福岡リート（8968） – Integrated Report 2021

Fukuoka REIT Corporation1-2-25 Sumiyoshi, Hakata, Fukuoka City, Fukuoka, Japanhttps://www.fukuoka-reit.jp/eng/Integrated Report2021Fukuoka REIT Corporation December 2021@fukuokareit8968facebook.com/fukuokarealtyfukuoka_realtyTo help stakeholders better understand FRC and its operations, FRC is focusing efforts on its IR activities. FRC uses its website to post press releases and various disclosure materials and provide information on its portfolio of investment properties and other items. In addition, FRC uses social media such as Twitter, Facebook, and Instagram to disseminate a wide range of information on the Fukuoka and Kyushu areas, including information on these regionsʼ economies, real estate markets, retail facilities, tourist attractions, and much more. We invite you to make use of these information resources.統合報告書2020Contents01 Introduction01 Corporate Profile / Characteristics02 Relationship with Fukuoka Realty Co., Ltd.04 Macroeconomic Environment around Fukuoka City08 J-REIT Mechanism and Fukuoka REIT Corporationʼs Business Model10 History and Business Performance12 Overview of Properties Owned14 Financial/Non-Financial Highlights (5-Year Graph)16 Value-Creation Activities16 CEOʼs Message20 Message from the Executive Director22 Strategies of Each Department26 Risks and Opportunities28 Financial Strategies and TSR （Total Shareholder Return）30 Foundation Underpinning Management30 Sustainability Policy and Materiality32 Environmental Issues36 Social Issues39 Organizational Issues42 Data Section42 Financial/Non-Financial Highlights (11-Year/22-Period Summary)44 GlossaryEditorial PolicyWith the aim of conveying details of the Investment Corporationʼs value creation process in an easy-to-understand manner, we have issued this Integrated Report since fiscal 2019. In editing this report, the editors adopt clear and accessible language, with reference to the International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC) and the Guidance for Collaborative Value Creation of Japanʼs Ministry of Economy, Trade and Industry (METI). We consider that this and subsequent reports will lead to active dialogue with investors and other stakeholders.（Residence）D-Wing Tower（Retail）Canal City Hakata（Office buildings）Gofukumachi Business Center（Logistics）LOGICITY HisayamaCorporate Profile / Characteristics Ta k i n g ad va nt a g e of o u r s tre n g th i n k n ow i n g th e l o c a l Corporate Profilecharacteristics of real estate, which is a region-specific business, to invest in the wider Kyushu region with a focus on Fukuoka, on June NameFukuoka REIT Corporation21, 2005, Fukuoka REIT Corporation (FRC) was listed as the first Securities code8968region-specific REIT in Japan. FRC believes that attracting excellent domestic and foreign investment funds to regional financial markets will stimulate community development in the Fukuoka and Kyushu areas. Moreover, we believe that possibilities for regional growth through urban development will provide FRC with a continuous stream of investment opportunities as well as income from assets under ownership for FRC while at the same time delivering profitable returns to unitholders.Listed dateJune 21, 2005 : FRC listed on Tokyo Stock Exchange and Fukuoka Stock ExchangeAccounting periodsFebruary, AugustAsset management companySponsorsFukuoka Realty Co., Ltd.Fukuoka Jisho Co., Ltd.Kyushu Electric Power Co., Inc.THE BANK OF FUKUOKA, LTD.THE NISHI-NIPPON CITY BANK, LTD.Nishi-Nippon Railroad Co., Ltd.SAIBU GAS HOLDINGS CO., LTD.Kyudenko CorporationKyushu Railway CompanyDevelopment Bank of Japan Inc.FRCʼs Characteristics1Japanʼs First Region-Specific REITTaking advantage of our strength in knowing the local characteristics of real estate, which is a region-specific business, we invest in real estate for rent in the Fukuoka and Kyushu areas, where growth potential exists. By appropriately managing the invested real estate, we continue to secure stable earnings over the medium to long term while providing stable dividends.2Excellent PortfolioTo build its portfolio, FRC selectively invests in a variety of investment property types, including retail facil-ities, office buildings, and logistics properties , etc., with a focus on the Fukuoka metropolitan area, which has significant growth potential.3Support Structure Comprises Sponsor CompaniesPowerful companies that lead the business world in Fukuoka and Kyushu, and accept our way of thinking, participate as shareholders of Fukuoka Realty Co., Ltd. FRC proactively utilizes the support from its sponsor companies while aiming to steadily expand its asset scale.4Stable Financial Base5FRC conservatively controls its LTV and diversifies repayment periods over time. In addition, the Investment Corporation continue s to maintain good re lationships with f inancial institutions including its three sponsor banks.Payment of Stable Dividends Continuing Since ListingUtilizing its sponsor pipeline and other advantages, FRC continues to distribute stable dividends per unit through the acquisition of carefully selected excellent properties and effective asset management in the Fukuoka and Kyushu areas.0101IntroductionFukuoka REIT Corporation 2021FRCʼs Basic PolicyCorporate Profile of Fukuoka Realty Co., Ltd.Listed on the real estate investment trust sections of the Tokyo and Fukuoka stock exchanges, Fukuoka Realty Co., Ltd., is FRCʼs asset management company. Having only one Executive Director and two Supervisory Directors, FRC outsources operations that include the selection of the real estate to be invested in, asset tate acquisitions, property selection, the post-acquisition manage-ment of real estate management companies outlined by Fukuoka Realty Co., Ltd., and real estate sales.　Located in Fukuoka City and comprising 40 employees with a variety of experience in real estate, finance, and other fields, management, and other general affairs to outside experts. Among Fukuoka Realty Co., Ltd., possesses a high level of expertise and the experts to which operations are entrusted, an important role is played by the asset management company. Generally, FRC makes full use of information unique to the local area in managing FRCʼs assets.movements occurring across the whole of Japan and the entire entrusts Fukuoka Realty Co., Ltd., see with surveys of new real es-Relationship with Fukuoka Realty Co., Ltd.【Our Mission】Taking advantage of our strength in knowing the local character-by utilizing its speed and depth of information based on knowledge of local land and a broad network centering on local governments istics of real estate, which is a region-specific business, we invest in real estate for rent in the Fukuoka and Kyushu areas. By appro-priately managing the invested real estate, we will achieve stable and the business world.【Think Global】We will proactively engage in IR activities to fulfill our accountabil-earnings over the medium to long term while making efforts to keep providing stable dividends for the future.【Act Local】We – FRC and Fukuoka Realty Co., Ltd. – are currently the only ity to global capital markets. In conjunction, we will take heed of Fukuoka Realtyʼs corporate governance and compliance. Regard-ing real estate and financial markets, FRC will keep closely tracking listed real estate investment corporation and asset management world, taking into consideration the logic of capital markets with company registered outside the Tokyo metropolitan and Kansai global ideas, and appropriately reflecting such in our asset man-areas under the provisions of the Act on Investment Trusts and Investment Corporations as well as the Financial Instruments and Exchange Act. As a region-specific REIT, FRC seeks differentiation in the selection of investment target properties and the manage-agement.　We will also keep diligently pursuing dialogue with investors,fo-cusing on fulfilling our accountability, and utilizing Fukuoka Realtyʼs fund management skills for investors under a strict compliance ment of owned assets through the enhancement of its information policy. gathering ability and ability to discern the profitability of properties Contribution to Regional Revitalization and Development of Attractive CommunitiesFRC and Fukuoka Realty Co., Ltd., believe that attracting domes-Based on this perspective, we believe that we can contribute to tic and foreign excellent investment funds to regional real estate regional revitalization and community development in the Fukuoka financial markets will stimulate community development in the and Kyushu areas.Fukuoka and Kyushu areas. Although we are not directly involved Funds will be returned to unitholders by distributing the earnings in community development or real estate development, we expect from owned assets.our acquisition of properties to lead to new funds passing to sellers Through the promotion of community development and the revi-and part of those funds being directed to new development, etc. talization of regional economies in the Fukuoka and Kyushu areas, With funds injected into FRC from Japan and abroad, new invest-we will aim for FRC earnings stability.ment funds will flow to the Fukuoka and Kyushu areas as a whole. Act LocalReal estate is a local business・ Distinctive capability for gathering qualitative information on the real estate market (speed, in-depth information)・ Specialization in local properties・ Solid network among local governments and the business worldOur MissionRegion-Specific REITFeaturing our expertise on local real estate markets, Fukuoka and Kyushu, maximize profits of investorsThink GlobalCapital market theory・ Accountability and transparent dialogue with investors・ Decent policy to comply・ Fund management skillsInvestment PolicyInvestment target areasInvestment typeFukuoka metropolitan area60%-90%Other Kyushu areas(including Okinawa and Yamaguchi prefectures)10%-30%Others0%-10%Retail40%-70%Office buildings20%-50%Others(Hotel, Residence, Logistics, etc.)0%-30%Real EstateInvestorsReal Estate Investment TrustFukuoka REIT Corporation［ Securities code:8968 ］HoldingsRents, etc.InvestmentsDividendsCompany entrusted with asset managementAsset management companyFukuoka Realty Co., Ltd.For more details : See pp.8–9Leading companies in Fukuoka and the Kyushu region that are in agreement with FRCʼs concept participate as shareholders（sponsors）of Fukuoka Realty Co., Ltd. FRC is aiming to achieve sustainable growth as a REIT through the expanded scale of its assets through the contribution of excellent properties from among our sponsors and by actively leveraging their support, including the provision of relevant information.　With regard to the properties owned and developed by the sponsor companies, Fukuoka Jisho Co., Ltd., FRC, and Fukuoka Realty Co., Ltd., have concluded a pipeline support memorandum of understanding（MOU）to seek stable and continuous acquisition opportunities.Fukuoka Jisho Co., Ltd. overview : See p.255%5%5%THE BANK OF FUKUOKA, LTD.THE NISHI-NIPPON CITY BANK, LTD.Development Bank of Japan Inc.55%Fukuoka Jisho Co., Ltd. ＊DirectorsFukuoka Realty Co., Ltd.(Asset Manager)Outside directors10%Kyushu ElectricPower Co., Inc.5%5%5%5%SAIBU GAS HOLDINGS CO., LTD.Kyudenko CorporationNishi-NipponRailroad Co., Ltd.Kyushu Railway Company* Concluded MOU with FRC and Fukuoka Realty Co., Ltd., concerning pipeline support.0203■ Introduction　　□ Value-Creation Activities　　□ Foundation Underpinning Management　　□ Data SectionIntroductionIntroductionFukuoka REIT Corporation 2021Fukuoka REIT Corporation 2021Fukuoka Cityʼs Standing: From Regional City to an Asian Economic MetropolisPopulation Continues to Grow in Fukuoka CityMacroeconomic Environment around Fukuoka CityBlessed with a history and culture nurtured by the sea, an abundant natural environment, exten-sive urban functions, diverse human resources, and various other assets, Fukuoka City is recog-nized around the world as a livable city.Under the “Fukuoka City Comprehensive Plan,” the basic strategy for city management focuses on creating a virtuous cycle of “urban growth” and “greater quality of life.” In aiming to become a “leading Asian city in which people, the environment, and urban vitality are harmonized,” Fukuoka City is advancing urban planning that recognizes its presence within Asia as a compact, sustain-able city that balances economic growth with a safe, secure, high quality of life.BeijingSeoulBusan OsakaTokyoShanghaiTaipeiFukuoka500kmHong Kong1,000km1,500kmFukuoka City Initiatives■ Fukuoka City: Trends in head office function/growth fields company relocationsNo. of companies relocatedNo. of persons employed(Companies)(Persons)Fukuoka Cityʼs Activities to Attract “Growth Fields and Head Office Functions”Having promoted the attraction of “growth fields and head office functions,” Fukuoka Cityʼs track record in company relocations has exceeded 50 companies annually for eight consecutive years. With the progress of risk diversification and telework in the centralized area of Tokyo, more companies are considering opening bases in regional cities. Even when impacted by COVID-19, the willingness of compa-nies to enter the market has not diminished. Fukuoka City will thus continue to make efforts to further establish companies and create employment by utilizing active PR and incentives.Example of Major Function RelocationJapanet Holdings Co., Ltd., launched its JAPANET@FUKUOKA project, which features Fukuoka City as one of its new major bases. In addition to relocating 12 departments, including personnel and accounting, mid-career recruitment will be strengthened, and the plan is to have commenced operations by the end of 2021.807060504030201005,0004,0003,0002,0001,0000202050665TEAM FUKUOKA attracting international financial functionsFukuoka: A Balanced City That Continues to GrowThe Japanese government, as a pillar of its growth strategy, aims to gather financial talent, funds, and information from overseas and to establish Fukuoka as an international financial city. In response, According to “Japan Power Cities: Profiling Urban Attractiveness 2021,” a survey conducted by the Mori Memorial Foundation, which analyzes the urban vitality of 138 cities in Japan from relative TEAM FUKUOKA, a promotional organization of industry-ac-and multifaceted perspectives, Fukuoka City consistently received ademia-government collaboration throughout Fukuoka, was estab-lished on September, 2020.In aiming to attract international financial functions to the city, TEAM FUKUOKA’s efforts included the opening of the Global high marks as the largest city in the Kyushu region that combines economic vitality and ease of living. In terms of its “daily life and liv-ability” functions, Fukuoka ranked first in the whole country. Aiming to create a leading city in Asia in which people, the environment, Finance Center, a one-stop support portal specializing in interna-and urban vitality are in harmony, Fukuoka continues to grow as a tional finance, and the appointment of a Fukuoka City international balanced city.financial ambassador. The first success, the entry into the mar-ket of Hong Kong asset management company MCP Holdings Limited, was announced in February 2021. In July, the companyʼs Japanese head office, MCP Japan Holdings, was established. TEAM FUKUOKA is deciding on many other corporate moves into the Fukuoka City market.Examples of TEAM FUKUOKA Successes（1） First success, MCP Holdings Limited attracted from Hong Kong（2）CapBridge Financial Pte. Ltd. attracted from Singapore（3） DHARMA.CAPITAL K.K., the first FinTech company, attracted from Tokyo■ Category Rankings/Standard DeviationEconomics/Business5th 71.1(2nd)Transportation/Access3rd 77.7(3rd)Standard Deviation by Category50-point standard deviation line（　） Figures in parenthesis indicate last yearʼs rankingsResearch/Development6th 80.6(5th)Environment63rd 51.3(91st)Culture/Exchange5th 74.1(5th)Source: “ Restoring Vitality!”―Overview of the Initial Budget Proposal for Fiscal 2021 issued by the Finance Bureau of the City of Fukuoka on February 16, 2021, and press release issued by the Economy, Tourism & Culture Bureau of the City of Fukuoka on February 12, 2021Lifestyle/Residence1st 73.3(6th)Source: Prepared by Fukuoka Realty Co., Ltd., based on data from“Japan Power Cities: Profiling Urban Attractiveness 2021,”a survey conducted by the Mori Memorial Foundation.Total population of Fukuoka CityPopulation growth ratio(Thousands)1,6501,6000.991,5000.99 1.020.991,5561,5701,5821.181,614 1,6201,5950.841,5501,541Fukuoka Has a Large Youth Population0.950.89 0.820.890.890.781,5121,5260.90 0.771.121,4971,482（%）1.41.21.00.8The total population of Fukuoka City has increased consistently since 1985, and as of May 1, 2020, the estimated population exceeded 1.60 million. This total population makes the city the fifth most populous among government-designated cities, following Yokohama, Osaka, Nagoya, and Sapporo. According to esti-mates from the National Institute of Population and Social Security Research, the population of Fukuoka City is expected to continue Compared to other cities, the population composition of Fukuoka 1,4500.6City is characterized by a higher proportion of young people. Of 1,4301,4411,4541,4661,417the cities listed in the chart below, the ratio of young people in 1,400Fukuoka City（the proportion of a cityʼs total population accounted 1,3500.2for by people ages 15 to 29）ranks first at 17.4%. Fukuoka Cityʼs working-age population ratio（the proportion of the cityʼs total pop-002013ulation made up of people ages 15 to 64）ranks third at 64.8%.2015201620172018201920202021200620072008200920102011201220140.4growing until 2035.■ Total Population and Population Growth Ratio of Fukuoka City■ Young People and Working-Age Population ratios of Nationwide and Total population of Fukuoka CityPopulation growth ratio(Thousands)Major Cities（2015）（%）（%）18.00.990.890.89 0.820.781.120.99 1.020.991,5561,5701,5821.180.891,5410.951,5121,5260.90 0.771,614 1,6201,5950.841,4971,4821,4661,4541,4411,4301,417・ Youth population 17.4% (1st)・ Working-age population 64.8% (3rd)SendaiFukuokaKawasakiKyotoOkayamaKumamotoOsakaSagamiharaNagoyaSaitamaTokyo Metropolitan areaHiroshimaSapporoYokohamaKobeNiigataSakaiNationwideHamamatsuChibaKitakyushuShizuoka・ Youth population 14.5%・ Working-age population 60.0%)l92 ot 51 dega noitaupop ytic fo egatnecreP(lnoitaupophtuoY 17.016.015.014.01.41.21.00.80.60.40.20Fukuoka as a Compact City・ Youth population 17.4% (1st)・ Working-age population 64.8% (3rd)As a compact city, the air, sea, and land transportation access five minutes to Hakata and about 10 minutes to Tenjin.points of Hakata Station, the Port of Hakata/Chuo Wharf, and Fu-About 60% of commuting times are less than 30 minutes, which kuoka Airport are located within a three-kilometer radius of Tenjin, Tokyo Metropolitan areaFukuoka City’s central business district. Traveling by the Fukuoka SagamiharaKumamotoSaitamaNagoyaOsaka16.0is about half that of Tokyo. In 2022, the Nanakuma Subway Line extension project will connect Tenjin and Hakata Station, and thus KyotoOkayamaSendaiFukuokaKawasakiCity Subway from Fukuoka Airport to the city center, it takes about HiroshimaYokohamaSapporoincreased convenience is expected.KobeNiigataSakaiNationwideHamamatsuChibaFukuoka CityKitakyushuShizuoka・ Youth population 14.5%・ Working-age population 60.0%Island City057.058.059.060.061.062.063.064.065.066.0 （%）Working-age population(Percentage of city population aged 15 to 64)JR（Conventional lines）ShinkansenNishi-Nippon RailroadFukuoka Municipal SubwayFukuoka Urban ExpresswayNishi Kyushu ExpresswayPort of Hakata/Chuo WharfTenjin StationFukuoka AirportHakata StationNanakuma Subway Line Extension ProjectAn intermediate station on the Nanakuma Line exten-sion project that will connect Tenjin and Hakata Station, Kushida Shrine Station is planned to be adjacent to Canal City Hakata, FRC’s flagship property.Nakasu Kawabata StationGion StationTaihaku-doriKushida Shrine StationCanal City HakataYakuin-SHakata RiverhinkaNakagawwa（river））a（rivero r ou t a i- dkoKTenjin StationTenjin-minami StationLegend）retneC ytiiCs（enL yawbuSHakata-ekimae-doriHakata StationExtension sectionTenjin-minami ~Hakata stationOperating sectionsNanakuma LineAirport Lineirod-ihsoymuSiSource: Created by Fukuoka Realty Co., Ltd. based on data from Fukuoka City Transportation Bureau’s Nanakuma Subway Line Extension Project Leaflet（April 2019）.1,6501,6001,5501,5001,4501,4001,350)l92 ot 51 dega noitaupop ytic fo egatnecreP(lnoitaupophtuoY （%）18.017.015.014.0LegendNo. of companies relocatedNo. of persons employed2016582,9892017571,0412018571,3342019531,05802006200720082009201020112012201320142015201620172018201920202021057.058.059.060.061.062.063.064.065.066.0 （%）Note: Total population for 2021 indicates the population as of November 1, and therefore does not reflect the population growth rate.Source: Prepared by Fukuoka Realty Co., Ltd., based on data from Fukuoka City Estimated Population and Fukuoka City Registered Population, published by Fukuoka CityCommunications, Statistics Bureau Population Census of Japan.Source: Prepared by Fukuoka Realty Co., Ltd. based on data from the Ministry of Internal Affairs and Working-age population(Percentage of city population aged 15 to 64)0405■ Introduction　　□ Value-Creation Activities　　□ Foundation Underpinning Management　　□ Data SectionIntroductionIntroduction70805.00004.00003.00002.00001.000050600020103040（社）（人）立地企業数雇用者数2016年2017年2018年2019年2020年立地企業数58社57社57社53社50社雇用者数2.989人1.041人1.334人1.058人665人5075250Fukuoka REIT Corporation 2021Fukuoka REIT Corporation 2021The Tenjin district of Fukuoka City received special authorization seek to encourage the reconstruction of older buildings as highly to relax Civil Aeronautics Act–related building height restrictions earthquake-resistant, high-tech buildings.Related Materiality・Contributions to boosting the attractiveness and revitalization of Fukuoka and KyushuTOPICFRC and Main Sponsor Fukuoka Jisho Co., Ltd.ʼs Initiatives in Tenjin Big Bang / Hakata ConnectedMacroeconomic Environment around Fukuoka Cityfactors as the deregulation of floor area ratios, the project will also Note: Focus areasTenjin Big Bang and Hakata Connected Projectsfollowing its designation as a National Strategic Special Zone for Global Startups & Job Creation. In addition, Fukuoka City has been advancing the Tenjin Big Bang project to create new spaces and employment, implementing original policies to deregulate floor area ratios, and working to significantly improve urban functions.In the cityʼs Hakata district, the Hakata Connected project has started to better link the vitality and prosperity of Hakata Station to the surrounding area. In the area surrounding Hakata Station, which serves as the overland gateway to the Kyushu region, municipal functions are being improved via transport infrastructure enhancements, including an extension to the Nanakuma subway line and the redevelopment of Hakata Ekimae Street. Through such ■Targeted certificationsTenjin Big Bang• Buildings scheduled to be completed by December 31, 2024• Working on infectious disease countermeasures, buildings scheduled to be completed by December 31, 2026（two-year extension from initial period）Hakata ConnectedBuildings scheduled to be completed by December 31, 2028 ■Certification requirementsTenjin Big Bangopen spacesbuildings（2） Building design that considers continuity with surrounding （3） Promotion of tree shade and flowers that enrich the town, and eye-catching greening（4）Consideration given to Universal DesignHakata Connected（1）Creation of spaces to wander that create a connection with and expand on the surrounding area（2）Creation of attractive plaza spaces that create a lively atmo-sphere, for example, by being used for events（3）Promotion of tree shade and flowers that enrich the town, and eye-catching greening（4）Consideration given to Universal Design applications）Tenjin Big Bang52 buildings（Construction completed: 42 buildings）Note: February 2015 to February 2021Hakata Connected15 buildings（Construction completed: 7 buildings）Note: January 2019 to February 2021Nanakuma Subway Line Extension(scheduled to start its operation in the FY2022)Kushida Shrine StationNishitetsu Fukuoka (Tenjin) StationCanal City HakataJR Hakata StationTenjin Big BangHakata Connected■Relaxation of height restrictionsTenjin Big Bang• Around Fukuoka City Hall　approx. 67 m（15 floors）Examples of height restriction relaxation • Tenjin, Meiji-dori district（west of the center of Watanabe-dori）　approx. 115 m（26 floors）• Tenjin, Meiji-dori district（east of the center of Watanabe-dori）　approx. 76 m（17 floors）to approx. 100 m（22 floors）• Tenjin 1-chome district　approx. 80 m（18 floors）to approx. 96 m（21 floors）Hakata ConnectedNone■Expansion of floor area ratio relaxation policy（Policy to Encour-age the Upgrading of Central Urban Functions in Fukuoka City）Buildings that contribute to an increase in activity, including those with plazas and other areas, which facilitate linkages and ripple effects, to be granted a maximum floor area ratio of 50%Current floor area ratio relaxation systemTenjin Big Bang bonusHakata Connected bonusMaximum floorarea ratio　　50％（Examples of relaxation of floor space ratios）• Tenjin 1-chome south block　 800％→1,400％（maximum）• Tenjin 2-chome south block（along Meiji-dori Ave.） 700％→1,300％（maximum）• Tenjin 1-chome north block（14th block） 600％→1,250％（maximum） infectionTenjin Big Bang Hakata ConnectedInfectious disease controls newly added to the existing system to relax floor area ratio（Policy to Encourage the Upgrading of Central Urban Functions in Fukuoka City）Check（Formerly）Global competitiveness（New）Global competitiveness/ Infection controlsMaximum 50%floor area ratio relaxationMaximum 50%floor area ratio relaxation■Number of buildings to be rebuilt（number of building certification ■Efforts toward becoming a city designed to control （1） High design quality buildings, including lower zones and public Tenjin Big Bang Hakata Connected06（千人）4,0003,000福岡空港利用博多港利用外国航路（不定期船）上陸人員数Concerning the Tenjin Nishi-Dori Business Center（Land with leasehold interest）acquired by FRC on June 1, 2021, we will be able to obtain stable rental income from sponsor and lessee Fu-kuoka Jisho Co., Ltd., during the redevelopment of the existing building on the property and for the period until either the end of February or the end of August, whichever comes first after nine months elapse following the completion of the redevelopment（the date certification of inspection is obtained）. Once that period has elapsed, rental income in line with market fluctuations will be obtained. Due to this acquisition, we will capture the growth of the （千人）area arising from Tenjin Big Bang and contribute to boosting the 福岡空港利用attractiveness and revitalization of the city as a landowner. Main sponsor Fukuoka Jisho Co., Ltd., also completed the Tenjin Busi-ness Center, the first property deregulated by Tenjin Big Bang, in 8842,000847September 2021. As the property is equipped with Fukuokaʼs first 0 2014年1612,000large-scale seismic isolation structure and the incorporates mea-1,000sures to address such infectious diseases as COVID-19, the Tenjin 1,631外国航路（不定期船）上陸人員数2101933,000外国航路（不定期船）上陸人員数5741835741835741832101932015年2016年2017年2018年210193福岡空港利用1,3921,6312,2052,414博多港利用4,0003,0002,2052,414博多港利用4,0001,3921,6312,2052,414161847167143842800143800167842161884847167143842800（千人）2,0001,0001,0008840 2014年1,3922015年2016年2017年2018年0 2014年2018年Fukuoka Office and Logistics Facility Market Conditions2015年2016年2017年Business Center is helping to attract companies from outside the See p.4タイ 1.1%（38千人）香港 5.9%（１97千人）その他地域 3.1%（１０３千人）欧州・米国・豪州 2.6%（87千人）, and prefecture, including Japanet Holdings Co., Ltd.operations have started at a high occupancy rate. In addition, Fukuoka Jisho Co., Ltd., is proceeding with the redevelopment of the adjacent Tenjin MMT Building, and the group represented by Fukuoka Jisho Co., Ltd., has obtained preferential negotiation rights for the site of Fukuoka City Hallʼs former north annex. In collaboration with THE NISHI-NIPPON CITY BANK, LTD., Fukuoka Jisho Co., Ltd., is also advancing a series of redevelopments of 台湾 9.6%（322千人）the Bankʼs aging main branch, main branch annex, and head of-タイ 1.1%（38千人）fice buildings under the Hakata Connected initiative.タイ 1.1%（38千人）欧州・米国・豪州 2.6%（87千人）欧州・米国・豪州 2.6%（87千人）香港 5.9%（１97千人）その他地域 3.1%（１０３千人）その他地域 3.1%（１０３千人）In this way, FRC and sponsor Fukuoka Jisho Co., Ltd., are 香港 5.9%（１97千人）actively involved in the redevelopment of urban areas in Fukuoka 台湾 9.6%（322千人）City and are promoting initiatives that will lead to our contributions 台湾 9.6%（322千人）to boosting the attractiveness and revitalization of Fukuoka and the Kyushu region, as stated in the materiality.外国航路（不定期船）上陸人員数 23.8%（800千人）中国 6.7%（224千人）韓国 47.2%（1,584千人）韓国 47.2%韓国 47.2%（1,584千人）（1,584千人）外国航路（不定期船）上陸人員数 外国航路（不定期船）23.8%（800千人）上陸人員数 23.8%（800千人）中国 6.7%（224千人）中国 6.7%（224千人）The office building market in Fukuoka remains solid, and demand for logistics facilities is robust.■ Fukuoka Business District/Vacancy Rates and Supply and Demand ■ Fukuoka Business District/Average Asking Rents （Y2005=100）FukuokaCentral Tokyo (5 wards)Completed floor space (total floor space)Net absorption (absorption demand)Vacancy rateCompleted floor space (total floor space)Net absorption (absorption demand)Vacancy rateFukuokaCentral Tokyo (5 wards)The average asking rent of the Fukuoka business district rose 4.8% from January 2020 to October 2021Central Tokyo (5 wards)Fukuokaof Office Buildings（Tsubo）賃貸可能面積稼働面積（Tsubo）（坪）50,000As of October. 2021Fukuoka 11,166 yenCentral Tokyo (5 wards) 20,804 yen(Yen/Tsubo) （%）130（%）130120（%）120110130110100120100110909010000900（%）20（%）20（%）201616121284.668844040Completed floor space (total floor space)50,000Net absorption (absorption demand)As of Oct. 2021Vacancy rate800,000（Tsubo）50,000600,00040,000400,00015.3840,00015.3814.7214.72FukuokaOsaka40,0000 2005年 2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年 2014年 2015年 2016年 2017年 2018年 2019年 2020年Sapporo13.2311.9815.3814.7213.2311.981610.8630,00012SendaiCentral Tokyo (5 wards)Nagoya6.30%6.47%5.39%4.66%4.45%2.80%30,00010.9930,00010.9920,00010.9913.2310.8611.9810.867.707.706.3020,00020,00010,00010,00010,000000-10,000Building Overview（Note）Office/hotel building（25aboveground floors）Offices 5th to 16th floorsRentable area: Approx. 30,000 m22009201220142015Community building（11 aboveground floors）Event hall（One aboveground floor）201020112013-10,000-10,000-20,0002008-20,000-20,0007.706.304.266.304.263.074.263.073.073.794.662.043.792.093.794.662.042.092.04Tenjin Business Center2.09（Provisional name）Utilization project for the formerDaimyo Elementary School site0Tenjin Business CenterTenjin Business Center（Tsubo）（Tsubo）600,000（Tsubo）800,000400,000800,000（Provisional name）Utilization project for the former2017Daimyo Elementary School site（Provisional name）Utilization project for the former2022Daimyo Elementary School site(Planned)2021(Planned)2019202020182016400,000400,000200820092010201120122013201420152016201720182019202020082009201020112012201320142015201620172018201920202021(Planned)2022(Planned)2021(Planned)2022(Planned)Completed floor area (total floor area) includes the floor area for common spaces, etc., and therefore differs from the leasable floor area.全国福岡市政令指定都市九州・沖縄（%）Notes: 1.Vacancy rates from 2008 to 2020 are based on the figures as of December 31.Notes: 2.Office building–related data for each city are the data for areas and buildings included 6in surveys conducted by Miki Shoji Co., Ltd.04Notes: 3.Net absorption（absorption demand）shows the change in the occupied floor space 2during a specific period. It is calculated by subtracting the occupied floor space on De-cember 31 of the previous year from the occupied floor space on December 31 of the applicable year（data for 2021 is based on figures as of the end of August）. Completed floor space（total floor space）figures for 2021 and 2022 have not been finalized, and the floor space and expected completion dates are subject to change.-4Source: Prepared by Fukuoka Realty Co., Ltd., based on data from Miki Shoji Co., Ltd., Office 2014年2015年2011年2012年2013年2016年2017年2018年-22019年2010年Market Data.Note: Prepared by Fukuoka Realty Co., Ltd., based on press releases from Fukuoka City and the operating entity.（Tsubo）60,00050,00040,00030,00020,00010,000200520052006200620072007200820082009200920102010201120112012201220132013201420142015201520162016201720172018201820192019202020212020202120052006200720082009201020112012201320142015201620172018201920202021Note: The figures from 2005 to 2020 are based on the figures as of December.Source: Prepared by Fukuoka Realty Co., Ltd., based on data from Miki Shoji Co., Ltd., Office Market Data.■ Trends in Leasable Floor Space and Occupancy Floor SpaceLeasable / Floor spaceOccupancy floor space800,000Leasable / Floor spaceLeasable / Floor spaceOccupancy floor spaceOccupancy floor space600,000600,0000 2005200620072008200920102011201220132014201520162017201820192020Source: Prepared by Fukuoka Realty Co., Ltd., based on data from Miki Shoji Co., Ltd., Office Market Data.20060 20050 2005202020202012Northern Kyushu Logistics Facility Supply and Demand Trends20142014201520152016201620172017201820182019201920062007200820092010201120132007200820092010201120122013■ Logistics Facility Supply/Demand and Vacancy RatesNew supplyNew demandVacancy rate020162017201820192020Note: The figures are covered total floor spaces (more than 5,000m²) which owned by the real estate investment company and real estate development company in Fukuoka and Saga.Source: Prepared by Fukuoka Realty Co., Ltd., based on data of CBRE.（%）12108642007■ Introduction　　□ Value-Creation Activities　　□ Foundation Underpinning Management　　□ Data SectionIntroductionIntroductionFukuoka REIT Corporation 2021Fukuoka REIT Corporation 2021J-REIT Mechanism and Fukuoka REIT Corporationʼs Business ModelTo contribute to the revitalization of Fukuoka and Kyushu and attractive urban development, FRC selects and procures funds for investment by utilizing local J-REIT CharacteristicsJ-REIT Mechanismgovernment and business networks as well as its information-gathering ability and know-how.in real estateWe aim to maximize the profits of investors by providing them with stable ② Relatively stable high yields① Enables efficient diversified investment Real estate propertiesInvestment corporationInvestmentsRental incomeearnings over the medium- to long-term.In addition, we place the utmost emphasis on dialogue with stakeholders and promote sustainable management that takes into account economic, social and environmental concerns by incorporating ESG issues into our investment management process as a part of our business model.③ Corporate taxes highly advantageous due to conduit status④ Enables daily trading on stock exchanges⑤ Full and ample information disclosureAsset warehousing companyCompany entrusted with businessManagement of assetsOutsourcingtnemeganam ytreporPOwned real estate for rentEntrustment of asset management servicesCommissioned remunerationBorrowings/bondsFinancial institutionsBond investorsCapitalInvestorsFund procurement (debt)Payments of principal and interestInvestmentDividendsReal estate management companyAsset management companySponsor companiesInvestmentMain Management Resources (Inputs)Financial capitalBuilding of a solid financial base through conservative control of LTVManufacturing capitalFinding excellent properties that can generate stable cash flow over the long termHuman capital(As of August 31, 2021)• Total liabilities • Net assets • Total assets • Total debt • Average remaining duration to maturity • LTV 98,049 million yen101,755 million yen199,804 million yen82,400 million yen5.7 years41.2%572,215.71m2• Total leasable area • Total acquisition price 202,019 million yen• Excellent human resources with • Number of officers and employees 40 specialized skills(Male: 20 / Female: 20)• Support framework for flexible working • Number of qualification holders: styles• Support system for career developmentReal estate appraisers 3 / Attorney 1 / First-class registered architects 3 / MBA 2Intellectual capital• A varied skill set formed through human resource training• Experience and knowledge of IR activities based on long years of practical implementation• Gathering of information deeply rooted in local communitiesSocial relationship capital• Co-creative and trusting relationships with tenants• Cooperative framework with property management (PM) companies• Coordination with local society, local communities• Maintenance of good relationships of trust with sponsorsNatural capital• Land in properties held in the Fukuoka and Kyushu areas (57.4 ha)• Energy, water, air, and other natural resources used in the operation of properties owned• Natural environment and biodiversity in the areas around properties ownedF i n a n c i a l StrategyFinancial StrategySee p.24Total 32 propertiesSee pp.12-13Created Value (Outcomes)ManagementOffice buildings 10 propertiesHuman resource capitalAcquisitionManagementInvestmentStrategySee p.22ygetartS tnemtsevnIOur MissionAct Local Contribution to regional revitalization and development of attractive communitiesThink Global Management StrategySee p.23Management Strategy)RI(R・Sn ationicumFund procuremeResearchValuationnt (finance)　　　　　　　　　　 　 　 　 　 　 I n f o r m a tio n disclosure comSalesResponse to ESG issuesSustainability PolicySee p.30Environmental IssuesSee p.32Social IssuesSee p.36Organizational IssuesSee p.39Retail 11 propertiesFinancial capital• TSR for past 10 years • Average interest rate paid • Dividend per unit • Dividend yield • Credit Ratings Manufacturing capital(As of August 31, 2021)Annual rate 8.5%0.69%3,539 yen4.0%JCR: AA- (stable), R&I: A+ (stable)• NOI • NOI yield 5,336 million yen5.4%• Unrealized gain 40,761 million yen• P/NAV 1.0ו Number of qualification holders: Real estate brokers 28 / ARES Certified Masters 25 / Certified building administrators 4• Average paid leave acquisition rate (FY2020) 64.4%Intellectual capital• Number of IR interviews during the year In Japan 166, Abroad 38 (including Residences 5 propertiestelephone conferences)• Track record of winning awards IR Excellent Company Encouragement Award (2014) / Nikko Excellent IR Website Award (2020)Logistics 4 propertiesSocial relationship capital• Implementation of COVID-19 tenant support measures (assistance with vaccinations as requested and other support)• Participation in local cleanup activities *289 times in total (as of October 15, 2021)• Human resource exchanges with sponsors (4 people dispatched to sponsors, 2 people accepted from sponsors)Natural capitalHotels 2 properties• Green building certification rate (total floor space basis) 78.8％• Reduction of electricity usage and water consumption at in properties owned0809■ Introduction　　□ Value-Creation Activities　　□ Foundation Underpinning Management　　□ Data SectionIntroductionIntroductionFukuoka REIT Corporation 2021Fukuoka REIT Corporation 2021History and Business PerformanceCarefully selecting and investing in properties that can generate stable cash flow over the years, FRC is working to continuously expand the scale of its assets. In addition to retail and office buildings, we are diversifying investment types by expanding the scope of investment into such properties as residences, hotels and logistics facilities.■ Retail　■ Office buildings　■ Residence　■ Logistics　■ Hotel　 Number of properties(Acquired properties)Canal City Hakata Canal City Business Center Building Park Place Oita Gofukumachi Business Center 32,00014,60015,70011,200SunLive City Kokura 6,633Acquisition Price(Millions of yen)200,000Sanix Hakata Building Kominedai Community Mall 4,400740Taihaku Street Business Center 7,000Tosu Logistics Center 1,2502,800D-Wing Tower Hotel FORZA Oita 1,530Tenjin North Front Building 2,800Tenjin Nishi-Dori Center Building 2,600Aqualia Kego 2,800Aqualia Chihaya 1,280Amex Akasakamon Tower Square Mall Kagoshima Usuki Kumamoto Intercommunity SC 2,0605,3002,400Aeon Hara Shopping Center 5,410Kominedai Community Mall (Sold) (740)Canal City Hakata・B 28,700Hanahata SC City House Keyaki Dori Kurume Higashi Kushiwara SC 1,1301,1112,500Kʼs Denki Kagoshima 3,550Higashi Hie Business Center 5,900201916161616171715151411118754150,000100,00050,0000Granfore Yakuin Minami 1,100LOGICITY Minato Kashii 8,150Marinoa City Fukuoka (Marina Side Building) 5,250590Park Place Oita (adjacent land) Tenjin Nishi-Dori Business Center（Land with leasehold interest）7,700Canal City Hakata・B Grand Building（88.28％ co-ownership）（sold）　　　　　　　　　　　（7,640）（Note）Konoha Mall Hashimoto 10,000Higashi Hie Business Center II 4,230860Park Place Oita (adjacent land) Higashi Hie Business Center III LOGICITY Wakamiya Park Place Oita (Home Plaza Nafco) 3,2901,700990Park Place Oita (Sports Club NAS) Aeon Hara Shopping Center (sold) Aqualia Kego (sold) 1,470(5,410)(2,800)LOGICITY Hisayama 5,050Tissage Hotel Naha 2,835（Number of properties）2727272626252929292825242323323131403020100Listed2nd3rd4th5th6th7th8th9th10th11th12th13th14th15th16th17th18th19th20th21st22nd23rd24th25th26th27th28th29th30th31st32nd33rd34thJun. 2005Aug. 2005Feb. 2006Aug. 2006Feb. 2007Aug. 2007Feb. 2008Aug. 2008Feb. 2009Aug. 2009Feb. 2010Aug. 2010Feb. 2011Aug. 2011Feb. 2012Aug. 2012Feb. 2013Aug. 2013Feb. 2014Aug. 2014Feb. 2015Aug. 2015Feb. 2016Aug. 2016Feb. 2017Aug. 2017Feb. 2018Aug. 2018Feb. 2019Aug. 2019Feb. 2020Aug. 2020Feb. 2021Aug. 2021Fukuoka REIT Corporation and Fukuoka Realty Co., Ltd. events• 1st Public Offering (September) Number of investment units: 15,000 (before 5:1 unit split) Offer price (per unit): 766,360 yen (before 5:1 unit split) Total issue price: 11,096 million yen• Canal City Hakata South Building renovation• 2nd Public Offering (March) Number of investment units: 16,000 (before 5:1 unit split) Offer price (per unit): 576,083 yen (before 5:1 unit split) Total issue price: 8,913 million yen• Facebook launched (March)• CSR study groups begin (April)• Volunteer support for disaster-affected areas (July)• IR Kyushu subcommittee established (November)• 3rd Public Offering (March) Number of investment units: 14,950 (before 5:1 unit split) Offer price (per unit): 710,580 yen (before 5:1 unit split) Total issue price: 10,263 million yen• 4th Public Offering (April) Number of investment units: 57,000 Offer price (per unit): 212,257 yen Total issue price: 11,701 million yen• First issue of investment corporation bonds (December)• 5:1 investment unit split implemented (March)• Canal City Hakata 20th anniversary• Japan’s largest 3D projection mapping and new Aqua Panorama fountain installed at Canal City Hakata• IR briefing held for Platinum WOMAN individual investors (August)• Incorporated into the FTSE EPRA/NAREIT Global Real Estate Index (September)• Receives the IR Excellent Company Encouragement Award (December)• Second issue of investment corporation bonds (July)•1st Integrated Report issued•2nd Integrated Report issued• 15th anniversary of FRC’s listing• 9th General Meeting of Unitholders• f-JOY app released for use at four retail facilities of the Fukuoka Jisho Group• Asset size reached 200 billion yen• 5th Public Offering (March) Number of investment units: 49,000 Offer price (per unit): 164,414 yen Total issue price: 7,795 million yen• Third issue of investment corporation bonds (July)• Canal City Hakata inbound continues to perform well, sets new visitor records (17.02 million in fiscal 2017)• Formulation of sustainability policy (January)• Fukuoka Urban Growth Strategy Project established (April)• Canal City Hakata communal area environment renewal (tree planting, additional benches, etc.)• First course donated to Fukuoka University held (September)Note: The amount is the appraisal value at the time of transfer.• Etsuo Matsuyuki appointed as President and CEO of Asset Management Company（current position: Advisor） See p.20• Fukuoka International House opens (April)• Second course donated to Fukuoka University held (August)• Fukuoka Realty Co., Ltd. 10th anniversary (December)• 10th anniversary of FRC’s listing• Tax exemption procedure counter and free Wi-Fi set up for inbound customers at Canal City Hakata• Park Place Oita 15th anniversary renovation• Zenji Koike appointed as President and CEO of Asset Management Company See p.161011■ Introduction　　□ Value-Creation Activities　　□ Foundation Underpinning Management　　□ Data SectionIntroductionIntroductionFukuoka REIT Corporation 2021Fukuoka REIT Corporation 2021Overview of Properties OwnedFRC carefully selects and invests in properties with the potential to generate stable cash flow over the long term. It owns properties with widely divergent uses, mainly retail and office buildings, to diversify risks within the region.■Other properties (Hotel, Residence, Logistics): 11222324252627Asset Ratio (As of August 31, 2021) See p.24■Investment Type (Acquisition price based on)■Investment Areas (Acquisition price based on)Retail54.2%Office buildings31.5%Others14.3%Fukuoka metropolitan area76.6%Other Kyushu area23.4%Amex Akasakamon Tower (Residence)1/9/2006/2,060City House Keyaki Dori (Residence)20/12/2007/1,111Aqualia Chihaya (Residence)1/3/2012/1,280D-Wing Tower (Residence)1/3/2013/2,800Granfore Yakuin Minami (Residence)4/11/2014/1,100Hotel FORZA Oita (Hotel)1/3/2013/1,5302829303132Number of properties owned:Total acquisition price:32202,019 million yenNote: Acquisition price data is rounded down to the nearest million yen.Tissage Hotel Naha (Hotel)7/12/2018/2,835Tosu Logistics Center (Logistics)28/3/2014/1,250LOGICITY Minato Kashii (Logistics)27/3/2015/8,150LOGICITY Hisayama (Logistics)1/6/2017/5,050LOGICITY Wakamiya (Logistics)30/6/2020/1,700■Retail: 11172839Canal City Hakata9/11/2004/32,000Canal City Hakata・B2/3/2011/21,060Park Place Oita9/11/2004/19,610SunLiveCity Kokura1/7/2005/6,633Konoha Mall Hashimoto1/3/2018/10,000Square Mall Kagoshima Usuki28/9/2006/5,30028Across Kyushu1011Property name / acquisition date / acquisition price (millions of yen)4563229273031Sta.24Sta.Sta.Kumamoto Intercommunity SC30/11/2006/2,400Hanahata SC3/9/2007/1,130Kurume Higashi Kushiwara SC1/2/2008/2,500Kʼs Denki Kagoshima27/3/2008/3,550Marinoa City Fukuoka (Marina Side Building)1/5/2015/5,250■Office buildings: 10121314151617Canal City Business Center Building9/11/2004/14,600Gofukumachi Business Center9/11/2004/11,200Sanix Hakata Building30/9/2005/4,400Taihaku Street Business Center16/3/2006/7,000Higashi Hie Business Center13/3/2009/5,900Tenjin Nishi-Dori Center Building1/2/2013/2,60018192021FUKUOKAPayPay DOMESta.Sta.22 2521Sta.Sta.23Sta.Sta.Sta.26Sta.Sta.Sta.Sta.Sta.Sta.Sta.BEST DENKIStadiumSta.Fukuoka City■Trends in Appraisal Value and Unrealized gainPeriod-end book value (note)Unrealized gain = (Period-end appraisal value – Period-end book value (note))(millions of yen)250,000200,000150,000100,000-41181,77150,00021,07020,79918,74213,95512,4659,3008,9539,3946,989146,621146,2461,8937,89486,77793,556103,025107,338112,001115,560115,195120,299119,486118,686118,4116,4985,5436,0066,522150,603152,4228,2439,13811,09714,434158,851158,007159,128159,24616,77719,83024,25521,15222,87825,541172,406171,555168,902164,527169,031168,13829,46731,80434,08736,92337,64837,92740,761182,352184,715183,532182,336187,891186,972186,088Tenjin North Front Building28/3/2013/2,800Higashi Hie Business Center II1/3/2018/4,230Higashi Hie Business Center III29/5/2020/3,290Tenjin Nishi-Dori Business Center (Land with leasehold interest) 1/6/2021/7,70006thAug.2007Note: Period-end book value does not include trust construction in progress. 10thAug.200911thFeb.20102ndAug.20053rdFeb.20064thAug.20065thFeb.20077thFeb.20088thAug.20089thFeb.200912thAug.201013thFeb.201114thAug.201115thFeb.201216thAug.201217thFeb.201318thAug.201319thFeb.201420thAug.201421stFeb.201522ndAug.201523rdFeb.201624thAug.201625thFeb.201726thAug.201727thFeb.201828thAug.201829thFeb.201930thAug.201931stFeb.202032ndAug.202033rdFeb.202134thAug.20211213■ Introduction　　□ Value-Creation Activities　　□ Foundation Underpinning Management　　□ Data SectionIntroductionIntroductionFukuoka REIT Corporation 2021Fukuoka REIT Corporation 2021Financial/Non-Financial Highlights （5-Year Graph）Financial Highlights(Millions of yen)9,730(Note 1)10,0009,178 9,242 9,231 9,1628,904 8,8678,5188,122 8,194(Millions of yen)4,198(Note 1)Total Operating RevenuesProfitAsset Management Company: Number of officers and employees (Note 3)Asset Management Company Officers and Employees: Percentage of female employees (Note 4)Non-Financial Highlights（People）4038383941414141404245.044.744.746.246.346.347.651.251.250.03,0002,556 2,6232,860 2,934 2,9392,8992,586 2,6752,816025thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 2021025thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 202125thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 202125thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 2021NOIDividend per Unit (Note 2)Asset Management Company: Average number of years of employment(Note 5)Number of IR Meetings in Japan and Abroad (Note 6)(Millions of yen)6,0005,010 4,998 5,0795,493 5,591 5,6335,5965,307 5,347 5,3363,398 3,4223,5123,5933,687 3,6933,6423,5393,3613,250(Years/Months)108.108.108.69.19.6(Meetings)7.107.117.76.96.111691481491291331261161149054025thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 2021025thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 202125thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 202125thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 2021Depreciation and Amortization ExpensesLTVPower Consumption (Note 7)Water Consumption (Note 7)(Millions of yen)2,0001,455 1,474 1,5001,602 1,622 1,6511,660 1,6861,6231,55238.139.338.939.139.739.739.841.441.341.2（Data coverage）70.1％70.1％（Mwh）90,00081,33979,47470.2％（Mwh/m²）190（m3）800,000（Data coverage）70.1％70.2％70.1％（m³/m²）2.0018471,192607,352596,007180600,0001751.371.35405,3660.911.501.000.500.00400,000160160200,00014560,00030,000Notes: 1. Due to differences in accounting and tax treatment, the gain and loss on sale of AEON Hara Shopping Center and Aqualia Kego transferred in the 25th fiscal period were handled as follows:(1) The amount of impairment loss for AEON Hara Shopping Center recorded in the profit and loss statement for the 24th fiscal period was recorded as reserve for temporary difference adjustments.(2) The gain on sale of Aqualia Kego was recorded in the income statement for the 25th fiscal period.(3) Reversal of reserve for temporary difference adjustment was recorded in the statement on cash dividend for the 25th fiscal period.Notes: 2. The dividend per unit for the 25th period was calculated as follows: Dividend for the 25th term: Profit – Reversal of the reserve for temporary difference adjustments – Surplus brought forwardNotes: 3. The number of officers and employees indicates the total number of directors and auditors, permanent employees, contract employees, temporary employees, secondees, etc., who are employed on a full-time basis at Fukuoka Realty Co., Ltd.Notes: 4. The percentage of female employees is calculated as the ratio of women to the number of directors, auditors, and employees.Notes: 5. Average number of years of employment is calculated as the average service years of permanent and contract employees of Fukuoka Realty Co., Ltd.Notes: 6. The number of IR meetings in Japan and abroad shows the total number of IR meetings, based on the dates on which they were held, with institutional investors and analysts through interviews and telephone conferences generally regarding the results for the previous period.Notes: 7. Total value for 11 properties, including four retail facilities and seven office buildings. Per unit is calculated by adjusting the total floor area （m2） by the occupancy rate. Data coverage is the area ratio of properties subject to data aggregation as compared to all properties, and is calculated at the end of the fiscal period. The figure for Canal City Hakata, Canal City Hakata•B, and Canal City Business Center Building reflects total electricity and water usage for all buildings, including electricity and water usage by some theater areas not owned by the Investment Corporation. The figure for Park Place Oita covers only the main building section and excludes the section for independently run stores. 025thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 202125thFeb. 201726thAug. 201727thFeb. 201828thAug. 201829thFeb. 201930thAug. 201931stFeb. 202032ndAug. 202033rdFeb. 202134thAug. 2021028th・29thMarch 2018-February 201930th・31stMarch 2019-February 202032nd・33rdMarch 2020-February 2021028th・29thMarch 2018-February 201930th・31stMarch 2019-February 202032nd・33rdMarch 2020-February 20215,0004,0002,0001,000(Yen)4,0003,0002,0001,000（%）504030201008,0006,0004,0002,0004,5003,0001,5001,5001,000500（%）60453015020016012080400５0４０3020100864201415■ Introduction　　□ Value-Creation Activities　　□ Foundation Underpinning Management　　□ Data SectionIntroductionIntroductionFukuoka REIT Corporation 2021Fukuoka REIT Corporation 2021CEOʼs Messagebut rather is in an area adjacent to Nakasu and Kawabata, on retail facilities and incorporate other assets, such as which, despite being situated in the heart of Fukuoka, did research-and-development facilities and data centers, as not see much daytime foot traffic at the time we devel-well as those in sponsor business fields, like energy-related oped this property. Hakata has a long history as a home to facilities in the infrastructure sector.wholesale districts and as a center for many other mer-Although there has been much debate over office as-chants, but a large site was left behind when the area emp-sets, for example, regarding how work styles will change tied out after the center of business moved to Tenjin and post COVID-19, when we consider the location of Fukuo-Hakata stations. So, we developed Canal City Hakata with ka in Kyushu, it is clear that this type of asset will hold the desire to create a new city here. With the birth of Canal firm. Moreover, I believe developments as part of Tenjin City Hakata in this area where people rarely came before, Big Bang must prepare workplace environments that can despite being in the heart of the city, the development has contribute to new office formats, work-style reforms, and become a new tourist destination in Fukuoka that attracts sustainability.visitors from a wide area and receives many people from around Asia.Canal City Hakata is home to a movie theater and play-houses, and we have aimed to make it into an entertain-QWhat is the appeal of Fukuoka?ment retail facility where people can pass the time enjoying I am originally from Fukuoka, so I could go on forever brag-meals, walking the grounds, and watching the fountains ging about my home. But the best thing about Fukuoka is and performance events. Under the initial concept of cre-that the city is extremely compact, which I think makes it ating a new city here, we developed the property with the the perfect size for people to really experience the scale of goal of limitlessly raising the accessibility of people in a way their lives. Including the region around Fukuoka City, the ur-that links to Hakata and Tenjin. I believe that the property ban area has a population of about 2.6 million people. The continues to realize this aim.average commute time is less than half that of the Tokyo On the other hand, one of the very real challenges the metropolitan area, the city is surrounded by nature, with property faces is the recent transformation in consump-both the ocean and mountains nearby, and it is compact tion activity, namely a decrease in the weight of in-person with sufficient public transportation infrastructure.shopping and the shift to e-commerce. So, the question is Although it might not offer the same amount of informa-how can we incorporate efforts aimed at e-commerce into conventional retail facilities? For tenants, brick-and-mortar store sales and e-commerce sales both lead to profits, so tion as Tokyo, in a metropolis like Tokyo the scope that can be grasped on oneʼs own is always limited. In contrast, I feel Fukuoka is an extremely comfortable city because the it is important for us to consider these as a whole. One residents can grasp the overall layout of their city as their President and CEOFukuoka Realty Co., Ltd.Zenji KoikeQPlease tell us about yourself.Canal City Theater and plans events at our retail facilities. More recently, I served the past four years as Chairman of Sunlife Co., Ltd., which is involved in building manage-After working for a local bank (currently THE NISHI-NIPPON ment, so I have experienced most types of work involved potential approach that involves the entire facility is to elim-sphere of everyday life. Which is why people like me who CITY BANK, LTD.) following my graduation from university, I in real estate.inate inventory at brick-and-mortar stores and instead use are from Fukuoka feel that Tokyo is a very difficult place to joined Fukuoka Jisho Co., Ltd., one of our sponsors, where Other than work, I was a member of the yacht club these like showrooms where cust