Accountants(current position)

June 2010

External Director of Mitsui MatsushimaCo., Ltd. (current position)

July 2010

Executive Board Member of the
Headquarters of the JapaneseInstitute of Certified Public
Accountants (current position)

April 1973

Registered as a lawyer.

April 1985

Chief of secretariat at Kyushu Federationof Bar Associations.

April 1986

Opened Shindo Law Firm (current
position)

April 1990

Chief of Public Relations at Kyushu
Federation of Bar Associations.

April 1996

A member of disciplinary committee at
Fukuokaken Bengoshikai, LTD.

July 2004

Supervisory Director of Fukuoka REIT
Corporation.

July 2006

Retired from Supervisory Director
Fukuoka REIT Corporation.

November 2010

Number ofshares held
00Supervisory Director Fukuoka REIT
Corporation. (current position)(Note) Masayasu Saki, CEO & Representative Director of Fukuoka REIT Corporation also serves as CEO of Fukuoka Realty Co.,Ltd.

(2) Change in directors in Fukuoka Realty Co., Ltd.
No relevant items.

15

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011

5. Reference Information(1) Investment situation(as of February 28, 2011)
Type of asset

Real estate in
Trust

Location(Note 1)

PurposeCommercial
facility
Office building
Residential
property

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

Percentage of
total assets(%)(Note 3)

Fukuoka urban area

38,114

28.8

Other Kyushu areas

36,136

27.3

Fukuoka urban area

41,095

31.0

Other Kyushu areas——

Fukuoka urban area

3,064

2.3

Other Kyushu areas——

118,411

89.4

6,437

4.9

Subtotal
Equity interests in anonymous partnership (Note 4)

Deposits and other assets
7,647
5.8
Total amount of assets
132,497100.0(Note 5)(124,849)(94.2)
Note 1: “Fukuoka urban area” refers to cities, towns and villages where 10% or more of the population commute to Fukuoka City
for school and work, according to the 2005 census, which states “the number of workers and students aged 15 years orolder commuting between their homes and places of work or school” conducted by Fukuoka City and the Statistics Bureauof the Ministry of Internal Affairs and Communications.
“Other Kyushu areas” refers to all other parts of Kyushu (excluding the Fukuoka urban area) and Yamaguchi Prefecture.
Note 2: “Total value of properties held” is based on the value on the balance sheet (the value of real estate in trust is the book value
after depreciation).
Note 3: Concerning the “Percentage of total assets,” the numbers are rounded off to one decimal place. The total of individual
percentages in the above table may not equal 100%.
Note 4: “Equity interests in anonymous partnership” are capital contributions to an SPC (CCH Bridge Y.K.) which operates theentire Canal City Hakata, excluding sections already owned by FRC and the Canal City Theater section. Moreover, 6.4
billion yen was received on March 2, 2011 as the amount equivalent to equity interests in anonymous partnership; hereafter
the same.
Note 5: Figures in parentheses for “Total amount of assets” refer to the value and percentage of real estate held in effect to the total
amount of assets.
(as of February 28, 2011)
Percentage of total amount of assets(%)

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

70,47053.2

Total amount of net assets

62,02646.8(2) Investment assets(i) Primary issues of investment securities(as of February 28, 2011)
Type

Description

Book value(millions of yen)

Evaluated amount(millions of yen)
(Note)

Percentage of
total assets(%)

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

16

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011(ii) Real estate investment portfolio(a) Values and investment ratios at end of period are as follows.
(as of February 28, 2011)
Acquisition
value(millions ofyen)(Note 1)

Value onbalancesheet(millions ofyen)

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

Investment
ratio
(%)
(Note 3)

Canal City Hakata

32,00031,53333,800

26.5

Tanizawa Sogo Appraisal
Co., Ltd.

Park Place Oita

15,70016,782

16,70013.0

Japan Real Estate Institute

SunLive City Kokura

6,633

6,257

7,420

5.5

Japan Real Estate Institute

5,300

4,954

4,910

4.4

Japan Real Estate Institute

2,400

2,265

2,420

2.0

Japan Real Estate InstituteHara SATY (Note 4)

5,410

5,482

5,200

4.5

Japan Real Estate InstituteHanahata SC

1,130

1,098

1,160

0.9

Kurume Higashi
Kushiwara SC

2,500

2,405

2,510

2.1

K’s Denki Kagoshima

3,550

3,470

3,400

2.9

Name of property

Square Mall
Kagoshima Usuki
Kumamoto
Intercommunity SC

Real estate appraiser

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

Commercial facilities
subtotal:
Canal City BusinessCenter Building
Gofukumachi
Business Center

74,62374,251

77,52061.7

14,60014,122

15,10012.1

11,200

10,31012,7009.3

Sanix Hakata Building

4,400

4,325

4,830

3.6

Japan Real Estate Institute

7,000

6,700

6,630

5.8

Japan Real Estate Institute

5,900

5,636

5,960

4.9

Tanizawa Sogo Appraisal
Co., Ltd.

43,10041,09545,220

35.7

2,060

1,970

1,660

1.7

City House Keyaki Dori

1,111

1,093

1,000

0.9

Residential properties
subtotal:

3,171

3,064

2,660

2.6

Total

120,894

118,411

125,400

100.0

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

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

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

Note 1: “Acquisition value” refers to the amount (purchasing prices shown on the purchasing contracts) not including expenses forthe acquisition of relevant properties (agency fees and taxes and other public charges).
Note 2: “Period-end appraisal value” refers to the evaluation value based on appraisals by a real estate appraiser in conformity withthe method and standards for asset evaluation stipulated in FRC’s Articles of Incorporation and rules stipulated by theInvestment Trusts Association, Japan.
Note 3: “Investment ratio” is obtained by dividing each property’s acquisition value by the total acquisition value. The total ofindividual percentages in the above table may not equal 100%, since the numbers are rounded off to one decimal place.
Note 4: Hara SATY’s (asset under management) name was changed to AEON Hara Shopping Center as of March 1, 2011; hereafter
the same.

17

Fukuoka REIT Corporation (8968), Earnings briefing for the period ended February 2011(b) Summary of the real estate rental business

Name of property

Number oftenants(Note 1)

Occupancy
Total
Total
rate
leasable space leased space
(%)
(m2)
(m2)
(Note 3)(as of February 28, 2011)
Percentage of
Total
total
rental revenues
rental revenues(millions of yen)(%)
(Note 4)(Note 5)
1,332
24.4

Canal City Hakata

1 (38)

97.8

45,990.34

44,983.46

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

1

99.3

103,963.52

103,246.81

963

17.7

1

100.0

61,450.22

61,450.22

292

5.4

11

100.0

14,661.72

14,661.72

253

4.6

2

100.0

6,968.66

6,968.66

90

1.7

1

100.0

27,580.75

27,580.75

212

3.9

2

100.0

2,801.15

2,801.15

40

0.7

1

100.0

6,467.80

6,467.80

88

1.6

1

100.0

7,296.17

7,296.17

111

2.0

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

(96)

21

(153)

99.4

277,180.33

275, 456.74

3,384

62.1

1

(55)

94.6

23,051.93

21,816.91

609

11.2

20

94.6

19,907.91

18,839.56

516

9.5

14

100.0

6,293.76

6,293.76

202

3.7

1

(61)

96.1

14,653.95

14,075.34

298

5.5

1

(15)

100.0

13,695.51

13,695.51

339

6.2

37

(165)

96.3

77,603.06

74,721.08

1,966

36.1

1

(62)

94.2

4,755.14

4,480.52

66

1.2

1

(41)

97.2

2,710.86

2,635.91

37

0.7

2

(103)

95.3

7,466.00

7,116.43

103

1.9

60 [421]98.6
362,249.39
357,294.25
5,454
100.0
(Note 2)
“Number of tenants” is based on the total number of sections stipulated in the tenancy agreements for commercial andoffice buildings among relevant properties. For the number of tenants in pass-through master leasing properties, the numberof sections stipulated in the tenancy agreements with end tenants is shown in parentheses. The Taihaku Street BusinessCenter is an office building with a residential tower. Its number of tenants comprises 11 offices and 50 residents.
The total of all the tenants in other than pass-through master leasing properties and the number of sections stipulated in thetenancy agreements with end tenants for pass-through master leasing properties is shown in parentheses in the totals
column for “Number of tenants.”“Occupancy rate” refers to the percentage of total leased space to total leasable space and the numbers are rounded off to
one decimal place.
“Total rental revenues” are the total of real estate rent revenues and other revenues from real estate rent in the current fiscal
period.
“Percentage of total rental revenues” is obtained by dividing each property’s total rental revenues by the total amount of
total rental revenues. The total of individual percentages in the above table may not equal 100%, since the numbers arerounded off to one decimal place.

Total
Note 1:

Note 2:
Note 3:Note 4:Note 5:(3) Investment target
The disclosure is omitted, since there are no significant changes from “Investment target” disclosed by the latest
securities report (submitted on November 24, 2010).

18