Fukuoka Reit Corporation · TSE:8968
Fukuoka Reit — 6th Fiscal Period Earnings Presentation
59 slides from Fukuoka Reit's earnings presentation, October 2007
Slide 1: Overview of 6th Fiscal Period Performance
Fukuoka REIT Corporation (8968) http://www.fukuoka-reit.jp Overview of 6th Fiscal Period Performance Fukuoka Realty Co., Ltd. (March 1, 2007 – August 31, 2007) 1
Slide 2: REIT Overview
REIT Overview Profile Profile Investment Investment Unit Unit Price Price 【Name】 Fukuoka REIT Corporation 【Current Price】 960,000 yen (as of August 31, 2007) 【Asset Manager】 Fukuoka Realty 【Outstanding Units】 107,050 【Market Cap】 102.768 billion yen (as of August 31, 2007) 【Sponsors】 Fukuoka Jisho,
Slide 3: Table of Contents
Table of Contents 1. Financial Statement 4 2. Portfolio 13 3. Strategy 24 4. Compliance 29 5. Appendix 33 These materials may contain future performance, plans, management targets and strategies. These forward-looking descriptions are based on present assumptions on future events and trends in the b
Slide 4: Financial Statement
Financial Statement (Presentation of Accounts for Sixth Fiscal Period)
Slide 5: Settlement Highlights of the 6th Fiscal Period (ended August 2007)
Financial Statement Settlement Highlights of the 6th Fiscal Period (ended August 2007) Primary Factors for Period-on-Period Variation in Net Profit Compared 6th Fiscal Period 5th Fiscal Period Category March 1, 2007 - September 1, 2006 - Variation Factors for increase August 31, 2007 February 28, 20
Slide 6: Profit and Loss Statement for the 6th Fiscal Period
Financial Statement Profit and Loss Statement for the 6th Fiscal Period (ended August 2007) Primary Factors for Period-on-Period Variation (unit: thousand yen) Increase Increase in in operating operating revenues revenues 6th Fiscal Period 5th Fiscal Period Variation (1) Contribution of Hara SATY ac
Slide 7: Balance Sheet for the 6th Fiscal Period
Financial Statement Balance Sheet for the 6th Fiscal Period (ended August 2007) (unit: thousand yen) (unit: thousand yen) 6th Fiscal Period 5th Fiscal Period 6th Fiscal Period 5th Fiscal Period (as of February 28, Variation Variation (as of August 31, (as of August 31, 2007) (as of February 28, 2007
Slide 8: Cash Flow Statement for the 6th Fiscal Period
Financial Statement Cash Flow Statement for the 6th Fiscal Period (ended August 2007) (unit: thousand yen) 6th period (184 days) 5th period (181 days) March 1, 2007 – August 31, 2007 September 1, 2006 – February 28, 2007 Ⅰ Cash flows from operating activities Net Profit before tax 1,966,802 1,866,09
Slide 9: Leasing Business Income and Expenditure
Financial Statement Leasing Business Income and Expenditure (unit: million yen) SunLive Kumamoto Gofuku Taihaku Amex Canal Park Kominedai Square Mall Inter Hara Canal City machi Sanix Street Akasaka Category City Place City Community Kagoshima community SATY Business Business Hakata Business mon Tot
Slide 10: Forecasts for 7th and 8th Fiscal Periods
Financial Statement Forecasts for 7th and 8th Fiscal Periods 8th Fiscal Period 7th Fiscal Period 6th Fiscal Period 5th Fiscal Period 4th Fiscal Period 3rd Fiscal Period (forecast) (forecast) (results) (results) (results) (results) Category March 1, 2008 – September 1, 2007 – March 1, 2007 – Septembe
Slide 11: Status of Interest-bearing Debt
Financial Statement Status of Interest-bearing Debt Total interest-bearing debt as of the end of the 6th fiscal period 44.1 billion yen (Note) The above figures have been calculated by setting the end of the 6th fiscal period (August 31, 2007) as the first day for calculation. 11
Slide 12: Itemization of Borrowings
Financial Statement Itemization of Borrowings (as of August 31, 2007) Repayment Annual Type Lender Amount (JPY) Borrowing Date Payment Method Interest Description Maturity Interest Nishi-Nippon City Bank 2,000,000,000 Feb 27, 2007 Feb 27, 2008 Lump sum upon maturity 1.05333％(*1) Floating Sumitomo Tr
Slide 13: Portfolio
Portfolio
Slide 14: J-REIT Specialized in Fukuoka/Kyushu Area
Portfolio J-REIT Specialized in Fukuoka/Kyushu Area Supported by Kyushu Business World Investment Policy 14
Slide 15: Portfolio Map
Portfolio Portfolio Map Taihaku Street Business Center Gofukumachi Business Center Sanix Hakata Building Center Building : ; SunLiveCity Canal City Business iI Hil | Kokura Class A Building Class A Building \ Class A Building Park Place Oita \ Fukuoka Airport City House Keyaki Dori ‘scheduled for ac
Slide 16: Portfolio Table
Portfolio Portfolio Table Acquisit Total ion Acquisition Tenants at Leasable Area Occupancy Age (planned) Source Primary Tenants at End of Period Property Name (planned) (Note 3) End of (2 top tenants for each property) at End of at End of (Note 1) Price Timing Period Period Period (mm yen) (Note 2)
Slide 17: List of Property Prices
Portfolio List of Property Prices Most Recent Most Recent DCF Method Acquisition Acquisition Appraisal Capitalization Acquisition Most Recent Appraisal (mm yen) (Note 5) (planned) CAP CAP Method Property Name (planned) Appraisal Appraisal Company Timing Price (mm yen) (NCF base) (NCF base) Appraisal
Slide 18: History of Occupancy Rate by Property
Portfolio History of Occupancy Rate by Property Portfolio occupancy of 99.7% during the 6th 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. 18
Slide 19: History of Retail Property Sales
Portfolio History of Retail Property Sales (Note) This represents a monthly tally of sales for each store at Canal City Hakata. (Note) This represents a monthly tally of sales for each store at Park Place Oita. (Note)This represents a monthly tally of sales for SanLiveCity Kokura without showing the
Slide 20: Rental Portfolio (including common expenses)
Portfolio Rental Portfolio (including common expenses) (Note 2) (Note 4) (Note 1) (Note 3) (Note 1) Figures in the pie graphs do not include the rents (including common expenses) of Kominedai Community Mall, which was sold on March 9, 2007. (Note 2) Ratios indicated in the pie graphs are figures obt
Slide 21: Breakdown of Tenant Rent Types for Retail Properties
Portfolio Breakdown of Tenant Rent Types (including common expenses) for Retail Properties (Note 1) Figures in the pie graphs do not include the rents (including common expenses) of Kominedai Community Mall, which was sold on March 9, 2007. (Note 2) "Fixed rent tenants" are tenants whose monthly ren
Slide 22: Overview of Top 10 Tenants
Portfolio Overview of Top 10 Tenants Total Remaining Leasing Ratio Rank Store Tenant Property Leased Areas Rent Structure Contract Type contract years (m2) (%) (years) Jusco Park Place Oita Fixed / Ordinary Lease/ Fixed- 14 1 AEON Kyushu Park Place Oita, Hara SATY 86,169.09 26.3 term Lease /Hara SAT
Slide 23: Plan to Expand Floors at Park Place Oita
Portfolio Plan to Expand Floors at Park Place Oita Illustrative image of the patio to be newly built and the portion of increased floors ● Park Place Oita Address: 1-1, 2-chome, Koen Dori Nishi, Oita City Land area: 179,491.81m2 Total floor area: 75,699.92m2 Leasing floor area: 100,925.97m 2 (Includ
Slide 24: Strategy
Strategy
Slide 25: Fukuoka REIT's Strategy for the Post Subprime Mortgage Loan Issue
Strategy Fukuoka REIT’s Strategy for the Post Subprime Mortgage Loan Issue 25
Slide 26: Investment Categories
Strategy Investment Categories Current Investment Ratio Use Category Definition and Key Investment Factors (based on the acquisition (planned) price) ● Strong properties that satisfy Canal City Fukuoka REIT’s own Class A standards Gofukumachi Business Center Buildings (location, size, specs, age, et
Slide 27: Future Strategy by Investment Category
Strategy Future Strategy by Investment Category Properties Located in City Centers Suburban Properties (Class A Office Buildings and Urban SCs) (Regional SCs and Community SCs) Fukuoka: 5.0% (Tokyo: 4.2%) [April 2007] *Source: "Survey of Real Estate Investors" by Japan Real Estate Institute Fukuoka:
Slide 28: External Growth Roadmap
Strategy External Growth Roadmap (Note 1) This is a preferred silent partnership interest in CCH Bridge YK, the SPC that is the operator that manages the portion owned by Canal City Hakata SPC. (Note 2) This has been calculated by combining the acquisition prices of owned properties as of the end of
Slide 29: Compliance
Compliance
Slide 30: Organizational Structure of Asset Manager
Compliance Organizational Structure of Asset Manager Organizational Chart of Fukuoka Realty Full-time directors and employees: 40 (as of October 1, 2007) ■Investment Management Committee (8) President, Vice President, Senior Managing Director, Managing Director, Investment Department General Manager
Slide 31: Introduction of New Executives
Compliance Introduction of New Executives 31
Slide 32: Decision-Making Process of Fukuoka REIT
Compliance Decision-Making Process of Fukuoka REIT 32
Slide 33: Appendix
Fukuoka REIT
Slide 34: New Properties to be Acquired in the 7th Fiscal Period
Appendix New Properties to be Acquired in the 7th Fiscal Period (Hanahata SC and City House Keyaki Dori) Community SC Residential City House Keyaki Dori Characteristics Hanahata SC Sep 3, 2007 1.13 bn yen 6.4％ • Near the Tenjin district with good access and walking distance from Tenjin Station and A
Slide 35: Retail Property Description: Canal City Hakata and SPC
Appendix Retail Property Description: Canal City Hakata and SPC Urban SC Canal City Hakata (red line) Characteristics • Within walking distance from Hakata Station and located near the popular area of Nakasu • Renowned tourist destination in Fukuoka with over 10 million visitors a year • Distinguish
Slide 36: Retail Property Description: Park Place Oita and SunLiveCity Kokura
Appendix Retail Property Description: Park Place Oita and SunLiveCity Kokura Regional SC Park Place Oita Nov 9, 2004 15.7bn yen 6.6％ Characteristics • Located in new town development next to Oita Prefectural Sports Park (World Cup Soccer Stadium) • Near Oita-Mera Interchange with parking for about 4
Slide 37: Retail Property Description: Square Mall Kagoshima Usuki and Kumamoto Intercommunity SC
Appendix Retail Property Description: Square Mall Kagoshima Usuki and Kumamoto Intercommunity SC Community SC Square Mall Kagoshima Usuki Sep 28, 2006 5.3bn yen 6.2％ Characteristics • Located at one of the busiest thoroughfares of Kyushu (along Prefectural Highway 217) with 42,000 cars passing per 1
Slide 38: Hara SATY and Amex Akasakamon Tower
Appendix Retail and Residential Property Description: Hara SATY and Amex Akasakamon Tower Regional SC Hara SATY Mar 1, 2007 5.41bn yen 6.8％ Characteristics • Excellent location for retail property in Fukuoka suburb • 286,000 people within 3km radius (equivalent to a suburb in the Tokyo metropolitan
Slide 39: Office Property Description: Canal City Business Center and Gofukumachi
Appendix Office Property Description: Canal City Business Center Building and Gofukumachi Business Center Class A Building Canal City Business Center Building Nov 9, 2004 14.6bn yen 6.3％ Characteristics • Pioneer of multi-use office and retail complexes • Enjoys benefit of popularity and name recogn
Slide 40: Office Property Description: Sanix Hakata Building and Taihaku Street
Appendix Office Property Description: Sanix Hakata Building and Taihaku Street Business Center Class A Building Sanix Hakata Building Sep 30, 2005 4.4bn yen 5.9％ Characteristics • Two-minute walk from Hakata Station (Shinkansen), and Fukuoka Airport is a mere five-minute subway ride away • The conce
Slide 41: Office Market in Fukuoka
Appendix Office Market in Fukuoka Changes in Average Rent of Office Buildings Vacancy Rate of Office Buildings (excluding common expenses) (Note) Each of the above graphs was prepared by Fukuoka Realty based on office market reports by CB Richard Ellis and data provided by Ikoma Data Service System.
Slide 42: Case Study of Fukuoka Office Market
Appendix Case Study of Fukuoka Office Market Survey on leasing status of offices representing each area (Note) The above data has been prepared by Fukuoka Realty based on a variety of materials. Some newly built office buildings have successfully concluded leasing contracts at rates about 20% higher
Slide 43: Standard Land Price in Fukuoka City
Appendix Standard Land Price in Fukuoka City Percentage of Change in Fukuoka City Land Prices Percentage of Change in Fukuoka City Land Prices (2005 - 2006) (YOY) (2006 - 2007) (YOY) (Note 1) All of the reference sites for the land study located in central Fukuoka City are shown. (Note 2) The red ba
Slide 44: Real Estate Transaction Cases around Hakata Station
Appendix Real Estate Transaction Cases around Hakata Station Major transaction cases in 2006 through the end of August 2007 The tenth largest rise in standard land price in Japan →Real estate transaction cases by J-REITs →Real estate transaction cases by parties other than J-REITs (local real estate
Slide 45: CAP Analysis
Appendix CAP Analysis (Source) Prepared by Fukuoka Realty based on the “Real Estate Investor Survey” by Japan Real Estate Institute 45
Slide 46: Population Growth in the Fukuoka Metropolitan Area
Appendix Population Growth in the Fukuoka Metropolitan Area Population Change in Principal Metropolitan Areas in Japan Personnel Exchange within Kyushu as Seen in (Indicated by index with figures in 1985 as 100) Students Entering Universities (Note) Actual results for fiscal 2006, excluding students
Slide 47: Size of the Fukuoka Metropolitan Area
Presentation of Accounts for Fifth Fiscal Period Portfolio Acquisition Strategy Management Finance Compliance Environmental Analysis and Management Policy Appendix Size of the Fukuoka Metropolitan Area Populations Populations of of Major Major Japanese Japanese Metropolitan Metropolitan Areas Areas
Slide 48: Where is Fukuoka / Kyushu
Where is Fukuoka / Kyushu Tokyo Osaka Kyushu Region Fukuoka Pref. ■ 7 prefectures ■ 1.5h flight from Tokyo, Seoul, ■ “#16” GDP in the world Shanghai ■ 14mm Population ■ Population: 2.47mm ■ Industry (Metropolitan Area), 5mm －Semiconductor (Pref.) －Automotive ■ Strong history of commerce －Processed f
Slide 49: Kyushu's GDP is Near Australia's in Size
Kyushu's GDP is Near Australia's in Size Country Comparison of Kyushu's GDP (Source)Global Statistics 2005: National Economic Figures issued by the Statistics Bureau of the Ministry of Internal Affairs and Communications and the 2004 Prefectural Citizens Economic Figures issued by the Cabinet Office
Slide 50: Strong Capital Investment in Kyushu
Appendix Strong Capital Investment in Kyushu Long-term Trend of Capital Investment Locations of Major Plants Related to Automobiles and Semiconductors Capital investment in Kyushu continues strongly Large manufacturers actively continue investment in Kyushu Toyota Motors Kyushu, Kanda Plant (Kanda-m
Slide 51: New Concentration of Industry Starts to Bud (Solar Island)
Appendix New Concentration of Industry Starts to Bud (Solar Island) Facilities involved in producing thin-film solar batteries in Kyushu Nishinihon Shimbun newspaper, March 9, 2007 (9th page) (Source) Prepared by Fukuoka Realty based on the “Emerging New Industrial Concentration” by Development Bank
Slide 52: Consumption Trends
Appendix Consumption Trends Fluctuations in Monthly (YOY) Comparisons of Large Retail Store Sales (May 2006 - July 2007) Source: Commercial Sales Statistics issued by the Ministry of Economy, Trade and Industry (Reference) Year-on-year comparison for the immediate past year (August 2006 – July 2007)
Slide 53: Significance of Community SC
Appendix Significance of “Community SC” 53
Slide 54: Analysis of Investor Attributes and Volume Ownership Reports
Appendix Analysis of Investor Attributes and Volume Ownership Reports Distribution by Investor Category Major Investors (End of 6th Fiscal Period) (Breakdown of Investment Units) Filing of Volume Ownership Report (as of September 28, 2007) 54
Slide 55: History of Investment Unit Price
Appendix History of Investment Unit Price History of Investment Unit Price 55
Slide 56: Risk Dispersion Effects of Incorporating FRC into Portfolio
Appendix Risk Dispersion Effects of Incorporating FRC into Portfolio Comparison of effective frontiers that incorporate FRC or not 【Calculation methods, etc.】 (From the listing of FRC [June 21, 2005] to September 28, 2007) ・Two types of portfolio have been assumed: portfolio comprising seven J-REITs
Slide 57: Canal City Hakata II and New Hakata Station Building
Appendix Canal City Hakata II and New Hakata Station Building to Change the Hakata Station Area In 2011, the Hakata Station area will simultaneously see the full opening of the Kyushu Shinkansen, opening of the New Hakata Station Building and the birth of Canal City Hakata II. Given this development
Slide 58: Fukuoka City Management Study Group
Appendix Fukuoka City Management Study Group What is Fukuoka City Management Study Group? Young businessmen who work in Fukuoka and love Fukuoka have voluntarily formed a group to promote “town creation” of Fukuoka. “Town creation” has been promoted by the initiatives of the government. As businessm
Slide 59: Survey Report on Commercial Facilities
Appendix Survey Report on Commercial Facilities What is the Urban Commercial Facilities Study Report? Fukuoka Realty manages assets of FRC that owns Canal City Hakata, an urban commercial facility, as a flagship property. As such, the asset manager has compiled a survey report, including visits to c
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