March 28, 2019

Provisional translation only

Fukuoka REIT Corporation
1-2-25 Sumiyoshi, Hakata Ward, Fukuoka City
Etsuo Matsuyuki
CEO & Representative Director(Securities Code: 8968)
Asset Management Company:
Fukuoka Realty Co., Ltd.
1-2-25 Sumiyoshi, Hakata Ward, Fukuoka City
Etsuo Matsuyuki
CEO & Representative Director
Inquiries:
Keishi Tamura
General Manager of Finance Department
TEL: +81-(0)92-272-3900
Notice Concerning Partial Amendments to the Asset Management Company’s Internal Regulations(Asset Management Guidelines)
Fukuoka REIT Corporation (FRC) announced that Fukuoka Realty Co., Ltd., the asset management company towhich FRC entrusts management of its assets, today decided to partly amend the asset management guidelines (the“Asset Management Guidelines”), its internal regulations, as described below (the “Amendments”).
1. Reasons and Major Points of Amendments to the Asset Management Guidelines
FRC aims to invest in a variety of properties, including retail facilities, office buildings, hotels, residentialproperties, logistics facilities and public facilities, geographically limiting its target investment area to the Fukuoka
and Kyushu area. This is based on the belief that the location and type of properties matching the selected areas are
the source of cash flows generated by real estate properties over the medium to long term.
Currently, the investment ratio of FRC in retail facilities (calculated on the basis of acquisition price; the same shallapply hereafter) is set at 60% as the lower limit. The figure is at a higher level than the investment ratio of any
investment type other than retail facilities. This means that, for future external growth, the room to consider
acquisition properties of investment types other than retail facilities is limited.
The Amendments are intended to allow the asset management company more flexibility in considering investment
in excellent properties of investment types other than retail facilities, namely office buildings and others (including
hotels, residential properties, logistics facilities and public facilities), with an aim of securing stable earnings over themedium to long term as well as stable growth of FRC’s investment assets.
In addition, the Amendments make it clear with regard to the lease contract formats in the property management
standards that formats such as percentage-of-GOP (gross operating profit) rent can be employed. Provisions regarding
acquisition and cancellation of treasury investment units will also be established in response to the provisions ofArticle 6 of FRC’s Articles of Incorporation, in order to set forth matters to be taken into account when considering
acquisition and cancellation of treasury investment units.
[Major Points of Amendments](1) The general rules on investment type under the basic asset management policy will be modified as follows:
・The upper and lower limits of the investment ratio of retail facilities will be changed from 80% to 70% andfrom 60% to 40%, respectively.
・The upper limit of the investment ratio of office buildings will be changed from 40% to 50%.
・The upper limit of the investment ratio of the other types will be changed from 20% to 30%.
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(2) Percentage-of-GOP and other formats of lease contracts will be additionally included in lease contract formats
under the portfolio building policy.
(3) Provisions regarding acquisition and cancellation of treasury investment units will be established in the financial
policy of the basic asset management policy.
*For details of the modifications, please refer to the attached “Comparison of the Asset Management Guidelines
before and after the Amendments.”
2. Date of the Amendments to the Asset Management Guidelines
March 28, 2019
3. OtherAn extraordinary report on this matter was submitted to the Kanto Local Finance Bureau as of March 28, 2019
4. Future Outlook
The partial amendments to the Asset Management Guidelines will have no impact on the operating results of FRC.

*This document was distributed to Kabuto Club (press club within the Tokyo Stock Exchange), Press Club for the Ministry of Land,Infrastructure, Transport and Tourism, Construction Trade Paper Press Club for the Ministry of Land, Infrastructure, Transport andTourism, Fukuoka Economic Press Club, and Fukuoka Securities Finance Press Club.
*Fukuoka REIT Corporation’s website is https://www.fukuoka-reit.jp/eng/-2-

Attachment:
Comparison of Asset Management Guidelines before and after the Amendments(Note)

The following table describes only the parts with amendments, for both before and after the amendments, and the descriptions forother parts are omitted.
Furthermore, underlined parts are amended.

BeforeAfter

1. Basic Asset Management Policy for Fukuoka REIT Corporation

1. Basic Asset Management Policy for Fukuoka REIT Corporation

(FRC)

(FRC)

(3) Investment targets and their acquisition methods(3) Investment targets and their acquisition methods

2) Investment types2) Investment types

As FRC limits its investment target area, it flexibly targets

As FRC limits its investment target area, it flexibly targets all

all properties in terms of investment type (with aproperties in terms of investment type (with a comprehensivecomprehensive portfolio). While diversification is achieved

portfolio). While diversification is achieved by investing in

by investing in office buildings and retail facilities as they

office buildings and retail facilities as they differ in risk-return

differ in risk-return profiles, FRC will invest with aprofiles, FRC will invest with a particular emphasis on retailparticular emphasis on retail facilities. This is because retailfacilities. This is because retail facilities are characterized byfacilities are characterized by the fact that the profitability

the fact that the profitability they generate is supported bythey generate is supported by consumption and notconsumption and not necessarily linked to land price trends,

necessarily linked to land price trends, and because FRC

and because FRC believes they are investment targets that canbelieves they are investment targets that can best utilize thebest utilize the development and management capabilities ofdevelopment and management capabilities of the Fukuoka

the Fukuoka Jisho Group. As a rule, the investment ratio for

Jisho Group. As a rule, the investment ratio for each

each investment type shall be within the following investment

investment type shall be within the following investment

ratios.

ratios.
Use

Investment Ratio

Investment Area

Use

Investment Ratio

Investment Target

Retail40～70%

Urban, Regional, Community

Retail60～80%

Urban, Regional, Community

Office Building

20～50%

A-class, Sale and Leaseback

Office Building

20～40%

A-class, Sale and Leaseback

Hotels, Residential properties,

OthersHotels, Residential properties,

Others

0～20%

0～30%

Logistics facilities, and Public
facilities

Logistics facilities, and Public
facilities

2. Portfolio Building Policy for FRC

2. Portfolio Building Policy for FRC(2) Property management standards(2) Property management standards2) Lease contract formats2) Lease contract formats

In concluding lease contracts with tenants of retail facilities,

In concluding lease contracts with tenants of retail facilities,

long-term lease contracts with fixed rents shall be employed

long-term lease contracts with fixed rents shall be employed as

as a rule. For retail facilities in the categories of urban anda rule. For retail facilities in the categories of urban andregional facilities, however, they shall be managed in a way

regional facilities, however, they shall be managed in a waythat allows tenant replacement to reflect the needs ofthat allows tenant replacement to reflect the needs ofconsumers by flexibly setting lease periods and introducing

consumers by flexibly setting lease periods and introducing

fixed-term lease contracts, among other measures. Moreover,fixed-term lease contracts, among other measures. Moreover,schemes shall be adopted to enable increased rent income inschemes shall be adopted to enable increased rent income in-3-theperiodofeconomic

expansionbycombining

the period of economic expansion by combining that containpercentage-of-sales rent lease contracts with fixed-rent leasevariable

rent

such

as

percentage-of-salesrentandcontracts.

percentage-of-GOP rent lease contracts with fixed-rent lease
contracts.
(6) Financial policy(6) Financial policy
3) Management policy for cash and deposits, etc.

3) Acquisition and cancellation of treasury investment units
FRC may consider acquisition and cancellation of treasury
investment units as part of its financial and capital measures toenhance capital efficiency and unitholder return.
In this case, factors such as the investment unit price level,
status of cash on hand, financial conditions and the financial
market trends shall be carefully discerned from the viewpointof enhancing unitholder value over a medium to long termand, with full considerations given to the impact on the market
conditions, etc., it shall be determined as to whether suchacquisition or cancellation may be made and what the scale ofsuch arrangement may be.
4) Management policy for cash and deposits, etc.

Supplementary Provisions

Supplementary Provisions(Omitted)(Omitted)

The Asset Management Guidelines were revised as of June 29, 2018.

The Asset Management Guidelines were revised as of June 29, 2018.
The Asset Management Guidelines were revised as of March 28, 2019.

-4-Reference:
Current Portfolio Overview and Investment Ratio by each investment category

Investment TypeAcquisition Price

Investment ratio based on

Investment ratio based on［mm yen］

acquisition pricenew guidelines

Retail116,083

59.2%

40～70%

Office building

52,73026.9%

20～50%

Others27,166

13.9%

0～30%

Total

195,979

100.0%--5-