Fukuoka Reit Corporation · TSE:8968
Fukuoka Reit — 7th Fiscal Period Earnings Presentation
68 slides from Fukuoka Reit's earnings presentation, April 2008
Slide 1: Overview of the Seventh Fiscal Period Performance
Fukuoka REIT Corporation(8968) http://www.fukuoka-reit.jp Overview of the Seventh Fiscal Period Performance (September 1st, 2007 - February 29th, 2008) The Floor Expansion of Park Place Oita (April 24th, 2008 OPEN) 1
Slide 2: REIT Overview
Profile REIT Overview Profile Profile Investment Investment Unit Unit Price Price Name Fukuoka REIT Corporation Current Price 664,000 yen (as of February 29, 2008) Asset Manager Fukuoka Realty Outstanding Units 】 107,050 Market Cap 71.0 billion yen Sponsors Fukuoka Jisho, Kyushu Electric Power, The
Slide 3: J-REIT Specialized in Fukuoka / Kyushu Area
Profile J-REAT Specialized in Fukuoka / Kyushu Area Supported by Kyushu Business World Investment Policy 3
Slide 4: Table of Contents
Table of Contents 1 Financial Statements 5 2 Portfolio 12 3 Financial Strategy 24 4 Growth Strategy 30 5 Compliance 34 6 Appendix 37 7 Appendix 52 8 Appendix 58 These materials may contain future performance, plans, management targets and strategies. These forward-looking descriptions are based on p
Slide 5: Financial Statements
中表紙：第7期決算報告 Financial Statements
Slide 6: Settlement Highlights of the 7th Fiscal Period
1 Financial Statements Settlement Highlights of the 7th Fiscal Period (ended February 2008) 3th Fiscal Period 4th Fiscal Period 5th Fiscal Period 6th Fiscal Period (1) 7th Fiscal Period(2) variation Category September 1, 2005- March 1, 2006 – September 1, 2006 - March 1, 2007 – September 1, 2007- Fe
Slide 7: Profit and Loss Statement for the 7th Fiscal Period
1 Financial Statements Profit and Loss Statement for the 7th Fiscal Period (ended February 2008) （unit：thousand） 7th Fiscal Period(①) 6th Fiscal Period (②) Variation September 1, 2007-Febrauary 29,2008 March 1, 2007 – August 31, 2007 （①－②） Primary Factors for Period-on-Period Variation (mm yen) Perc
Slide 8: Balance Sheet for the 7th Fiscal Period
1 Financial Statements Balance Sheet for the 7th Fiscal Period (ended February 2008) （unit：thousand） （unit：thousand） 7th Fiscal Period 7th Fiscal Period 6th Fiscal Period 6th Fiscal Period Variation (as of Variation (as of (as of August 31, 2007) February29,2008 (as of August 31, 2007) February29,20
Slide 9: Differences between Forecasts and Results
1 Financial Statements The 7th Fiscal Period (February, 2008) Differences between Forecasts and Results 7th Fiscal Period Forecast (2) Variation Category 7th Fiscal Period Results (1) Announcement of October 15, 2007 (1) - (2) Operating revenue 5,179 mm yen 5,160 mm yen ＋19 mm yen Operating profit 2
Slide 10: Forecasts for 8th and 9th Fiscal Periods
1 Financial Statements Forecasts for 8th and 9th Fiscal Periods 3rd Fiscal 4th Fiscal 5th Fiscal 6th Fiscal 7th Fiscal 8th Fiscal 9th Fiscal Period Period Period Period Period Period Period Category February 2006 August 2006 February 2007 August 2007 February 2008 August 2008 February 2009 Results R
Slide 11: MEMO
MEMO メモ
Slide 12: Portfolio
中表紙：ポートフォリオ Portfolio
Slide 13: Portfolio Map
2 Portfolio Portfolio Map (As of March 31, 2008) (*) Figures have been calculated by owned properties as of February 29, 2008, but excluding figures for the preferred interest in silent partnerships. 13
Slide 14: Portfolio Table
2 Portfolio Portfolio Table Total Age Acquisition Leasable Occupancy Acquisition Source Tenants at Primary Tenants at End of Period Property Name Price Area at End at End of (Note 1) Timing (Note 3) End of Period (2 top tenants for each property) (mm yen) (Note 2) of Period Period (m2) Canal City Ha
Slide 15: List of Property Prices
2 Portfolio List of Property Prices Amounts Most Recent DCF Method Most Recent Acquisition Recorded on Acquisition Appraisal Appraisal (mm yen) (Note 5) Most Recent Capitalization Price the Balance CAP CAP Appraisal Company Property Name Appraisal Method (mm yen) Sheet at End (NCF base) (NCF base) F
Slide 16: History of Occupancy Rate by Property (Retail)
2 Portfolio History of Occupancy Rate by Property (Retail) (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. 16
Slide 17: History of Occupancy Rate by Property
2 Portfolio History of Occupancy Rate by Property Occupancy is expected to 100% by the end of 2008 Portfolio occupancy of 99.2% during the 7th 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 f
Slide 18: History of NOI by Property (Retail)
2 Portfolio The 3rd–7th Fiscal Period History of NOI by Property (Retail) 18
Slide 19: History of NOI by Property (Office, Others)
2 Portfolio The 3rd–7th Fiscal Period History of NOI by Property (Office, Others) 19
Slide 20: Risk Management for Retail Properties
2 Portfolio Risk Management for Retail Properties - Daily property management activities (including tenant replacement and guidance of selling floor) in accordance with consumer needs Ex. 1: Canal City Hakata: 42 shops out of 212 shops replaced during the past 18 months Ex. 2: Park Place Oita: 50 sh
Slide 21: History of Retail Property Sales
2 Portfolio History of Retail Property Sales (mm yen) (*) This represents a monthly tally of sales for each store at Canal City Hakata. (*) This represents a monthly tally of sales for each store at Park Place Oita. (*)This represents a monthly tally of sales for SunLiveCity Kokura without showing t
Slide 22: Overview of Leased Area's Top Tenants
2 Portfolio Overview of Leased Area’s Top 10 Tenants (As of February 29, 2008) Total Remaining Leased Share Rent Contract Rank Store Tenant Property (%) Structure contract Areas Type (*1) (m2) years (*2) Ordinary Jusco Park Place Oita Park Place Oita 58,588.34 Fixed Lease 14.2 1 AEON Kyushu 25.6% Fi
Slide 23: MEMO
MEMO メモ
Slide 24: Financial Strategy
中表紙：財務戦略 Financial Strategy
Slide 25: Diversification and Stability of Debt Finance
3 Financial Strategy Diversification and Stability of Debt Finance 48.0 Billion 2.2Billion 39.5 Billion 15.3Billion 11.3Billion 26.6 Billion 28.2Billion 30.5Billion 25
Slide 26: Fixed / Floating Ratio and Duration
3 Financial Strategy Fixed / Floating Ratio and Duration Targeting 2.5-3.0 years 26
Slide 27: Dispersion of Repayment Period and Interest Payment
3 Financial Strategy Dispersion of Repayment Period and Interest Payment Planning to increase 0.1%-0.2% by fixing Debt from Short-tem to Long-term. (The dividend forecast already includes the cost) 27
Slide 28: Results of the 7th Financial Activities
3 Financial Strategy Results of the 7th Financial Activities 28
Slide 29: Itemization of Borrowings
3 Financial Strategy Itemization of Borrowings (As of February 29, 2008) Repayment Maturity Payment Annual Interest Type Lender Amount (JPY) Borrowing Date Method Interest Description Aozora Bank, The Bank of Fukuoka, Nishi- Nippon City Bank, Oita Bank, Iyo Bank, The Long-term Debt payable Lump sum
Slide 30: Growth Strategy
中表紙：外部成長戦略 Growth Strategy
Slide 31: Growth Roadmap
4 Growth Strategy Growth Roadmap [IPO period] [The first PO period] [Use LTV allowance] [The second PO period] ・ Listing with incorporating ・ Implemented PO to ・ Increase dividend through ・ Incorporate large- large-scale flagship expand the portfolio properties acquired by scale properties into prop
Slide 32: Growth Strategies: Asset Side
4 Growth Strategy Growth Strategies: Asset Side Sponsors’ pipelines L o c al” “Act Asset size of 160 billion yen Properties owned or developed by (Enhance liquidity of our stocks Fukuoka Jisho Group through expansion of market Leaseback properties from other sponsors capitalization) (including indus
Slide 33: Growth Strategies: Debt and Equity Side
4 Growth Strategy Growth Strategies: Debt and Equity Side G l o b a l” “Thi nk LTV Allowance Capable of additionally borrowing approximately 15 to 20 billion yen even after the acquisition of K’s Denki Kagoshima LTV at the End of the 7th Fiscal Period: 39.5% Public Offering Others Increase capital N
Slide 34: Compliance
中表紙：コンプライアンス Compliance
Slide 35: Organizational Structure of Asset Manager
5 Compliance Organizational Structure of Asset Manager Organizational Chart of Fukuoka Realty Full-time directors and employees: 37 (as of April 1, 2008) General Meeting of Shareholders Auditor (1) Board of Directors (3 full-time, 3 part-time) Compliance Assessment Committee (3) Compliance Departmen
Slide 36: Decision-Making Process of Fukuoka REIT
5 Compliance Decision-Making Process of Fukuoka REIT Internal staff Real estate appraisals ●Real estate appraisers (2 people) 【Outsourced】 ●Building managers (2 people)) ● Japan Real Estate Institute (8 properties) ●Japanese securities analysts ● Tanizawa Sogo Appraisal (6 properties) (2 people), et
Slide 37: Appendix I
中表紙：市場分析「商業施設・オフィストピックス」 AppendixⅠ
Slide 38: Strategies for Operating Retail Facilities
6 AppendixⅠ Strategies for Operating Retail Facilities Commercial (retail) sales volume is not impacted much by Fukuoka REIT’s strategies on retail properties economic boom and recession cycles “Place for Fun” strategy The most enjoyable place: more than just shopping. The pie has a sufficient volum
Slide 39: Direct Operations
6 AppendixⅠ Direct Operations 2. Capabilities to renovate zones and 1. Portfolio effects leasing capabilities Diversification of risks through leasing to multiple tenants Lease a single property in sections to many tenants (Example: Park Place Oita has 79 tenants) Manage monthly sales of Fukuoka REI
Slide 40: Plan to Expand Floors at Park Place Oita
6 AppendixⅠ Plan to Expand Floors at Park Place Oita 40
Slide 41: Park Place Oita: Changes in Use of Land Adjacent
6 AppendixⅠ Park Place Oita: Changes in use of Land Adjacent The change from category 1 district for medium-rise and high-rise residential buildings to a category 2 residential district makes it possible to build hotels, restaurants, sporting facilities, retail tenants, and offices for general use 4
Slide 42: Strength of SunLiveCity Kokura
6 AppendixⅠ Strength of SunLiveCity Kokura Achieved sales increases for three consecutive years since opening, attracting customers with its “fresh food market” market” that is indispensable for the inhabitants in the local community Won recognition as “No. 1 shop” in the area Fukuoka REIT also enjo
Slide 43: Fixed-term Lease Strategies: Properties Acquired in & after 7th Fiscal Period
6 AppendixⅠ Fixed-term Lease Strategies: Properties Acquired in & after 7th Fiscal Period Property Acquired in the 7th Fiscal Period Property Acquired in the 7th Fiscal Period Property Acquired in the 8th Fiscal Period Hanahata SC Kurume Higashi Kusiwara SC K’s Denki Kagoshima - Synergy of a high qu
Slide 44: Canal City Hakata: Targets Tourists from Asia
6 AppendixⅠ Canal City Hakata: Targets Tourists from Asia Cruise Ships will call At The Port of Hakata A port of call of Luxury Liners 22 times this year ◆ Luxury passenger cruisers start to call at the Port of That’s Canal City Hakata! Hakata in the spring of 2008 (from April to October; 22 times i
Slide 45: MEMO
MEMO メモ
Slide 46: Future Perspective of Office Market in Fukuoka
6 AppendixⅠ Future Perspective of Office Market in Fukuoka “Fukuoka City” is a “market with un-volatile” “Fukuoka REIT” is acquiring and managing large-scale, well-located and high-grade properties at “high cap rates” 46
Slide 47: Office Market in Fukuoka
6 AppendixⅠ Office Market in Fukuoka Vacancy Rate Changes in Average Rent of Office Buildings (excluding common expenses) (Note) Each of the above graphs was prepared by Fukuoka Realty based on data provided by CBRE and Ikoma Data Service System (Reference) “Vacancy (%)”: (vacancy area within zones/
Slide 48: Office Space Supply Trends in Fukuoka
6 AppendixⅠ Office Space Supply Trends in Fukuoka *Rent: unit price per tsubo of monthly offering rent (not including common expenses) (Source) For above line graphs: CBRE and Ikoma Data Service System / CBRE Office Market Report vol.43 2007 Autumn 48
Slide 49: Category Analysis of Large Office Buildings
6 AppendixⅠ Category Analysis of Large Office Buildings (Total Floor Area of 3,000 Tsubos or More) (Source: (Source) CBRE CBRE and andData Ikoma Ikoma DataSystem Service Services) (Note) The above graph was prepared by Fukuoka Realty based on data provided by CB Richard Ellis and Ikoma Data Service
Slide 50: Analysis of Real Estate Market in Fukuoka
6 AppendixⅠ Analysis of Real Estate Market in Fukuoka 50
Slide 51: Fukuoka's 2011 Dynamism: Mega-projects for Redevelopment
6 AppendixⅠ Fukuoka's 2011 Dynamism: Mega-projects for Redevelopment Simultaneously Proceed in Line with Full Opening of Kyushu Shinkansen Tenjin 2-chome district: Given the application of loose requirement in FAR, Fukuoka City and major companies started a study session Thirteen re-development buil
Slide 52: Appendix II
中表紙：福岡・九州マクロ経済 AppendixⅡ
Slide 53: Population Growth in Fukuoka Metropolitan Area
7 AppendixⅡ Population Growth in Fukuoka Metropolitan Area Population Change in Principal Metropolitan Areas in Japan Fukuoka City with Growing Population (Indicated by index with figures in 1985 as 100) (Note) Population growth rate of major cities in past 5 years. Total rate of move-ins = Total nu
Slide 54: Automobile Industry in Kyushu
7 AppendixⅡ Automobile Industry in Kyushu Long-term Trend of Capital Investment Capital investment in Kyushu continues strongly Graph formed after establishing the capital investment value of all industries in 2002 as 100 and indexing based on this (Source) “Capital Investment Trend in Kyushu Region
Slide 55: Semiconductor Industry in Kyushu
7 AppendixⅡ Semiconductor Industry in Kyushu Locations of Major Plants Related to Automobiles and Semiconductors Large manufacturers actively continue Panel investment in Kyushu （Sony Semiconductor Kyushu 〔Kagoshima〕、 Toyota Motors Kyushu, Kanda Plant Miyazaki Oki Electronic 〔Miyazaki〕） (Kanda-machi
Slide 56: Fusion of Automobile and Semiconductor Clusters
7 AppendixⅡ Fusion of Automobile and Semiconductor Clusters Progress in Applying Electronics to Automobiles Future Semiconductor Market (share on a value basis) Source: Nikkei Electronics (March 18, 2004) Source: made by Fukuoka Realty based on Development Bank of Japan “The age of Coalescence of Cl
Slide 57: Formation of Automobile Cluster over Northern Kyushu and South Korea
7 AppendixⅡ Formation of Automobile Cluster over Northern Kyushu and South Coast of Korea Northern South Korea A cluster of automobile manufacture formed beyond the national boundary Kyushu Production base of Strong competitiveness Ecological cars in component industry Advantages over Increase the p
Slide 58: Appendix III
oe . DR Fukuoka” 4 REIT
Slide 59: Leasing Business Income and Expenditure by Properties
8 AppendixⅢ Leasing Business Income and Expenditure by Properties (unit: million yen) Kurume Canal Gofukuma Taihaku Canal City Park Place SunLive Square Mall Kumamoto Hara Hanahata Higashi City chi Sanix Street Amex City House Category Hakata Oita City Kagoshima Intercomm SATY SC Kushiwara Business
Slide 60: Rental Portfolio (including common expenses)
8 AppendixⅢ Rental Portfolio (including common expenses) (Note 3) (Note 1) (Note2) (Note 1) Ratios indicated in the pie graphs are figures obtained by dividing the actual for the 7th fiscal period, as totaled for each remaining contract period of residents at Amex Akasakamon Tower and City House Key
Slide 61: Breakdown of Tenant Rent Types for Retail Properties
8 Breakdown of Tenant Rent Types for Retail Properties ・Comme ca Store ・SunLive ・Jusco Park Place Oita ・SATY ・K’s Denki ・Washington Hotel ・Sports Depo/Golf 5 ・United Cinema Canal City 13 ・Canal City OPA ・Sports Authority (*1) (*4) (*5) (*6) (*5) This represents the total for the fixed rent of “Fixed
Slide 62: Cash Flow Statement for the 7th Fiscal Period
8 AppendixⅢ Cash Flow Statement for the 7th Fiscal Period (ended February 29, 2008) 7th period (182 days) 6th period (184 days) （unit: thousand) September 1st, 2007 – February 29, 2008 March 1, 2007 – August 31, 2007 Ⅰ Cash flows from operating activities Net Profit before tax 1,981,346 1,966,802 De
Slide 63: Relation between Depreciation Expense and Capital Expenditures
8 AppendixⅢ Relation between Depreciation Expense and Capital Expenditures (incl. Repairing Expenses) 63
Slide 64: Construction Confirmation Inspection Agencies
8 AppendixⅢ Construction Confirmation Inspection Agencies Construction Construction Construction PML Value Property Name Completion Date Design Companies Contractor Confirmation Confirmation Name (*3) Agency Inspection Agency A) 8.0 Fukuoka Jisho First Class Architect’s Canal City Hakata New New con
Slide 65: Composition of Asset Management Fees
8 AppendixⅢ Composition of Asset Management Fees Calculation （Payment Period） {3 months from the date following the end of the latest settlement period } Total Assets at end of latest settlement period * 0.3% * Length / 365 days AM Fees① (Assets Linked) {From the date following the end of the period
Slide 66: Analysis of Investor Attributes and Volume Ownership Reports
8 AppendixⅢ Analysis of Investor Attributes and Volume Ownership Reports Distribution by Investor Category (Breakdown of Investment Units) Major Investors (End of 7th Fiscal Period) *Number of units * * owned by trust banks * * * * Filing of Volume Ownership Report (as of March 31, 2008) 66
Slide 67: History of Investment Unit Price
8 AppendixⅢ History of Investment Unit Price History of Investment Unit Price 67
Slide 68: Size of the Fukuoka Metropolitan Area
8 AppendixⅢ Size of the Fukuoka Metropolitan Area Populations of Major Japanese Metropolitan Areas Fukuoka Metropolitan Area Fukuoka City and municipalities from which 10% or more of the population commutes to school or work in Fukuoka City Tokyo Metropolitan Area 33.64 million people Osaka Metropol
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