Fukuoka REIT : Integrated Report 2022～Who We Are～

Contents	Fukuoka REIT Corporation in Numbers
Who We Are	Sustainability

1. Fukuoka REIT Corporation in Numbers
2. Overview of Fukuoka REIT Corporation

1. Relationship with Fukuoka Realty Co., Ltd.

1. Value-CreationStory

1. Value-CreationActivities

1. Materiality

1. History of Asset Portfolio Expansion

1. Financial/Non-FinancialHighlights (5-Year Graph)

Growth Strategy

29 Sustainability

1. Environmental Issues

1. Social Issues

1. Organizational Issues

Data Section

1. External Environmental Data

1. Overview of Properties Owned

44 Financial/Non-Financial Highlights (11-Year/22-Period Summary)

Properties owned		Occupancy rate		Asset size
33		99.4%		206,339
			million yen
				Dividend	3,523
				per unit		yen

Who We Are

16 CEO's Message

Investment

Others

Credit ratings★

Dividend yield

20

External Environment (Initiatives of Fukuoka City)

22

Risks and Opportunities

type

14.0%

JCR: AA

4.1%

24

Investment Strategy

based on

Office buildings

(stable)

( acquisition price )

33.0%

R&I: A+

25 Management Strategy

Retail

gain

53.0%

LTV★

26

Financial Strategy

(stable)

Unrealized

43,026

Investment

Other

%

Editorial Policy

areas

Kyushu areas

41.7

million yen

based on

22.9%

We have issued our Integrated Report since fiscal

Positioning of This Report

( acquisition price )

Securities code

Accounting periods

2019 with the aim of imparting knowledge concerning

Fukuoka

the value creation process of the investment

8968

February

Financial

Non-Financial

metropolitan area*

The Report has been positioned as an important tool

corporation and the asset management company.

Information

Integrated

Information

77.1%

for engaging with our unitholders, investors, and other

・Earnings report

・Financial briefing materials

August

・Securities report

Report

・Online disclosure of

stakeholders. The International Reporting Framework

・Asset management

sustainability information

recommended by the IFRS Foundation and the

report

・Corporate profile

Ministry of Economy, Trade and Industry's Guidance for Collaborative Value

・Operating systems report

・PR information disclosure

* The Fukuoka metropolitan area includes Fukuoka City, Chikushino City, Kasuga City, Onojo City, Munakata City, Dazaifu City, Koga City, Fukutsu City, Itoshima City, Nakagawa City, Umi Town, Sasaguri Town, Shime Town,

Creation have been referenced in the preparation of this Report to ensure

Sue Town, Shingu Town, Hisayama Town, and Kasuya Town.

ease of understanding.

Glossary Credit rating

Through this Report, we aim to increase understanding of our efforts to

A grade that reflects the safety and creditworthiness of a company and its

enhance corporate value based on the basic philosophies of the investment

These materials might contain future performance projections, plans, management

ability to pay the principal and interest of bonds issued by the company

corporation and the asset management company as well as the value we

based on an analysis of the company's performance and financial condition.

targets, and strategies. These forward-looking descriptions are based on present

create in working to realize a sustainable society. We will continue striving to

LTV

assumptions on future events and trends in the business environment, but

make the Report an effective tool for facilitating constructive dialogue.

An abbreviation for Loan to Value, and an indicator of a company's borrowing

such assumptions might not necessarily be accurate. Actual results could differ

ratio as well as a measure of stability in borrowing. The lower the value, the

materially due to various factors. Neither Fukuoka REIT Corporation nor Fukuoka

greater the degree of safety against redemption of debt.

International Initiatives We Focus On

[Calculation method] LTV (%): Interest-bearing debt / Total assets multiplied by 100

Realty Co., Ltd., shall be liable for the accuracy, rationality, and completeness of

information contained in these materials, whether they were prepared by Fukuoka

REIT Corporation or Fukuoka Realty Co., Ltd., or provided by a third party.

Sustainable Development Goals (SDGs)

Principles for Responsible Investment (PRI)

Task Force on Climate-related Financial Disclosures (TCFD)

Note that all information in this document is current at the time of preparation

and is subject to change without prior notice.

The SDGs refer to the international goals

PRI comprises an international network of

Cognizant of the fact that climate change is a

These materials have not been prepared to entice investment.

set forth in the 2030 Agenda for Sustainable

financial institutions working to realize six

major issue facing the international community,

When applying to purchase investment units issued by Fukuoka REIT

Development adopted at the United Nations

principles for the finance industry with the aim of

in September 2022 we became a signatory of

Corporation, do so based on your own judgment and responsibility.

Any unauthorized reprinting, use, reproduction, distribution, or modification of

Summit in September 2015 as the successor to the

encouraging the incorporation of environmental,

the Task Force on Climate-related Financial Disclosures (TCFD) established

all or part of the content contained in this Report is expressly prohibited.

Millennium Development Goals (MDGs) established

social, and governance ("ESG") issues into investment decision-making

by the Financial Stability Board (FSB), having endorsed the recommendations

in 2001. Given the medium- to long-term expectations stakeholders have

processes. Fukuoka Realty Co., Ltd., endorsed and became a signatory of

of the TCFD that were announced in June 2017. We will strive to disclose

for the resolution of these challenges, our priority issues (materiality) were

PRI in September 2018 to promote the consideration of ESG issues in real

the impact of climate change and implement specific measures based

Note: Regarding amount, percentage, and ratio rounding: Unless otherwise noted, in these materials,

established in September 2019 with reference to the SDGs.

estate investment management operations and practices that conform to

on the recommendations of the TCFD in addition to continuing to reduce

monetary amounts are rounded down to the nearest whole unit, and percentages and ratios are

rounded off to one decimal place.

international standards.

environmental impact and contribute to the local community.

Growth Strategy

Sustainability

Data Section

Fukuoka REIT Corporation 2022

01

Overview of Fukuoka REIT Corporation

Name	Fukuoka REIT Corporation		Asset manager	Fukuoka Realty Co., Ltd.
Representative	Zenji Koike, Executive Director			Fukuoka Jisho Co., Ltd.
			Sponsors	SAIBU GAS HOLDINGS CO., LTD.
Security code	8968
	Kyushu Electric Power Co., Inc.
	(Shareholders of the	Kyudenko Corporation
	June 21, 2005		THE BANK OF FUKUOKA, LTD.

FRC's Characteristics

FRC has the following five main strengths.

Listed date	(Tokyo Stock Exchange, Fukuoka Stock Exchange)		asset management	THE NISHI-NIPPON CITY BANK, LTD.	Kyushu Railway Company
		company)	Development Bank of Japan Inc.
			Nishi-Nippon Railroad Co., Ltd.
Fiscal period	February and August

	History of Fukuoka REIT Corporation	Fukuoka Kyushu Actions
2005	● Listed on the Tokyo Stock Exchange and Fukuoka Stock Exchange	● Nanakuma subway line opens
● Property acquisitions: SunLive City Kokura, Sanix Hakata Building	● Kyushu National Museum opens
	●1st public offering (Offer price: 153,272 yen*)
2006	●10th anniversary of the opening of Canal City Hakata	● New Kitakyushu Airport opens
● Property acquisitions: Taihaku Street Business Center, Amex Akasakamon Tower, Square Mall
	Kagoshima Usuki, Kumamoto Intercommunity SC
2007	● Property acquisitions: Hanahata SC, City House Keyaki Dori	● Tenjin LOFT opens
2008	● Canal City Hakata South Building renovation (2nd floor)	● Kurume City, Fukuoka Prefecture, becomes a core city
● Property acquisitions: Kurume Higashi Kushiwara SC, K's Denki Kagoshima
2009	● Property acquisition: Higashi Hie Business Center	● Kyushu University Ropponmatsu Campus closes
(redevelopment project zone)
2010	● Canal City Hakata common space and Park Place Oita common space, tenant floor renovations	● Fukuoka Parco opens
	●2nd public offering (Offer price: 115,217 yen*)
2011	● IR Kyushu Workshop launch	● Kyushu Shinkansen Kagoshima route fully opens
● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2011
	● Property acquisition: Canal City Hakata・B
	● Opened LAOX/XEBIO in the Canal City Hakata South Building
2012	● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2012	● Fukuoka Urban Expressway fully opens and Kanjo Line opens
	● Property acquisition: Aqualia Chihaya
	●3rd public offering (Offer price: 142,116 yen*)	● Fukuoka City population tops 1.5 million
	●1st investment corporation bond issuance
2013	● JR Kyushu Cruise Train "Seven Stars in Kyushu"
● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2013
	begins operations
	● Property acquisitions: Tenjin Nishi-Dori Business Center Building, D-Wing Tower, Hotel FORZA Oita, Tenjin North Front Building
	●5:1 investment unit split implemented	● Fukuoka City designated a National Strategic Special Zone
2014	● Received the IR Excellent Company Encouragement Award (organized by Japan Investor Relations Association)
● Number of cruise ship port calls: 115
	● Property acquisitions: Tosu Logistics Center, Granfore Yakuin Minami
	●4th public offering (Offer price: 212,257 yen*)	● Tenjin Big Bang begins
2015	● Fukuoka REIT Corporation 10th anniversary	● Number of cruise ship port calls: 259 (shopping sprees)
	● Property acquisitions: LOGICITY Minato Kashii, Marinoa City Fukuoka (Marina Side Building)	● JR Oita City opens
	● Canal City Hakata 20th anniversary	● Higashi-Kyushu Expressway fully opens
2016	● Number of cruise ship port calls: 328
● Japan's largest 3D projection mapping and new Aqua Panorama fountain installed at Canal City Hakata
	● Vegefru stadium (new fresh produce market) begins at Island City
	●2nd investment corporation bond issuance
	● Park Place Oita 15th anniversary renovation	● Fukuoka City Science Museum opens
	● Canal City Hakata inbound sets new visitor record (17.02 million in fiscal 2017)
2017	● World Cultural Heritage registers heritage sites related to
● Property acquisition: LOGICITY Hisayama
	Kami-yadoru shima Munakata and Okinoshima
	(Asset management company)
	● Formulated Policies for Customer-Oriented Business Operations
	●5th public offering (Offer price: 164,414 yen*/3rd investment corporation bond issuance)
2018	● Property acquisitions: Konoha Mall Hashimoto, Higashi Hie Business Center II, Tissage Hotel Naha	● Fukuoka Jisho Co., Ltd., becomes a premium partner of
(Asset management company)
Avispa Fukuoka
	● Formulated the Sustainability Policy/Endorsed the Principles for Responsible Investment (PRI) and the Principles for
	Financial Action for the 21st Century (PFA21)/Certified as a "Fukuoka 'Work Style Reform' Promotion Company"
2019	● Received the rating of "4 stars" and "Green Star" in the GRESB Real Estate Assessment	● Private-sector outsourcing of Fukuoka Airport
● Became the first company in Kyushu to conduct borrowing via green loans	operations begins
	● Became the first J-REIT to publish an integrated report	● COVID-19 outbreak
2020	● Received the rating of "3 stars" and "Green Star" in the GRESB Real Estate Assessment	● TEAM FUKUOKA launched to attract international financial
	● Property acquisitions: Higashi Hie Business Center III, LOGICITY Wakamiya	functions to Fukuoka
	● Canal City Hakata opening 25th anniversary/Nitori Canal City Hakata opens
2021	● Received the rating of "4 stars" and "Green Star" in the GRESB Real Estate Assessment	● Tenjin Big Bang, Tenjin Business Center completed
● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2021
	● Property acquisition: Tenjin Nishi-Dori Business Center (Land with leasehold interest)
	● Partial revision to management guidelines/Set targets for materiality KPIs/Conducted borrowing via a
	sustainability-linked loan /Endorsed the TCFD recommendations
	● Received the rating of "4 stars" and "Green Star" in the GRESB Real Estate Assessment/Top "A" in
	the GRESB Public Disclosure	● Dontaku parade held for the first time in three years
2022	● Renewal opening of Park Place Oita's 3-floor,Shangri-la Zone	● Oiyama event of Hakata Gion Yamakasa Festival held for
	● Property acquisitions: Hakata Chikushi-Dori Center Building, Island City Minato Bay related site (land	the first time in three years
	with leasehold interest; conclusion of agreement; tentative name)
	(Asset management company)

• • Registration with Fukuoka City Well-Being & SDGs Registration System "Master"
• The investment corporation undertook a five-for-one investment unit split effective March 1, 2014. Accordingly, offer prices for the first to third public offerings have been divided by five.

1 Japan's first	2	Excellent portfolio	3	Solid support from a
region-specific		centered on the Fukuoka		sponsor company involved
REIT		metropolitan area		in property development
Asset management	A portfolio of carefully	Asset portfolio expansion and
leveraging our in-depth	selected investments in the	high occupancy rates facilitated
knowledge of the real	high growth area of Fukuoka	through coordination with our
estate environment	City, which is gaining attention	sponsors
of the Fukuoka and	in Japan and abroad
Kyushu areas

Canal City Hakata

〜Redevelopment project that took approximately 20 years to complete〜

Canal City Hakata is a multipurpose retail facility that opened in 1996 as an urban redevelopment project based on the concept of "urban theater."

Canal City Hakata is located between the Tenjin district̶which forms the commercial center of Fukuoka City̶and the business district centering on JR Hakata Station, and is close to the famous entertainment area Nakasu and Kushida Shrine, which once flourished as a community of Hakata merchants and is famous throughout Japan for the Hakata Yamakasa Festival. Canal City Hakata was designed by American architect Jon Jerde. The project site was the former location of the Hakata Silk Cotton Spinning Company (later the Hakata Factory of Kanegafuchi Spinning, hereafter the "Kanebo Factory"). It had become a forgotten plot of land at the heart of Fukuoka City that had lost the urban functions that once helped develop modern society.

In 1977, Fukuoka Jisho acquired a portion of the former Kanebo Factory site, which is an area of approximately 3,000 tsubo. At the time, the area was being planned as a redevelopment for condominiums, but the concept was reworked many times in the hope of "reviving Hakata as a commercial city." In 1982, a basic development concept was formulated and a master plan was announced the following year, but the redevelopment was temporarily postponed due to the poor earnings for key tenants. In 1988, a major step toward realization was finally taken, and Canal City Hakata opened on April 20, 1996, as a catalyst to revitalize the central part of the downtown area, which had become stagnant, and to promote the balanced development of the entire city center. Traffic congestion on surrounding roads that had been a concern before the opening was addressed through road maintenance in cooperation with the local government, and a pedestrian bridge was constructed to connect to the Kamikawabata Shopping Arcade. Accordingly, the opening of Canal City Hakata has led to the revitalization of the Kamikawabata Shopping Arcade and surrounding areas.

Source: Prepared by Fukuoka Realty Co., Ltd., based on the Canal City Hakata Concept Book

4	Establishment	5	Stable dividends
	of a stable		and steady NAV
	financial base		growth since listing
Conservative control	Appropriate management of
of the interest-bearing	real estate investments
debt ratio and long-
term diversification of
repayment deadlines

• Before completion

Kanebo Factory in 1957. The Japan National Railways tracks and a service line are visible in the foreground.

• Completion

Fulfilling new urban functions, enhances circulation to Tenjin and Hakata while connecting the surrounding areas of Kawabata and Sumiyoshi.

• After Completion

Five million people visited Canal City Hakata in the first two months after its opening. The "urban theater" was born, creating a variety of ripple effects in the surrounding area.

Who We Are

Growth Strategy

Sustainability

Data Section

Glossary Sustainability-linked loan	Investment corporation bond
Sustainability-linked loans are loans that encourage borrowers to meet	Bonds issued by investment corporations in accordance with the Act on Investment Trusts and
ambitious sustainability performance targets (SPTs).	Investment Corporations and are equivalent to corporate bonds of stock companies. Bonds
02	are issued as a means of fund procurement, and are used mainly for acquisition of real estate,
repair, and maintenance of existing properties, and repayment and redemption of borrowings.

Glossary NAV
NAV is an abbreviation for Net Asset Value at an investment trust. Net assets are defined as total	[Calculation method] NAV: Net assets + Unrealized gains or losses - Dividends
investment trust balance sheet assets minus liabilities, with the base price based on the number	Market net assets value per unit: NAV / Total number of units issued
of units. For REITs, the term net assets refers to net assets plus unrealized gains or losses	Fukuoka REIT Corporation 2022
reflecting the difference between the book value of the property owned and the appraised value.

03

Relationship with Fukuoka Realty Co., Ltd.

Fukuoka REIT Corporation ("FRC") comprises one Executive Director and two Supervisory Directors, and actual investment management is contracted to our asset manager, Fukuoka Realty ("Fukuoka Realty"). As such, FRC and Fukuoka Realty are treated as one entity in this document in reporting on the value created for stakeholders.

FRC's Basic Policy

Corporate Profile of Fukuoka Realty Co., Ltd.

Listed on the real estate investment trust sections of the Tokyo	Located in Fukuoka City and comprising 41 employees with
and Fukuoka stock exchanges, Fukuoka Realty Co., Ltd., is FRC's	a variety of experience in real estate, finance, and other fields,
asset management company.	Fukuoka Realty possesses a high level of expertise and makes
Based on an asset management agreement concluded with FRC,	full use of information unique to the local area in managing FRC's
Fukuoka Realty is entrusted with the key operations of "acquiring	assets.
and selling assets," "asset rental management," and "financing."

Who We

【Our Mission】

Taking advantage of our strength in knowing the local characteristics of real estate, which is a region-specific business, we invest in real estate for rent in the Fukuoka and Kyushu areas. By appropriately managing the invested real estate, we will achieve stable earnings over the medium to long term while making efforts to keep providing stable dividends for the future.

【Act Local】

We̶FRC and Fukuoka Realty̶are currently the only listed real estate investment corporation and asset management company registered outside the Tokyo metropolitan and Kansai areas under the provisions of the Act on Investment Trusts and Investment Corporations as well as the Financial Instruments and Exchange Act.

As a region-specific REIT, FRC seeks differentiation in the selection of investment target properties and the management of owned assets through the enhancement of its information gathering ability and ability to discern the profitability of properties

by utilizing its speed and depth of information based on knowledge of local land and a broad network centering on local governments and the business world.

【Think Global】

We will proactively engage in IR activities to fulfill our accountability to global capital markets. In conjunction, we will take heed of Fukuoka Realty's corporate governance and compliance.

Regarding real estate and financial markets, FRC will keep closely tracking movements occurring across the whole of Japan and the entire world, taking into consideration the logic of capital markets with global ideas, and appropriately reflecting such in our asset management.

We will also keep diligently pursuing dialogue with investors, focusing on fulfilling our accountability, and utilizing Fukuoka Realty's fund management skills for investors under a strict compliance policy.

Real Estate	Real Estate Investment Trust
Investors

	Fukuoka REIT Corporation
Holdings	［ Securities code: 8968 ］
Investments
Rents	Dividends

Company entrusted

with asset

management

Asset management company

Are

Growth Strategy

Contribution to Regional Revitalization and Development of Attractive Communities

Fukuoka Realty Co., Ltd.

FRC and Fukuoka Realty believe that attracting domestic and foreign excellent investment funds to regional real estate financial markets will stimulate community development in the Fukuoka and Kyushu areas. Although we are not directly involved

in community development or real estate development, we expect our acquisition of properties to lead to new funds passing to sellers and part of those funds being directed to new development, etc.

With funds injected into FRC from Japan and abroad, new

as a whole. Based on this perspective, we believe that we can contribute to regional revitalization and community development in the Fukuoka and Kyushu areas.

Funds will be returned to unitholders by distributing the earnings from owned assets.

Through the promotion of community development and the revitalization of regional economies in the Fukuoka and Kyushu areas, we will aim for FRC earnings stability.

Leading companies in Fukuoka and the Kyushu areas that are in agreement with FRC's concept participate as shareholders (sponsors) of Fukuoka Realty. FRC aims to achieve sustainable growth as a REIT through the expanded scale of its assets through the contribution of excellent properties from among our sponsors

5%

5%		5%

Sustainability

investment funds will flow to the Fukuoka and Kyushu areas

and by actively leveraging their support, including the provision of relevant information.

THE BANK OF

FUKUOKA, LTD.

THE NISHI-NIPPON

CITY BANK, LTD.

Development Bank

of Japan Inc.

Act Local

Real estate is a local business

Distinctive capability for gathering qualitative information on the real estate market (speed, in-depth information)

Specialization in local properties

Investment Policy

Our Mission	Think Global	Investment target areas	Investment type
Region-Specific REIT
Aim to achieve the best	Capital market theory	Fukuoka	Retail
interests of unitholders by	Accountability and transparent	metropolitan area	40％-70％
leveraging our expertise	dialogue with investors	60％-90％
in the local real estate	Decent policy to comply

With regard to the properties owned and developed by the sponsor companies, Fukuoka Jisho Co., Ltd., FRC, and Fukuoka Realty have concluded a pipeline support memorandum of understanding (MOU) to seek stable and continuous acquisition opportunities.

55%

Fukuoka Jisho

Co., Ltd.*

Directors		Outside
Fukuoka Realty	directors
	Co., Ltd.
	(Asset manager)

10%

Kyushu Electric Power Co., Inc.

Data Section

Solid network among local governments and the business world

markets of Fukuoka	Fund management skills	Office buildings
and Kyushu	Other Kyushu areas
(including Okinawa and	20％-50％
	Yamaguchi prefectures)
	10％-30％
	Others	Others
	0％-10％	(Logistics, Residence,
	Hotel, etc.)

0％-30％

5%		5%		5%		5%
SAIBU GAS	Kyudenko	Nishi-Nippon	Kyushu Railway
HOLDINGS CO., LTD.	Corporation	Railroad Co., Ltd.	Company

* Concluded MOU with FRC and Fukuoka Realty Co., Ltd., concerning pipeline support.

Glossary Pipeline support agreement

Pipeline support agreements refer to contracts that provide the opportunity to acquire a property from a sponsor in advance of and in priority to a third party

04

Fukuoka REIT Corporation 2022

05

Management Strategy See p.25

Community-Based

Initiatives See p.37

Value-Creation Story

Our	Act Local, Think Global
Mission

Vision	Promote Attractive Urban Development in the
Fukuoka and Kyushu Areas

Main management resources (Inputs)

Business activities

Total 33 properties	Outcome	Value creation with stakeholders

Who We Are

Financial	Building of a solid financial base through
capital	conservative control of LTV
	• LTV …………………………………… 41.7%
	• Fixed rate……………………………… 93.4%

Manufacturing
capital	Finding excellent properties that can generate
	stable cash flow over the long term

	• Excellent human resources with specialized skills
	• Support framework for flexible working styles
Human	• Support system for career development
• Number of full-time officers
capital
	and employees*: ………………………… 41
	• Number of qualification holders*:
	Real estate appraisers 1 / Attorney 1 /
	First-class registered architects 1 / MBA 2
	*Fukuoka Realty Co., Ltd.
	• A varied skill set formed through human
Intellectual	resource training
• Experience and knowledge of IR
capital
	activities based on long years of practical
	implementation

• Gathering of information deeply rooted in local

communities

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See p.42

Retail 11 properties

Office buildings 11 properties

Residences 5 properties

Financial capital

• TSR for past 10 years Annual rate 8.1%

• Dividend per unit /	3,523 yen
Average interest rate paid	4.1%

• Credit ratings JCR: AA- (stable), R&I: A+ (stable)

Manufacturing capital

• NOI yield

5.2％

• Unrealized gain 43,026 million yen

• NAV per unit

178,348 yen

Human capital

• Number of qualification holders: Real estate brokers 56.1%
  out of 41 full-time officers and employees / ARES Certified Masters 43.9%
  out of 41 full-time officers and employees

Intellectual capital

• Number of IR interviews during the year In Japan 184, Abroad 22 (including telephone conferences)
• Track record of winning awards
  IR Excellent Company Encouragement Award (2014) / Nikko Excellent IR Website Award (2021)

Social relationship capital

• Human resource exchanges with sponsors (e.g., 3 people accepted from sponsors, 8 people dispatched to sponsors)

Clients/Tenants	Management Strategy See p.25
Initiatives at Facilities See p.34

＜Office Buildings＞

・Create business opportunities, attract companies from other countries and other regions in Japan, and establish a place for start-ups to flourish

＜Commercial＞

・Increase users, create employment, and generate synergies between tenants (differentiate from shopping centers)

Region and Society

＜Commercial and Hotel＞

・Provide new discoveries for users and enhance satisfaction (e.g., first store in Kyushu) ・Revitalize interaction with surrounding regions through community-based initiatives

・Make it fun to go out and invigorate regional interaction

＜Logistics＞

・Increase convenience for the general public by upgrading local distribution networks

Employees	Sustainability See p.29
Employee Initiatives See p.36

・Improve experiences through human resource exchanges and rotation ・Increase motivation through participation in urban development, etc.

・Enhance personal connections and capabilities based on various experiences through connection with society

・Boost employees' job and personal satisfaction through a focused human resource strategy

・Enhance systems that enrich people's lives and encourage them to remain in service for longer

Unitholders/	Investment Strategy See p.24
Financial Institutions	Redevelopment Project in
・Create investment opportunities in real	Fukuoka City See p.21
estate in the Fukuoka and Kyushu areas

・Convey the appeal of the Fukuoka and Kyushu areas by enhancing information disclosure

・Ensure the stable return of profits and secure opportunities for growth through appropriate investment and management in response to unitholder feedback

・Maintain good relationships with financial institutions and ensure the appropriate return of profits

Growth Strategy

Sustainability

Social	• Co-creative and trusting relationships with
tenants

relationship	• Cooperative framework with property
capital	management (PM) companies
	• Coordination with local society, local communities
	• Maintenance of good relationships of trust
	with sponsors

Natural	• Energy, water, air, and other natural resources
capital	used in the operation of properties owned
	• Natural environment and biodiversity in the
	areas around properties owned

	External Environment See p.20
	Response to ESG issues
Sustainability	See p.29	Environmental Issues	See p.32
Social Issues	See p.36	Organizational Issues	See p.38

Risks and Opportunities See p.22

	• Improvement of office environments		Sponsors	Investment Strategy See p.24
	(introduction of meeting booths, plants		Redevelopment Project in
Logistics 4 properties
and other greenery)
・Provide funding for new property development	Fukuoka City See p.21
	• Implementation of COVID-19 tenant support
	・Support developments over the medium to long term that lead to local advancement
	measures (assistance with vaccinations as	・Engage in collaborative projects to enable efficient and productive property
	requested and other support)		management
		・Strengthen development and operational capabilities through ongoing
	Natural capital		information exchange
	・Bolster human capital through human resource exchanges
	• Green building certification rate (total floor
		Environment/
	space basis) 77.8％		Environmental Initiatives See p.32
	• Reduction of electricity usage and		Nature
Hotels 2 properties
・Promote environmental conservation through investment in properties with
water consumption at properties owned
		high environmental performance
	Electricity usage reduced by 8.84%
	・Contribute to sustainability in the Fukuoka and Kyushu areas over the medium
	compared with 2019
		to long term through active participation
	Water consumption reduced by 31.14%	・Co-create in harmony with nature through proactive environmental initiatives in
	compared with 2019		the real estate market
		・Engage in real estate development that takes advantage of the nature found in Kyushu
				As of August 31, 2022

Data Section

Related Stakeholders

Clients/Tenants		Region and Society		Employees
		Population of the 6 prefectures		Number of full-time officers
Total tenants in all properties: 1,021
	we have properties in: Approx. 11,774,000		and employees: 41
• Customer satisfaction surveys at retail facilities	• Organizing community and other events utilizing facility common areas	• Various employee education systems
• Tenant satisfaction surveys	• Active participation in the Hakata Town Planning Promotion Council's	• Employee satisfaction surveys
		activities	• Career interviews with employees
		• Announcement of financial results by the Fukuoka Stock Exchange

						Glossary	TSR
Unitholders/Financial Institutions				Environment/Nature
	Sponsors				An abbreviation for Total Shareholder Return.
No. of unitholders: 13,554			Property location/Six prefectures			This can also be called total shareholder
	Sponsors: 9
No. of financial institutions we deal with: 22			(Fukuoka/Saga/Kumamoto/			(investor) yield and reflects combined capital
				Oita/Kagoshima/Okinawa)
• General Meeting of Unitholders	• Contribution of excellent
		gains and dividends, reflecting the overall
• Results briefings for investors		properties	• Environmental preservation (Electricity		investment yield for investors.
• 1-on-1 meetings (Japan and overseas)	• Ongoing information exchange	and water conservation)		[Calculation method] TSR (%): (Dividend per
	• Human resource exchanges	• Green Building certification		unit + Increase in investment unit price) / Initial
							investment unit price multiplied by 100

06

Fukuoka REIT Corporation 2022

07

Value-Creation Activities

h c r a e s e

R

			Acq	uis
			ition
				s
			es	s
				tr
		in			at
	s					e
u							g
B									y
	Act Local,			M
			a
			n
										a
Think Global	g
e
m
										e

Investment Strategy See p.24

Management Strategy See p.25

									n
									t
		M			y
			it
M				aterial
a									d
n	a	ge
						n
			m			n,
sa		ent, valuatio	t
		le	s /
				en
					Replacem

Strengths and	characteristics of the	value creation process
	Related capital
Challenges and initiatives	to further strengthen	value creation

Financial Strategy

See p.26

Research

Human resources who are familiar with the area and have built trusting relationships collect high-quality information on properties from sponsors and the community

• Property appraisal skills unique to a local person
• Robust network
• Market research and analysis
• Intellectual capital

(information-gathering ability)

• Human capital

(know-how)

• Social relationship capital

(relationships of trust, cooperation and collaboration)

• Employment of exceptional human resources required for suitable business execution
• Asset portfolio expansion and realization of high occupancy rates

See p.24

Fund procurement (financing)

Acquisition

Acquisition of excellent real estate in the Fukuoka and Kyushu areas through sponsor companies and local communities

• Discovery and acquisition of properties that can generate stable cash flow
• Improvement of property value
• Financial capital

(financing ability)

• Manufacturing capital

(excellent properties)

• Human capital

(discerning eye, expertise)

• Diversification in fund procurement
• Discovery of excellent properties using networks we created

See p.24

Information communication (IR/SR)

Management

Constant forward-looking

management with an attention to detail unique to a region- specific REIT

• Stable cash flow
• Derive maximum value from our real estate portfolio over the long term
• Human capital

(know-how)

• Social relationship capital

(relationships of trust, cooperation and collaboration)

• Natural capital

(natural environment)

• Maintenance of NOI in existing properties
• Essential environmental initiatives

See p.25

Management,

Valuation, and Sales/

Replacement

Portfolio management from a medium- to long-term perspective and appropriate financial strategies

• Sound financial position
• Realization of stable distributions and dividends
• Financial capital

(management know-how/ performance)

• Human capital

(know-how)

• Social relationship capital

(relationships of trust, cooperation and collaboration)

• Management focused on long- term fixed interest rate entities and financial stability
• Management that emphasizes the best interests of unitholders

See p.26

Who We Are

Growth Strategy

Sustainability

Data Section

Related Stakeholders

Clients/Tenants

Total tenants in all properties: 1,021

• Customer satisfaction surveys at retail facilities
• Tenant satisfaction surveys

08

Region and Society		Employees		Unitholders/Financial Institutions
Population of the 6 prefectures		Number of full-time officers		No. of unitholders: 13,554
we have properties in: Approx. 11,774,000		and employees: 41		No. of financial institutions we deal with: 22
• Organizing community and other events utilizing facility common areas	• Various employee education systems	• General Meeting of Unitholders
• Active participation in the Hakata Town Planning Promotion Council's	• Employee satisfaction surveys	• Results briefings for investors
activities	• Career interviews with employees	• 1-on-1 meetings (Japan and overseas)
• Announcement of financial results by the Fukuoka Stock Exchange

		Environment/Nature
Sponsors
	Property location/Six prefectures
Sponsors: 9
	(Fukuoka/Saga/Kumamoto/
• Contribution of excellent	Oita/Kagoshima/Okinawa)
properties	• Environmental preservation (Electricity
• Ongoing information exchange	and water conservation)
• Human resource exchanges	• Green Building certification

Fukuoka REIT Corporation 2022

09