Fukuoka Reit Corporation · TSE:8968
Fukuoka Reit — 27th fiscal period Earnings Presentation
59 slides from Fukuoka Reit's earnings presentation, Apr 27, 2018
Slide 1: Overview of the 27th fiscal period performance
ti i ) u S) MEMORIES RAMEW-IAPANESE Fol . Fukuoka REIT Corporation oe Overview of the 27*" fiscal period performance [8968] September 15{2017~February 28" 2018
Slide 2: Contents and disclaimer
Overview of public offering‘New acquisitions 1 Financial statements 5 Business forecasts 13 Overview of retail operation 15 Overview of office buildings operation 18 Financial strategy 20 Asset’s growth 23 Current situation of Fukuoka City 24 Fukuoka REIT sen penesuneonnneat’ Corporation monetary am
Slide 3: Public Offering at the beginning of the 28th fiscal period
Overview of public offeringGrowth in dividends Public Offering at the beginning of the 28th fiscal period Overview of public offeringNew acquisitions 1
Slide 4: New acquisition: Konoha Mall Hashimoto
New acquisition in the 28th fiscal period Konoha Mall Hashimoto A community-based retail facility deeply rooted in people’s daily life Overview of public offeringNew acquisitions 2
Slide 5: New acquisition: Konoha Mall Hashimoto
New acquisition in the 28th fiscal period Konoha Mall Hashimoto A community-based retail facility deeply rooted in people’s daily life Overview of public offeringNew acquisitions 3
Slide 6: New acquisition: Higashihie office building
New acquisition in the 28th fiscal period Highly functional office building directly connected with Higashihie Station Overview of public offeringNew acquisitions 4
Slide 7: Financial highlights
Financial highlights Dividend per unit was 3,512 yen - unit : mm yen Figures rounded down to the nearest mm yen 23rd 24th 25th 26th 27th Difference 28th 29th Category Feb. 29, 2016 Aug. 31, 2016 Feb. 28, 2017 Aug. 31, 2017 Feb. 28, 2018 Aug. 31, 2018 Feb. 28, 2019 A B forecast forecast Operating rev
Slide 8: Dividend's track record
Dividend’s track record Dividend recovery to the 3,500 yen range The 27th fiscal period end February 28, 2018 Days in fiscal period 181 semi-annual periods ending every February and August Dividend actual 3,512 yen per unit Dividend yield 4.1 Dividend / days in fiscal period 365/ Unit price as of Fe
Slide 9: Balance sheets compared with the previous fiscal period
Balance sheets compared with the previous fiscal period - unit : mm yen Figures rounded down to the nearest mm yen 26th 27th Difference 26th 27th Difference Account Aug. 31, 2017 Feb. 28, 2018 Account Aug. 31, 2017 Feb. 28, 2018 A B A B Total current assets 8,130 8,200 69 Total current liabilities 1
Slide 10: Statements of Income compared with previous fiscal period
Statements of Income compared with previous fiscal period Dividend recovery to the 3,500 yen range - unit : mm yen Figures rounded down to the nearest mm yen Sign indicates impact on profit unit : mm yen 26th 27th Difference Account Aug. 31, 2017 Feb. 28, 2018 A B Total operating revenues 8,122 8,19
Slide 11: Statements of Income compared with forecast
Statements of Income compared with forecast Results above forecast for Canal City Hakata, mainly the hotels - unit : mm yen Figures rounded down to the nearest mm yen Sign indicates impact on profit unit : mm yen 27th Previous Forecast Difference Account Feb. 28, 2018 B Total operating revenues 8,13
Slide 12: Portfolio properties' occupancy rates
Portfolio properties' occupancy rates Maintained high occupancy rates Historical occupancy rates the weighted average during the period Financial statements Occupancy rates the weighted average during the period Investment Category 23rd 24th 25th 26th 27th ratio Feb. 29, 2016 Aug. 31, 2016 Feb. 28,
Slide 13: Appraisal value
Appraisal value Unrealized gains 1 totaled 25,541 mm yen at the end of 27th fiscal period - unit : mm yen Figures rounded down to the nearest mm yen Appraisal value Difference Direct capitalization values Acquisition Book value Acquisition at 27th From From 27th 26th Name of Property name price 27th
Slide 14: Historical appraisal values unrealized gains
Historical appraisal values unrealized gains Maintained continuously since the 3rd fiscal period13.2% ratio of unrealized gains at the 27th 1 Financial statements 12
Slide 15: Business forecast the 28th fiscal period
Business forecast the 28th fiscal period, Aug. 2018 Dividend per unit of 3,570 yen due to new acquisition of two properties Forecast in the 28th fiscal period - unit : mm yen Figures rounded down to the nearest mm yen) Sign indicates impact on profit unit : mm yen 28th 28th 27th 28th 27th Account Fo
Slide 16: Business forecast the 29th fiscal period
Business forecast the 29th fiscal period, Feb. 2019 Dividend per unit forecast of 3,570 yen the same amount as for the 28th fiscal period Forecast in the 29th fiscal period - unit : mm yen Figures rounded down to the nearest mm yen) Sign indicates impact on profit unit : mm yen 28th 29th 28th Accoun
Slide 17: Active retail
Active retail Stable rent levels maintained over the long term Overview of retail operation 15
Slide 18: Current situation at Canal City Hakata overall
Current situation at Canal City Hakata overall Canal City Hakata, an evolving “Urban Theater” Overview of retail operation 16
Slide 19: Breakdown of active retail rents
Breakdown of active retail rents Overview of retail operation 17
Slide 20: Historical and projected office buildings' occupancy rates
Historical and projected office buildings’ occupancy rates Keeping to maintain well occupancy rate Overview of office buildings operation Occupancy rates are calculated as a weighted average during period. Total leasable floor space is figured as of the end of period. 1Residential floor spaces are r
Slide 21: Fukuoka office market
Fukuoka office market Vacancy rate declined to the lower 3% range, and supply will remain limited in the future Overview of office buildings operation 19
Slide 22: Key financing events
Key financing events Achievement of both interest cost reduction and borrowing term extension and diversification Financial strategy 20
Slide 23: Financing condition
Financing condition A stable network of sponsor banks and other lenders Financial strategy 21
Slide 24: List of borrowings
List of borrowings Stable debt financing As of February 28, 2018 Balance Drawdown Repayment Term Fixed/ Average Interest Balance Drawdown Repayment Fixed/ Average Interest Category Lender mm yen Date Date year Floating Rate Category Lender Term mm yen Date Date year Floating Rate Short-term debt - -
Slide 25: Historical trends of asset's size by investment type
Historical trends of asset’s size by investment type Asset site is 192,284 million yen after acquiring Konoha Mall Hashimoto and Higashi Hie Business Center Asset’s growth 23
Slide 26: The condition of Fukuoka City Center
The condition of Fukuoka City Center Nanakuma Subway Line extension project completed by FY2022 Current situation of Fukuoka City 24
Slide 27: The condition of suburb area in Fukuoka
The condition of suburb area in Fukuoka Compact city of Fukuoka, well-organized transport infrastructure Current situation of Fukuoka City 25
Slide 28: Appendix
ke Appendix
Slide 29: Profile
Profile Profile Investment unit price Name Fukuoka REIT Corporation Unit price 173,100 yen as of February 28, 2018 Asset manager Fukuoka Realty Co., Ltd. Licensed by Fukuoka Local Finance Branch Bureau Total number of investment units outstanding 747,000 units as of February 28, 2018 financial instr
Slide 30: A real estate investment trust specializing in regional properties
A real estate investment trust specializing in regional properties Sponsors Investment policy Investment area 5% THE BANK OF 5% THE NISHI-NIPPON Development 5% 5% SAIBU GAS 60-90% Fukuoka metropolitan area 10-30% Appendix FUKUOKA, LTD. CITY BANK, LTD. Bank of Japan Inc. CO., LTD. Other Kyushu areas
Slide 31: Population movement of Fukuoka metropolitan area
Population movement of Fukuoka metropolitan area The population of Fukuoka metropolitan area continues to increase Appendix 29
Slide 32: Portfolio table
Portfolio table As of February 28, 2018 Acquisition Total leasable Age Price Investment Acquisition Source Tenants Real estate property name floor space Occupancy rate Primary tenants 1 mm yen ratio timing 3 4 2 Canal City Hakata 21yr 10m 32,000 18.0 Nov. 9, 2004 Sponsor 46,602.94 99.1 49 Washington
Slide 33: Portfolio map
Portfolio <== Kyushu Shinkansen <= Rline — bxressway Fukuoka metropolitan area aa Hakata Bay Fukuoka keit @ Canal city Hakata @ Canal city Hakata-B © Park Place Oita © sunlive city Kokura @ Konoha Mall Hashimoto (#1) © sauare Mall Kagoshima Usuki @ Kumamoto intercommunity SC @ Hanahata sc © Kurume H
Slide 34: Portfolio: Active retail
Portfolio : Active retail Appendix 32
Slide 35: Portfolio: Active retail
Portfolio : Active retail Appendix 33
Slide 36: Portfolio: Passive retail
Portfolio : Passive retail Appendix 34
Slide 37: Portfolio: Office buildings
Portfolio : Office buildings Appendix 35
Slide 38: Portfolio: Others
Portfolio : Others Appendix 36
Slide 39: Top tenants by leased floor space
Top tenants by leased floor space Appendix 37
Slide 40: Income and expenditure by properties: Active retail
Income and expenditure by properties Active retail - unit : mm yen Figures rounded down to the nearest mm yen 27th 26th Difference Forecast Difference Category Canal City Hakata Canal City Hakata B Park Place Oita SunLive City Kokura Total Total A B AB C AC 1 27th FP Sep 1, 2017 Feb. 28, 2018 Length
Slide 41: Income and expenditure by properties: Passive retail
Income and expenditure by properties Passive retail - unit : mm yen Figures rounded down to the nearest mm yen Marinoa City Square Mall 27th 26th Difference Forecast Difference Kumamoto Inter- Kurume Higashi K’s Denki Fukuoka Category Kagoshima Community SC Hanahata SC Kushiwara SC Kagoshima Total T
Slide 42: Income and expenditure by properties: Office buildings
Income and expenditure by properties Office buildings - unit : mm yen Figures rounded down to the nearest mm yen Canal City Tenjin Tenjin 27th 26th Difference Forecast Difference Category Gofukumachi Sanix Hakata Taihaku Street Higashi Hie Business Center Nishi-Dori North Front Total Total Building
Slide 43: Income and expenditure by properties: Others
Income and expenditure by properties Others - unit : mm yen Figures rounded down to the nearest mm yen Amex Granfore Hotel Tosu LOGICITY 27th 26th Difference Forecast Difference City House Aqualia D-Wing LOGICITY Category Akasakamon Yakuin FORZA Logistics Minato Total Total Keyaki Dori Chihaya Tower
Slide 44: Income and expenditure by properties: Total
Income and expenditure by properties Total - unit : mm yen Figures rounded down to the nearest mm yen 27th 26th Difference Forecast Difference Category Total Total A B A B C A C 1 Length 181 days 184 days 3 days Total leasing business revenues 8,194 8,117 76 8,134 59 Leasing revenue-real estate 7,72
Slide 45: Cash flow statements compared with previous fiscal period
Cash flow statements compared with previous fiscal period - unit : mm yen Figures rounded down to the nearest mm yen 26th 27th Category Aug. 31, 2017 Feb. 28, 2018 Difference A B BA Net cash provided by used in operating activities 3,590 4,292 701 Profit before income taxes 2,562 2,624 62 Depreciati
Slide 46: Repair and maintenance expenses, capital expenditures, and depreciation
Repair and maintenance expenses, capital expenditures, and depreciation - unit : mm yen Figures rounded down to the nearest mm yen Repair and maintenance expenses, capital expenditures, and depreciation Appendix Major capital expenditures in the 27th fiscal period Major capital expenditures in the 2
Slide 47: IR initiatives
IR initiatives [ Major IR activities ] ©For overseas investors + Participation in global conferences in Japan ©For institutional investors - Results briefing roadshows in Japan - One-on-one meetings + Overseas IR activities ©For individual investors + One-on-one meetings in Japan « Briefings for inc
Slide 48: Sustainability: Environment initiatives
SustainabilityEnvironment initiatives Appendix 46
Slide 49: Asset management company's organization
Asset management company’s organization Appendix 47
Slide 50: Corporate governance
Corporate governance Appendix 48
Slide 51: Unitholders' data
Unitholders’ data Appendix 49
Slide 52: Unit price chart
Unit price chart — Investment unit price (+ lll Turnover (+2) [ Market capitalization (as of Feb. 28, 2018): 129,305 mm yen (yen) 300,000 April 27, 2015 Ath PO. 250,000 60,000 June 21, 2005 Listing 200,000 48,000 150,000 — ~~ 36,000 100,000 24,000 0 ‘Aug. 31, Feb. 28, Aug. 31, Feb. 28, Aug. 31, Feb.
Slide 53: Analysis of earthquake risk in Fukuoka
Analysis of earthquake risk in Fukuoka All properties owned by Fukuoka REIT are covered by earthquake insurance Appendix 51
Slide 54: Fukuoka Jisho Group
Fukuoka Jisho Group Appendix 52
Slide 55: Logistics market in Northern part of Kyushu
Logistics market in Northern part of Kyushu Market formation centered on Hakata Port, Fukuoka Interchange, and Tosu Junction Appendix 53
Slide 56: Current situation of Fukuoka and Kyushu: Inbound visitors
Current situation of Fukuoka and Kyushu Inbound Visitor Situation Appendix 54
Slide 57: Influx of visitors from within Japan and overseas
Current situation of Fukuoka and Kyushu Influx of visitors from within Japan and overseas Appendix 55
Slide 58: Future potential and population dynamics
Current situation of Fukuoka and Kyushu Future potential and population dynamics Appendix 56
Slide 59: Implementation of urban redevelopment in Tenjin area
Current situation of Fukuoka and Kyushu Implementation of urban redevelopment in Tenjin area Appendix 57
Fukuoka REIT — 27th fiscal period Earnings Presentation on 6ix