Fukuoka Reit Corporation · TSE:8968
Fukuoka Reit — 9th fiscal period Earnings Presentation
73 slides from Fukuoka Reit's earnings presentation, April 2009
Slide 1: Fiscal Period Performance, February 28, 2009
:liwww.fukuoka-reit.jp/ a LON cc) & September ist, 2008 . 3 Fistale riod Performante ~»>>Febrilar§ 28t — > = Lu aa :O aa O > << - Li
Slide 2: Slide 2
Slide 3: Fukuoka REIT Overview
Profile Fukuoka REIT Overview Profile Profile Investment Investment Unit Unit Price Price 【Name】 Fukuoka REIT Corporation 【Unit Price】 343,000 yen (as of February 27, 2009) 【Asset Manager】 Fukuoka Realty Co., Ltd 【Outstanding Units】 107,050 units 【Sponsors】 Fukuoka Jisho, Kyushu Electric Power, 【Mar
Slide 4: J-REIT specialized in Fukuoka / Kyushu area
Profile J-REIT specialized in Fukuoka / Kyushu area 4
Slide 5: Table of Contents
ukuoka ce Table of Contents Financial Statements --- 006 tor haation eperty O19 Financial Strategy---- ()2] Appraisal Value 027 Strategy of Retail ------ (130 Strategy of Office 037 Total Strategy 047 Appendix 050 Business Forecast Financial Statements New Aquisition Property Financial Strategy Appr
Slide 6: Financial Statements
Financial Statements ow y Strategy of Netai| Strategy of Office Total Stratedy Appendis Financial Statements
Slide 7: Financial highlights
Financial statements Financial highlights 3rd fiscal period 4th fiscal period 5th fiscal period 6th fiscal period 7th fiscal period 8th fiscal period ① 9th fiscal period ② Variation Category September 1, 2005 to February 28, 2006 March 1, 2006 to August 31, 2006 September 1, 2006 to February 28, 200
Slide 8: Comparison of the statement of income
Financial statements Comparison of the statement of income ① Operating revenues : NOI ② NOI : Ordinary income (million yen) Operating revenues （16.7） Other operating expenses 36.6 Real estate leasing revenues （58） Depreciation and amortization expenses 17 Full contribution of properties newly acquir
Slide 9: Difference between forecast and result
Financial statements Difference between forecast and result Primary factors for difference between forecast and result Forecast for the (Unit：million yen) Result for the 9th 9th fiscal period ② Difference Category Ordinary Ordinary income income (in (in comparison comparison to to the forecast) +26
Slide 10: History of occupancy rate by property (Retail)
Financial statements History of occupancy rate by property (Retail) (*1) The occupancy is the percentage the leased area comprises of the leasable area (*2) The information used for each data is that for the end of each month. Retail：Continuing the stable occupancy rate 10
Slide 11: History of occupancy rate by property (Office, Others)
Financial statements History of occupancy rate by property (Office, Others) (*1) The occupancy is the percentage the leased area comprises of the leasable area (*2) The information used for each data is that for the end of each month. Office, residence：Keeping the high occupancy rate although the ma
Slide 12: History of NOI by property (Retail)
Financial statements History of NOI by property (Retail) (*) Shown NOI actual price by each property at the every fiscal period (*) The numbers below million yen rounded down Park Place Oita & K’s Denki Kagoshima supported the decrease of NOI by the renovation at Canal City Hakata 12
Slide 13: History of NOI by property (Office, Others)
Financial statements History of NOI by property (Office, Others) (*) Shown NOI actual price by each property at the every fiscal period (*) The numbers below million yen rounded down Keeping the stable NOI 13
Slide 14: Slide 14
Slide 15: Business Forecast / New Acquisition Property
Business Forecast= New Aquisition Property
Slide 16: Business forecasts
Business forecast・New acquisition property Business forecasts 3rd fiscal 4th fiscal 5th fiscal 6th fiscal 7th fiscal 8th fiscal 9th fiscal 10th fiscal 11th fiscal period period period period period period period period period Category （Feb. 2006） （Aug. 2006） （Feb. 2007） （Aug. 2007） （Feb. 2008） （Aug.
Slide 17: Basic assumption for business forecast
Business forecast・New acquisition property Basic assumption for business forecast Comparison of forecast for the 10th fiscal period and result of the 9th fiscal period Comparison result of the 9th fiscal period (million yen) Operating revenues 128 Other operating expenses 85 Increase in revenues by
Slide 18: Acquisition of Higashi Hie Business Center
Business forecast・New acquisition property Acquisition of Higashi Hie Business Center Favorable Location, High Occupancy rate, High Specification 18
Slide 19: Favorable location with convenience of access
Business forecast・New acquisition property Favorable location with convenience of access Satisfies needs of big companies whose sales persons drive company cars to meet customers 19
Slide 20: Slide 20
Slide 21: Financial Strategy
Financial Strategy > Business Forecast Financial Statements New Aairiti tion Property v Strategy of Netai| Stratagy of Office Tota! Strategy Appendis Financial Strategy
Slide 22: Basic financial policy and state of achievement in the 9th fiscal period
Financial strategy Basic financial policy and state of achievement in the 9th fiscal period Enhansing Strategic Financial Structure 22
Slide 23: Measures in the 9th fiscal period
Financial strategy Measures in the 9th fiscal period Continuing to strength its financial structure 23
Slide 24: Dispersion of repayment period and average interest rates during period
Financial strategy Dispersion of repayment period and average interest rates during period The dispersion of repayment period completed. Average interest rates remained unchanged 24
Slide 25: The percentage of fixed-rate debts to total debts and duration
Financial strategy The percentage of fixed-rate debts to total debts and duration Aiming for further stabilization 25
Slide 26: Itemization of borrowings
Financial strategy Itemization of borrowings (As of February 28, 2009) Type Lender Amount (JPY) Borrowing date Repayment maturity(*1) Payment Annual interest Interest Description method Long-term debt payable due Development Bank of Japan Inc. 12,000,000,000 November 9, 2004 August 31, 2009 Lump sum
Slide 27: Appraisal Value
Appraisal Value H Business Forecast- Financial Statements New Agiriti tion Property Strategy of Offi Tota! Strategy Appendis Appraisal Value
Slide 28: List of property prices
Appraisal value List of property prices Amount Latest Latest appraisal value by the DCF method recognized appraisal value (mm yen) (* 6) Acquisition Latest Acquisition Appraisal cap in balance by the direct Price appraisal cap rate rate Property name sheet at end Appraisal company capitalization App
Slide 29: Analysis of causes for changes in direct capitalization values
Appraisal value Analysis of causes for changes in direct capitalization values 9th fiscal period Difference from the previous fiscal period Difference factor Property name Direct capitalization values Cap rate Direct capitalization values Cap rate CF factor CR factor CF factor CR factor (million yen
Slide 30: Strategy of Retail
Strategy of Retall
Slide 31: Variation in sales of three properties under active management policy
Strategy of retail Variation in sales of three properties under active management policy Recorded better results under a harsh business environment 31
Slide 32: Canal City Hakata: Renovation works in the 9th fiscal period and the future renovation
Strategy of retail Canal City Hakata: Renovation works in the 9th fiscal period and the future renovation project Renovations：Managing various challenges 100％ occupancy 32
Slide 33: Retail property under passive management policy: Maintaining stable NOI
Strategy of retail Retail property under passive management policy：Maintaining stable NOI (*) Shown NOI actual price by each property at the every fiscal period The numbers below million yen rounded down (*) The phrase “in principle” is used, since there exists a provisional exception that allows ea
Slide 34: Breakdown of tenant rent types for retail properties
Strategy of retail Breakdown of tenant rent types for retail properties (*5) This represents the total for the fixed rent of “Fixed rent tenants” minimum guarantee for “Percentage of sales with minimum guarantee tenants” and fixed rents for “Fixed rent +percentage of sales tenants” (*6) This represe
Slide 35: Simulation of rents from sales assumption (Three active retail properties)
Strategy of retail Simulation of rents from sales assumption (Three active retail properties) Although Sales decreases 10％ from the current situation, Rents decreases only 4.5％ 35
Slide 36: Top tenants in the portfolio
Strategy of retail Top 10 tenants in the portfolio Remaining Rank Total leased Contract Name of tenant (Name of shop) Contractor Property name Share Rent structure contract years areas （㎡） type (years) (*2) Jusco Ordinary Park Place Oita 58,588.34 Fixed 13.2 Park Place Oita lease 1 AEON Kyushu 24.9％
Slide 37: Strategy of Office
Strategy of Office Business Forecast na Financial Statement New Aditi toon Property vancial Strategy Anoraina! Value Strategy of Nets Tota! Strategy FY Strategy of Office
Slide 38: Fukuoka office market vacancy rate
Strategy of office Fukuoka office market vacancy rate Source：CB Richard Ellis Research Institute Increasing vacancy rates of major cities 38
Slide 39: Variation in demand and supply balance
Strategy of office Variation in demand and supply balance Source：CB Richard Ellis Research Institute Vacancy rate deteriorates due to mass supply of office spaces, but it seems to have hit a peak in 2008 39
Slide 40: New office space supply trends: Hakata, Gion, and Gofukumachi areas
Strategy of office New office space supply trends ① Hakata, Gion, and Gofukumachi areas Superior to location and specification of our owned properties 40
Slide 41: New office space supply trends: Tenjin and Yakuin areas
Strategy of office New office space supply trends ② Tenjin and Yakuin areas Non-local companies offices will be completed 41
Slide 42: Analysis on vacancy rate for new buildings and existing buildings
Strategy of office Analysis on vacancy rate for new buildings and existing buildings Source：CB Richard Ellis Research Institute Source：CB Richard Ellis Research Institute Newly constructed office buildings are still struggling to find tenants. 42
Slide 43: Analysis on vacancy rate for A-class office buildings
Strategy of office Analysis on vacancy rate for “A”- class office buildings Source：CB Richard Ellis Research Institute The vacancy rate for the existing “A”- class office buildings has remained stable 43
Slide 44: Simulation on rents for owned properties and assumed occupancy rate
Strategy of office Simulation on rents for owned properties and assumed occupancy rate (*) The occupancy rate is the percentage the leased areas comprise of the leasable areas. Higashi Hie Business Center is not included in the data, since it was not acquired as of the end of the previous fiscal per
Slide 45: Rents in Fukuoka office building market
Strategy of office Rents in Fukuoka office building market Source：CB Richard Ellis Research Institute The volatility of rents has been smaller in Fukuoka City 45
Slide 46: Market situation and future prospects
Strategy of office Market situation and future prospects Maintaining the current management stance to come through a hard time caused by a massive supply 46
Slide 47: Total Strategy
Total Strategy
Slide 48: Fukuoka REIT's perception of the current J-REIT market environment
Total strategy Fukuoka REIT’s perception of the current J-REIT market environment Responsing to market fluctuations with the beliefs of “Act Local Think Global” 48
Slide 49: Strategies for future growth
Total strategy Strategies for future growth Keeping steady management 49
Slide 50: Slide 50
Slide 51: Appendix
Appendix Financial Statements | rer ee cre : > rer . rrr z 3 = rre Business Forecast- Financial Statement New Aquisition Property Financial Strategy Appraisal Value Strategy Re ul rategy Appendix
Slide 52: Balance sheet
Appendix Balance sheet （unit：thousand） （unit：thousand） 9th fiscal period 8th fiscal period variation 9th fiscal period 8th fiscal period Variation (as of February 28, 2009) (as of February 28, 2009) (as of February 28, 2009) (as of February 28, 2009) Category value value value Category value value v
Slide 53: Statement of income
Appendix Statement of income （unit：thousand） 9th fiscal period（①） 8th fiscal period（②） Variation (September 1, 2008-February 28, 2009) (March 1, 2008-August 31, 2008) （①－②） Category Value Value Operating revenue Rental revenue 5,111,304 5,169,535 Other rental revenue 219,007 177,472 Limited partners
Slide 54: Cashflow statement
Appendix Cashflow statement （unit：thousand） Category 9th fiscal period (181days） 8th fiscal period（184days） (September 1, 2008-February 28, 2009) (March 1, 2008-August 31, 2008) Net cash provided by operating activities Income before income taxed 1,933,205 1,968,589 Depreciation and amortization 864
Slide 55: Appendix
Appendix Business Forecast- New Aquisition Property Financial Strategy Appraisal Value Strategy of Re Appendix
Slide 56: Portfolio map
Appendix Portfolio map Canal City Hakata Fukuoka City Taihaku Street Higashi Hie ess Center Hakata Building Business C 10 Community SC City House Hara SATY Hanahata SC Keyaki Dori = y @ Kusamotg Kagoshima Park Place Olta SunLiveCity Kurume Kokura Higashi Kushiwara SC 14 Community $C 15 Community $C
Slide 57: Portfolio overview
Appendix Portfolio overview （*1） Limited partnership (Japanese Tokumei kumiai) distribution is not included. （*2） It’s calculated the figures as of February, 2009. 57
Slide 58: Ratio by properties
Appendix Ratio by properties （*） It is calculated the figures as of February, 2009. 58
Slide 59: Portfolio table
Appendix Portfolio table Acquisition Number of Leasable floor Occupancy Age Acquisition Primary tenants at end of period Property name price Source (* 3) tenants at areas at end of rate at end (* 1) timing (Top 2 tenants of the relevant property) (mm yen) (* 2) end of period period (㎡) of period Can
Slide 60: Construction confirmation inspection agencies / PML
Appendix Construction confirmation inspection agencies / PML Construction Construction PML value Property name Construction name Completion date Design company Contractor confirmation confirmation agency (*3) inspection agency A) 8.0 Canal City Hakata Fukuoka Jisho First Class Architect’s Office, Ne
Slide 61: Analysis on length of tenant's occupancy
Appendix Analysis on length of tenant’s occupancy （*） It is calculated tenant’s contracted period as of the end of 9th fiscal period (4owned properties). It is shown the contracted floor area by each period. “Tenant’s relation” is important in the office building market in Fukuoka City. 61
Slide 62: Appendix
Appendix v Leasing Business Income and Expenditure | Appendix
Slide 63: Rental portfolio (including common expenses)
Appendix Rental portfolio (including common expenses) (*1) Ratios indicated in the pie graphs are figures obtained by dividing the rents for the 9th fiscal period, as totaled for each remaining contract period of tenants at Canal City Business Center Building, Gofukumachi Business Center, Taihaku St
Slide 64: Leasing business income and expenditure by properties (Retail)
Appendix Leasing business income and expenditure by properties (Retail) (unit：mm yen) Kumamoto Park Place SunLive City Square Mall Intercommunity Kurume Higashi K's Denki Category Canal City Hakata Hara SATY Hanahata SC Kushiwara SC Kagoshima Oita Kokura Kagoshima Usuki SC 9th fiscal period (Septemb
Slide 65: Leasing business income and expenditure by properties (Office, Others, Total portfolio)
Appendix Leasing business income and expenditure by properties (Office, Others, Total portfolio) (unit：mm yen) Canal City Gofukumachi Taihaku Street Amex Category Business Center Sanix Hakata Akasakamon City House Total Business Center Building Business Center Keyaki Dori Building Building Building
Slide 66: Relation between depreciation expense and capital expenditures
Appendix Relation between depreciation expense and capital expenditures (incl. repairing expenses) (*) The numbers below thousand yen rounded down. 66 減価償却範囲内でのクオリティコントロール
Slide 67: Assumption for the 10th and 11th fiscal period
Appendix Assumption for the 10th and 11th fiscal period 67
Slide 68: Appendix
Appendix Appendix
Slide 69: Investor attributes and volume ownership reports
Appendix Investor attributes and volume ownership reports 69
Slide 70: History of investment unit price
Appendix History of investment unit price 70
Slide 71: Highlights of financial indicators
Appendix Highlights of financial indicators (*) Figures are calculated based on the result for the 8the fiscal period. Investment unit price at the end of the 9the fiscal period (343,000 yen as of February 28,2009) The forecast dividend per unit is based on the forecast for the 10th fiscal period (e
Slide 72: Appendix
Slide 73: Slide 73
Fukuoka REIT — 9th fiscal period Earnings Presentation on 6ix