Fukuoka Reit Corporation · TSE:8968
Fukuoka Reit — 31st fiscal period Earnings Presentation
57 slides from Fukuoka Reit's earnings presentation, May 2020
Slide 1: Overview of the 31st fiscal period performance
Security code Overview of the 31st fiscal period performance 8968 September 1st,2019 February 29th,2020
Slide 2: Topics of the 31st fiscal period or later
Topics of the 31st fiscal period or later 1 New Acquisition properties [scheduled] 3 Financial statements 7 Business forecasts 9 Portfolio overview 11 Financial strategy 18 Appraisal value 21 Situation of Fukuoka and Kyushu 23 Sustainability 27 Appendix 28 ＊Regarding rounding of amounts, percentage,
Slide 3: Topics of the 31st fiscal period or later
Topics of the 31st fiscal period or later Owned properties The 31st FP New acquisition properties The 32nd FP ◎Retail ◎Two new properties to be acquired in the 32nd fiscal period total: 4,990 million yen Office building Logistics Canal City Hakata （＊1） 96.5％ ■ Fewer tourists from South Korea plus se
Slide 4: Actual fixed and variable rents for the 31st FP and projections for the 32nd and 33rd FP
Actual fixed and variable rents for the 31st FP and projections for the 32nd and the 33rd FP Expected to be affected by the new COVID-19 infections in the rent assumptions for the 32nd and the 33rd fiscal periods Year-on-year comparison of fixed and variable rents for the 31st fiscal period Year-on-
Slide 5: New acquisition property for the 32nd FP: Higashi Hie Business Center III
New acquisition property for the 32nd FP Higashi Hie Business Center III ~a new office building with high specifications near "Higashi Hie" Station〜 ◎Overview of the property Acquisition date May 29, 2020 ● Close to the entrance of the "Higashi Hie" scheduled S t a t i o n, w hi c h i s l o c a t e
Slide 6: New acquisition property for the 32nd FP: LOGICITY Wakamiya
New acquisition property for the 32nd FP LOGICITY Wakamiya 〜Property acquisition by seizing the need to sell logistics facilities for own use〜 Shimonoseki 10km approx.40 min 3 by car from 495 Kitakyushu City Kitakyushu Shinmoji port 495 3 r b an hu U y k y us a Lin e K it a pr e s s w approx.40 min
Slide 7: Logistics market in northern part of Kyushu
Logistics market in northern part of Kyushu The supply and demand balance remains tight Major logistics area Development of the Island City area Shimonoseki Fukuoka Urban Expressway 10km Island City Port Area （about209.5ha） Town Area （about191.8ha） Island-city Line （maintenance） LOGICITY Hisayama 3
Slide 8: Historical trends of asset's size by investment type
Historical trends of asset’s size by investment type [based on acquisition price] Asset size will reach 200 billion yen for the 32nd fiscal period Retail Office buildings Residence Logistics Hotel LTV Future external growth strategy ◎Expand the asset size, which will reach 200 billion yen in the 32n
Slide 9: Statements of Income (compared with the previous fiscal period)
Statements of Income （compared with the previous fiscal period） Dividend per unit was 3,642 yen for the 31st FP: （1.4） % compared with the previous period - unit : mm yen （Figures rounded down to the nearest mm yen） Sign indicates impact on profit unit : mm yen 30th A 31st B Difference ■Operating pr
Slide 10: Statements of Income (compared with the forecast)
Statements of Income （compared with the forecast） Impacted by expanded infection of COVID-19 at Canal City Hakata - unit : mm yen （Figures rounded down to the nearest mm yen） Sign indicates impact on profit unit : mm yen 31st A 31st B Difference ■Operating profit and loss Account Previous Forecast 〜
Slide 11: Business forecast (the 32nd fiscal period, Aug. 2020)
Business forecast （the 32nd fiscal period, Aug. 2020） Decrease in revenues due to the impacted by the infection of COVID-19 Forecast in the 32nd fiscal period - unit : mm yen （Figures rounded down to the nearest mm yen) Sign indicates impact on profit （unit : mm yen） 32nd 32nd 31st 32nd ■Difference
Slide 12: Business forecast (the 33rd fiscal period, Feb. 2021)
Business forecast （the 33rd fiscal period, Feb. 2021） Contributed newly acquired 2 properties in the 32nd FP Forecast in the 33 rd fiscal period - unit : mm yen （Figures rounded down to the nearest mm yen) Sign indicates impact on profit （unit : mm yen） 32nd 33rd 32nd ■Variance from updated the 32 n
Slide 13: Perspectives on business environment surrounding owned properties and future policies
Perspectives on business environment surrounding owned properties and future policies Use of property Perspective on business environment Future policies ● Closely monitor the impact of COVID-19 infection and work to reinforce tenant relationships. Short term Consumption trends are changing due to s
Slide 14: Situation of active retail ①
Situation of active retail ① ●Canal City Hakata ◎Almost 100% occupancy rates in active retail properties ●Canal City Hakata・B Sales（annual total（＊1）） 29.9 bn yen Mar. 2019 - Feb. 2020 YoY （3.5）% Occupancy rate Property name as of Feb. 29, 2020 Tenants Sales were strong at stores newly opened through
Slide 15: Situation of active retail ②
Situation of active retail ② Canal City Hakata Park Place Oita Konoha Mall Hashimoto ■Remarkable tenants ■Remarkable tenants ■Cumulative number of visitors surpassed 50 million! ◎First in Kyushu area ◎Renewal open of SPORTS AUTHORITY ◎September 19, 2019 『THE GUNDAM BASE FUKUOKA』 『GUNDAM Café』 Cumula
Slide 16: Situation of Hotel
Situation of Hotel Over view of hotel Canal City Hakata ／ Canal City Hakata ・ B Grand Hyatt Fukuoka Fukuoka Washington Hotel ◎Average year-on-year comparison of RevPAR （＊1） ◎Change in total number of foreign lodgers in Fukuoka Hotel FORZA Oita Tissage Hotel Naha （thousand people ） thousand Lodgers f
Slide 17: Trends in the Fukuoka office market
Trends in the Fukuoka office market Vacancy rate below 3%, rent has risen for 32 consecutive months Fukuoka business district / Vacancy rates and supply and demand of office buildings Fukuoka business district / Average asking rents tsubo Completed floor spaceotal floor space left axis Net absorptio
Slide 18: Historical and projected office buildings' occupancy rates
Historical and projected office buildings’ occupancy rates Maintaining high occupancy levels while steadily increasing rent per unit area （％） 100.0 1 Canal City Business 99.8 100.0 100.0 Major indicators of owned properties（＊2） Center Building 90.0 96.1 96.5 Total leasable floor space：23,029.92㎡ 80.
Slide 19: Office building rent revisions and tenant replacement situation
Office building rent revisions and tenant replacement situation The amount of rent expanded from the 30th fiscal period Change in monthly rent due to rent revisions and tenant replacements （＊1） Newly occupied floor space and number of new occupants （thousand yen） tsubo Newly occupied floor space 5,5
Slide 20: Financing condition
Financing condition Establishment of stable financial base LTV Average interest rate （＊1） and duration Fixed and floating rate （％） （％） （years） 50 1.3 8 Average interest rate Duration years 1.2 7 Floating 45 1.1 6.4 6 7.6％ 6.3 6.0 6.0 6.1 1. 0 5 40 0.9 4 77,500 Fixed mm yen 38.9 39.1 39.7 39.7 39.8 0
Slide 21: Key financing events in the 31st fiscal period
Key financing events in the 31st fiscal period Achievement of both interest cost reduction, borrowing term extension and diversification New financing and repayment results Extension of commitment line agreement period ◎Long-term debt for the 31st fiscal period ended February 2020 ◎Changed the perio
Slide 22: List of Interest-bearing debt
List of Interest-bearing debt The current maturity of long-term debt is only 1,000 million yen ■List of borrowings （As of February 29, 2020） Balance Drawdown Repayment Term Fixed/ Average Interest Balance Drawdown Repayment Term Fixed/ Average Interest Category Lender Category Lender （mm yen） Date D
Slide 23: Appraisal value
Appraisal value Maintained unrealized gains for all properties （＊1） - unit : mm yen （Figures rounded down to the nearest mm yen） Appraisal value Difference Direct capitalization values Acquisition Acquisition Book value From From Property name 31st 30th 31st 30th Difference Appraiser price cap rate
Slide 24: Historical appraisal values (unrealized gains)
Historical appraisal values （unrealized gains） Maintained continuously since the 3rd fiscal period （Unrealized gains 36,923 mm yen, 20.3% ratio of unrealized gains at the 31st FP ） （＊1） Historical appraisal values （mm yen） Book value at the end of period( * 2) Unrealized gains = (latest appraisal va
Slide 25: The condition of suburb area in Fukuoka
The condition of suburb area in Fukuoka A B C D E F Vegefru stadium 1km (Fresh produce market) Kyushu Sangyo 500m Shikanoshima 《Redevelopment Project in Fukuoka City》 Island Island City Logistics Development Project 28 Fukuoka Urban University 29 Ni izu Ka sh ka Expressway Route 6 hi The Tenjin Big
Slide 26: Functional Enhancement of Fukuoka Airport
Functional Enhancement of Fukuoka Airport Initiatives to increase runway handling capacity and expand number of routes Current status of Fukuoka Airport Fukuoka Airport Domestic terminal building ◎ Ranking by number of arrivals and departures ◎International flights' schedule in summer 2020 and numbe
Slide 27: Redevelopment in Tenjin area (Tenjin Big Bang)
Redevelopment in Tenjin area （Tenjin Big Bang） Preparation made for functional renewal of buildings in the Tenjin district ◎Creation of an attractive environment that promotes Tenjin as a start-up location ① Deregulation of floor space ratios ②Relaxation of restrictions Issues pertaining to function
Slide 28: Redevelopment in Hakata area: Hakata Connected
Redevelopment in Hakata area Hakata Connected Initiative to expand the vitality and bustle of Hakata Station area out further to the surroundings approx. 500m radius from the station, covering about 80 hectares Project for effective utilization of the Fukuoka Prefecture ◎Hakata Connected Bonus ◎Spec
Slide 29: Sustainability
Sustainability Publication of “Integrated Report 2019”: first in the J-REIT industry FRC published the “Integrated Repor t 2019,” which integr ally pr ovides it s f inancial and ■J-REIT Mechanism and Fukuoka REIT Corporation's Business Model non-financial information and encompasses its initiatives
Slide 30: Appendix
サステナビリティへの取り組み 28 Appendix
Slide 31: Profile
Profile Special features of Fukuoka REIT Corporation ◎Investment type Proven track record over 31 fiscal periods as a region-specific REIT Portfolio summary （＊1） （based on acquisition price） 1 Asset management leveraging our in-depth knowledge of the real estate environment Number of properties / As
Slide 32: A real estate investment trust specializing in regional properties
A real estate investment trust specializing in regional properties Sponsors Investment policy ◎Investment area THE BANK OF FUKUOKA 5％ THE NISHINIPPON CITY BANK, LTD. 5％ 5％ 5％ 60-90％ Fukuoka metropolitan area THE BANK OF FUKUOKA, LTD. THE NISHI-NIPPON Development CITY BANK, LTD. Bank of Japan Inc. SA
Slide 33: Population movement of Fukuoka metropolitan area
Population movement of Fukuoka metropolitan area The population of Fukuoka metropolitan area continues to increase Population trends of major metropolitan areas Number of population growth in Fukuoka City （index） thousand 150 Actual figures Future projection people Number of population in Fukuoka Ci
Slide 34: Condition of Inbound Tourists to Fukuoka
Condition of Inbound Tourists to Fukuoka Number of overseas visitors from China and Southeast Asia increasing although decreased number of overseas visitors from South Korea Number of foreign tourists [by country] The total number of foreign lodgers and Hotel occupancy rate in 2019 thousand thousand
Slide 35: Portfolio properties' occupancy rates
Portfolio properties' occupancy rates Maintained high occupancy rates Historical occupancy rates the weighted average during the period Fukuoka REIT Corporation（＊1） J-REIT average（＊2） （％） 99.8 99.7 99.6 99.6 99.8 99.7 99.6 99.7 99.6 99.6 100.0 99.4 99.5 99.5 99.4 99.2 99.2 99.3 99.1 99.3 99.1 99.3 9
Slide 36: Dividend and NAV per unit
Dividend and NAV per unit ■17th ■22nd ■29th Dividend per unit Tenjin Nishi-Dori Center Building 2,600 LOGICITY Minato Kashii 8,150 ■26th Tissage Hotel Naha 2,835 Marinoa City Fukuoka（Marina Side Building） 5,250 LOGICITY Hisayama 5,050 ■14th ■18th Park Place Oita adjacent land 590 Canal City Hakata B
Slide 37: Earthquake risk in Fukuoka, etc
Earthquake risk in Fukuoka, etc All properties owned by Fukuoka REIT are covered by earthquake insurance Probabilistic earthquake prediction map Example of measures taken by the Fukuoka City government against other natural disasters Fukuoka City flooding countermeasures Probability of occurrence of
Slide 38: ESG Initiatives [Basic Policy]
ESG Initiatives ［Basic Policy］ Identification of materially significant issues as of September 2019 Materially significant issues Policies and targets Related SDGs ● Coordinate with Property Management and Building Management on promotion of management and reduction of energy Reduction of environmen
Slide 39: ESG Initiatives [Environment・Society]
ESG Initiatives ［Environment・ Society] Environment Initiatives of owned properties ■Retail ■Office buildings ■Others[Logistics] ●Filtration System ◎Progress with switch to LED lighting ◎Utilization of renewable energy ◎ At Canal City Hakata Switch to LED lighting Solar panels have been installed on
Slide 40: ESG Initiatives [Governance]
ESG Initiatives ［Governance] Governance System Matching unitholder interests and sponsor interests, etc. Fukuoka Realty has established a Basic Policy on Compliance, as well as compliance regulations ・ Same-boat investment by sponsor and other internal rules to prevent c onf licts of interest. We c
Slide 41: Asset management company's organization
Asset management company’s organization Shareholders General Meeting Corporate Profile Established : December 26, 2003 Paid-in capital ： 200 million yen Auditor Certifications, etc. : ◎Obtained license for real estate transaction services February 27, 2004／ Board of Directors License No. 4 15052 iss
Slide 42: Unitholders' data
Unitholders’ data Distribution by investor category breakdown of investment units No. of unitholders and investment units held by unitholder category at the end of the 31 FP st （As of February 29, 2020） （units） 796,000 796,000 796,000 796,000 Investment 800,000 No. of unitholders Percentage Percenta
Slide 43: Unit price chart
Unit price chart Investment unit price （＊1） Turnover （＊2） ■Market capitalization as of Feb. 29, 2020 ：133,648 mm yen （yen） （units） 300,000 120,000 31 st April 27, 2015 4th PO 250,000 100,000 June 21, 2005 Listed March 1, 2018 March 1, 2013 5th PO 3rd PO 200,000 80,000 March 1, 2011 2nd PO 150,000 60
Slide 44: Financial highlights
Financial highlights Dividend per unit was 3,642 yen - unit : mm yen （Figures rounded down to the nearest mm yen） 27 th 28 th 29 th 30th 31st Difference 32nd 33rd Category Feb. 28, 2018 〜 Aug. 31, 2018 Feb. 28, 2019 〜 Aug. 31, 2019 Feb. 29, 2020 B A Aug. 31, 2020 Feb. 28, 2021 A B forecast forecast
Slide 45: 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） 30th 31st Difference 30th 31st Difference Account Aug. 31, 2019 Feb. 29, 2020 Account Aug. 31, 2019 Feb. 29, 2020 A B B－A A B B－A Total current assets 10,234 11,047 813 Total curren
Slide 46: Cash flow statements compared with the previous fiscal period
Cash flow statements compared with the previous fiscal period - unit : mm yen （Figures rounded down to the nearest mm yen） 30th A 31st B Difference Category 〜Aug. 31, 2019 〜Feb. 29, 2020 B－A Net cash provided by （used in） operating activities 4,863 3,985 （877） Profit before income taxes 2,939 2,900
Slide 47: Income and expenditure by properties (Retail)
Income and expenditure by properties （Retail） - unit : mm yen （Figures rounded down to the nearest mm yen） Konoha Mall 31st 30th Difference Forecast Difference Category Canal City Hakata Canal City Hakata・B Park Place Oita SunLive City Kokura Total Total Hashimoto A－B C （＊） A－C A B 31st FP （Sept. 1,
Slide 48: Income and expenditure by properties (Office buildings・Others)
Income and expenditure by properties （Office buildings・Others） - unit : mm yen （Figures rounded down to the nearest mm yen） Canal City Taihaku Tenjin Gofukumachi Higashi Hie Tenjin North Higashi Hie 31st 30th Difference Forecast Difference Business Sanix Hakata Street Nishi-Dori Category Business Bu
Slide 49: Income and expenditure by properties (Total)
Income and expenditure by properties （Total） /Repair and maintenance expenses, capital expenditures, and depreciation - unit : mm yen （Figures rounded down to the nearest mm yen） 31st 30th Difference Forecast Difference Category Total Total A－B C （＊） A－C A B （Length） 182 days 184 days （2） days ①Tota
Slide 50: Portfolio table
Portfolio table As of February 29, 2020 Acquisition Total Real estate property name Age price Investment Acquisition Source leasable Occupancy Tenants Primary tenants （＊1） （mm yen） ratio timing （＊3） floor space rate （＊4） （＊2） （㎡） Canal City Hakata 23yr10m 32,000 16.3％ Nov. 9, 2004 Sponsor 46,604.75
Slide 51: Portfolio map
Portfolio map ne i Li 4 ich Ka Nis uka Fukuoka City m Shikanoshima aka iz Kyush Island City hit Lin no- N 29 Fukuoka City ets e i- 28 Um u JR u Expre Uminonakamichi Seaside Park Fukuoka Oita ine ay Saga 27 ssway ii L sw 9 25 JR sh res Chihaya Stn. 22 Ka 3 Ka Exp s hii Najima Stn. 3 n Lin ba e Ur Hak
Slide 52: Portfolio
Portfolio Retail 11 properties Canal City Hakata Canal City Hakata・B Park Place Oita SunLive City Kokura Konoha Mall Hashimoto Square Mall Kagoshima Usuki Kumamoto Intercommunity SC Hanahata SC Office buildings 8 properties Kurume Higashi Kushiwara SC K’ s Denki Kagoshima Marinoa City Fukuoka（Marina
Slide 53: Top tenants by leased floor area
Top tenants by leased floor area Ordinary lease Fixed-term lease Lessee Tenant Share of total leased space 32nd 33rd 34th Remaining lease term （＊1） 〜Aug. 31, 2020 〜Feb. 28, 2021 〜Aug. 31, 2021 (years) （＊2） ●SunLive City Kokura 5 1 SunLive Co., Ltd. SunLive 11.2％ ●Konoha Mall Hashimoto 11 2 AEON Kyus
Slide 54: Breakdown of variable rents
Breakdown of variable rents Breakdown of active retail rents by property Breakdown of active retail rents Portfolio overall Fixed rents（＊1） Variable rent s（＊2） ◎The 31st FP ◎The 30th FP mm yen mm yen 3,000 2,841 3,000 Variable rents Variable rents 2,759 2,734 2,734 530 628 519 505 20.1％ 11.8％ 318 29
Slide 55: The condition of Fukuoka city center
The condition of Fukuoka city center Nanakuma subway line extension project will be completed by FY2022 箱 下鉄 博多小学校 550 空港通 線 蔵本 吉塚1丁目 崎 A B C D E F 地 中呉服町 福岡高校 天神北出入口 Yutaka 1chome Naraya-machi Fukuoka Dai-ichi Kamigofuku -machi 552 Shiminkaikan-mae Building Gofuku machi 13 Gofukumachi Katakasu i Ka
Slide 56: Office demand underpinning the thriving Fukuoka office market
Office demand underpinning the thriving Fukuoka office market Trend in average net absorption [absorption demand] for the past 10 years Office demand underpinning the office market ●Despite strong office demand, supply has been small since 2017 to keep net absorption low （tsubo） 25,000 ◎Establishmen
Slide 57: Sponsor pipeline (Fukuoka Jisho Group)
Sponsor pipeline （Fukuoka Jisho Group） Overview of Fukuoka Jisho Co., Ltd. Major properties owned by Fukuoka Jisho Group Use No. Name Year of completion Total floor Name Fukuoka Jisho Co., Ltd. space 1 Fukuoka Daiichi Building 1961 9,962㎡ Established July 1961 2 Fukuoka Kogin Building 1970 15,160㎡ 3
Fukuoka REIT — 31st fiscal period Earnings Presentation on 6ix