福岡リート投資法人（8968） – Notice on Acquisition and Leasing of Assets (Conclusion of Agreement) (Domestic real estate)

Provisional translation only June 14, 2022 Fukuoka REIT Corporation 1-2-25 Sumiyoshi, Hakata Ward, Fukuoka City Zenji Koike Executive Director (Securities Code: 8968) Asset Management Company: Fukuoka Realty Co., Ltd. 1-2-25 Sumiyoshi, Hakata Ward, Fukuoka City Zenji Koike President and CEO Inquiries: Hiroyuki Ayabe Executive Officer and General Manager Finance Department TEL: +81-(0)92-272-3900 Notice on Acquisition and Leasing of Assets (Conclusion of Agreement) (Domestic real estate) Fukuoka REIT Corporation (FRC) announces that Fukuoka Realty Co., Ltd, the asset management company to which FRC entrusts the management of its assets (the “Asset Manager”), decided to acquire and lease the following domestic real estate (the “Property”) today. 1. Summary of Acquisition Property name Use Location Acquisition Price (planned) Acquisition Date (scheduled) Island City Minato Bay related site (Land with leasehold interest) (tentative) Logistics 3-Chome, Minato Kashii, Higashi Ward, Fukuoka City 8,082 mm yen (Note) March 31, 2029 Note: FRC will acquire the entire land to be sold including Island City Bay-Related Site (Land with leasehold interest) (tentative) (the “Property”) jointly with Fukuoka Jisho Co., Ltd. The Property which will be acquired by FRC is expected to become the land portion after subdivision, which is equivalent to 95.05% of the entire land to be sold, but may increase/decrease depending on the measurement and subdivision scheduled to be implemented in the future and the result of the assessment by the Real Estate Price Assessment Committee of Fukuoka City, which is the seller. Moreover, at the time of application for purchase of the land to be sold including the Property, the acquisition ratio for FRC is 1%. However, after reaching an agreement again with Fukuoka Jisho Co., Ltd. and obtaining approval from Fukuoka City upon the conclusion of the provisional sale and purchase contract of the land, this figure is scheduled to be changed to 95.05%. The same applies hereinafter. 2. Reason for Acquisition and Leasing FRC invests in a diverse range of properties, including retail facilities, office buildings, and others (logistics facilities, residential properties, hotels, etc.) in the Fukuoka and Kyushu regions as its main investment target area. In March 2019, the management guidelines at the asset management company were partially amended to modify the principle of the investment ratio in investment types, thereby allowing for more flexibility when considering investment in office buildings and other properties (logistics facilities, residential properties, etc.). The acquisition of a logistics facility (Land with leasehold interest) (planned) is in line with the revised investment policy. – 1 – Island City, where the Property is located, is located in the Hakata Port area which is within a 10-km radius of Hakata Port, Fukuoka Airport, and Fukuoka IC. The Fukuoka City Expressway Route 6 (Island City Line) was opened in March 2021, making the area more convenient. In addition, there are very limited opportunities to acquire a site (Land with leasehold interest) for a large-scale logistics facility of 10,000 tsubo or more in the Hakata Port area, and FRC believes it is of great significance to able to acquire a property in an area which will further develop as a logistics hub to drive growth in Fukuoka. The tenant involved in the leasing of the Property is planned to be Fukuoka Jisho Co., Ltd. , a sponsor of the Asset Manager, and it is deemed that the leasing of the property conforms to the tenant selection criteria described in FRC’s “Report on the Management Structure and System of the Issuer of Real Estate Investment Trust Units and Related Parties” submitted on May 31, 2022. FRC anticipates that the acquisition of the property will contribute to further enhancement of its portfolio and securing of stable earnings in the future. 3. Detail of Property for Acquisition (1) Overview of Acquisition 1) Property to be acquired: 2) Property name: Real Estate Island City Minato Bay related site (Land with leasehold interest) (tentative) 3) Acquisition price (planned) (Note1): 8,082 million yen 4) Appraisal value: 5) Acquisition cap rate (Note2): 6) Acquisition date (scheduled): 7) Seller: 8) Funding: 9) Payment method: 8,210 million yen (as of May 20, 2022) 3.4% March 31, 2029 Fukuoka City Undecide (Note3) For details, please see 3. (7) Form of payment below. 10) Others: The agreement on conclusion of the land purchase and sale contract of the land to be sold including the Property (the “Agreement”) falls under the category of forward commitment, etc. (a postdated transaction contract where the settlement and delivery are to take place one month or more after the conclusion of the contract as well as other similar contracts; the same applies hereinafter). For details, please refer to 3. (3) Overview of the property to be acquired “Special notations” column below. (Note 1) Planned acquisition price does not include acquisition expenses, amounts equivalent to the settlement of the property tax and city planning tax, consumption tax on the building and other expenses. (Note 2) Acquisition CAP is calculated by the direct capitalization method; NCF in the appraisal report/ Planned (Note 3) The details of the funds for acquisition are yet to be determined at this point in time and will be announced acquisition price x 100 (%). once determined. (2) Points Valued in Deciding on the property -Good accessibility, such as being close to Hakata Port, Fukuoka Airport, Fukuoka IC, and the entrance/exit of Fukuoka City Expressway No. 6 (Island City Line), which was newly established in March 2021. -Large-scale logistics facilities on a site (Land with leasehold interest) of 10,000 tsubo or more in the Hakata Port area are highly rare. – 2 – -It is considered possible to operate 24 hours a day as an area dedicated to logistics. (Location conditions) Island City, where the Property is located, is an artificial island constructed in Higashi Ward, Fukuoka City, with the aim of strengthening the functions of Hakata Port, as well as promoting advanced town development and concentration of new industries. The total area is 401.3 ha, and it is divided into a “town development area” on the east side and a “port development area” on the west side, with the harbor road Island City Route 1 running mostly through the center of the artificial island as the boundary. The “port development area” is further divided into a port-related zone, an industrial logistics zone and a wharf zone. The Property is located in the port-related zone. (3) Overview of the property Property name Island City Minato Bay related site (Land with leasehold interest) (tentative) Type of the specified asset Real estate Acquisition price (planned) Location (address) Land 8,082 million yen Part of Minato Kashii 3-32-1, Higashi Ward, Fukuoka City Area Approx. 39,142 ㎡ (Entire land to be sold: Approx. 41,181 m2) (Note 1) Soil contamination risk assessment company Appraisal Value Appraiser Collateral Special notations Zoning Floor area ratio Building coverage ratio Type of ownership Quasi-industrial district 300% 60% Ownership (Note 1) Tokio Marine dR Co., Ltd. 8,210 mm yen (as of May 20, 2022) The Tanizawa Sogo Appraisal Co., Ltd. None – By June 22, 2022, Fukuoka City, FRC and Fukuoka Jisho Co., Ltd. will conclude the Agreement. – The conclusion of the Agreement constitutes a forward commitment, etc. At the time of the conclusion of the Agreement, the Investment Corporation will pay to Fukuoka City 5% (approximately 4 mm yen) of the amount equivalent to the purchase price corresponding to its acquisition ratio at the time of the application for purchase as a guarantee deposit. In addition, if the Investment Corporation withdraws as the prospective seller, it will be obligated to pay a penalty as follows depending on the timing of the withdrawal. (1) Before the conclusion of the provisional contract for the sale of land: An amount equivalent to 5% of the purchase price (2) After the conclusion of the provisional contract for the sale of land ~ Decision by the Fukuoka City Council: The amount equivalent to 10% of the planned acquisition price (3) After decision by the Fukuoka City Council: Amount equivalent to 20% of the planned acquisition price The Investment Corporation has a total of 13.0 billion yen in – 3 – commitment line limits and intends to maintain the commitment line and unused lines in preparation for the acquisition. At the time of the settlement of the Property, the risk of the Investment Corporation being unable to procure the funds for acquisition due to deterioration in the financial environment or other factors, thereby leading to termination of the Agreement and incurring the obligation to pay a penalty is considered to be considerably low. The Investment Corporation believes that even in the case where it withdraws from acquisition of the Property upon mutual agreement with Fukuoka Jisho Co., Ltd., such event is unlikely to have harmful effect on its financial standing. Total number of tenants Tenant’s name Type of contract Leasing term Start of lease 1 Fukuoka Jisho CO., Ltd. Undecide Undecide March 31, 2029 (date of Delivery of Land) 1. Rent during the development period (fixed rent) 212 million yen (Note 3) 2. Rent after completion of the building (variable rent) 304 million yen × Actual amount of recent rent income for completed buildings / Base amount of rent income for completed buildings (Note 3) Undecide Approx. 39,142 ㎡ (Note 4) Approx. 39,142 ㎡ (Note 4) 100.0% (Note 5) (scheduled on March 31, 2029) Security Deposits Total leasable area Total leased area Occupancy rate Status of leasing (planned) (Note 2) Contract rents (annually) *The lot number, area, etc. are indicated based on the “Outline of public offering for four construction areas in fiscal 2021 for the Island City Port-Related Site” announced by the Seaport and Airport Bureau of Fukuoka City (Note 1) The Property which will be acquired by FRC is scheduled to become the land portion after subdivision, which is equivalent to 95.05% of the entire land to be sold. At the time of application for purchase of the Property, the acquisition ratio for FRC is 1%. However, after reaching an agreement again with Fukuoka Jisho Co., Ltd. and obtaining approval from Fukuoka City upon the conclusion of the provisional sale and purchase contract of the land, the figure is scheduled to be changed. (Note 2) A land lease reservation agreement or a land lease agreement with conditions precedent is scheduled to be concluded by the date of conclusion of the provisional sale and purchase contract of the land. Moreover, the total number of tenants, tenant name and contracted rent may change if the tenant shares the completed building with other tenants. (Note 3) When the planned acquisition price increases/decreases or changes from the currently assumed property tax and city planning tax for the Property, rent will increase/decrease up to the amount of the increase/decrease and the amount of the change. In addition, the figures have been rounded to the nearest million yen. (Note 4) Total leasable area is the area that can be leased to tenants and total leased area is the total contract area indicated in the lease agreement concluded with tenants and the total contract area indicated in the land lease agreement with condition (Note 5) The figure indicates the ratio of the total leased area to the leasable area, and has been rounded to the first decimal precedent concluded. – 4 – (4) Profile of Previous Owners The property will be acquired from Fukuoka City through a public offering for sale. (5) Condition of the property acquirer The property is not being acquired from a person who has a special interest with the Investment Corporation or the Asset Manager. (6) Sales Agent Profile N/A (7) Form of payment The Investment Corporation is scheduled to pay the balance in a lump sum to the designated financial institution in accordance with the payment notice issued by Fukuoka City within three months of the month following the month in which the resolution on the land disposal of the Property is made by the Fukuoka City Council. (8) Acquisition on Schedule June 22 2022 (scheduled) December 2028 (scheduled) Conclusion of Provisional Contract on Sale of Land (Note) March 31 2029 (scheduled) Delivery of Land Agreement on Conclusion of Contract on Sale of Land Note: In accordance with the provisions of Article 3 of the” Ordinance Concerning Contracts to Be Submitted to the Resolution of the Council and Acquisition or Disposition of Property (Fukuoka City Ordinance No. 39 of 1964),” this Contract shall be finalized from the time of resolution by the Fukuoka City Council. 4. Outlook Since the scheduled acquisition date of the property is March 31, 2029, the acquisition of the property had no impact on the forecast of performance for the fiscal period ending August 2022 (March 1, 2022 – August 31, 2022), and for the fiscal period ending February 2023 (September 1, 2022 – February 28, 2023), announced in “Earnings Briefing for the Period Ended February 2022” dated April 14, 2022. – 5 – 5. Outline of appraisal report Property nameIsland City Minato Bay related site (Land with leasehold interest) (tentative)Appraisal value8,210,000 thousand yenAppraiserPricing dateThe Tanizawa Sogo Appraisal Co., LtdMay 20, 2022CategoryFiguresReasons, etc.Income Capitalization Approach Value8,210,000 thousand yenValue Calculated Using the DirectCapitalization Method8,430,000 thousand yenGross Operating Revenue304,192 thousand yenMasimum Gross Operating Revenue304,192 thousand yenAssesment based on the lease agreement andthe market rent levelTaxes and Fees28,802 thousand yen Assesment based on the similar casesShortfall Attributed to VacanciesOperating ExpensesPM Fees29,106 thousand yen00Other Expenses304 thousand yenNeto Operating Income275,086 thousand yenProfit through Management ofTemporary Deposits3,041 thousand yenNet Cash Flow278,128 thousand yenValue through DCF method8,120,000 thousand yen3.3%Evaulated considering the location, etc. of theproperty, future uncertainties, comparablecases, etc.Capitalization RageDiscount RateTerminal Cap RateValue through cost methodPercentage of Leased LandPercentage of BuildingOther matters noted by the appraiser ininconducting appraisalNot listed *FRC’s website is https://www.fukuoka-reit.jp/en/index.html 3.1%3.4%—- 6 – (Attachments) Reference 1: Outlook of land to be sold Reference 2: Location of the land to be sold Reference 3: Map of FRC’s Portfolio Reference 4: List of FRC’s Portfolio – 7 – Reference 1: Outlook of land to be sold Island City Minato Bay related site (Land with leasehold interest) (tentative) (Note) This shows the appearance of the entire plan land including land to be sold. This property to be acquired by FRC is scheduled to become a land portion after subdivision equivalent to 95.05% of the total planned land for subdivision, but its location has not yet been determined. – 8 – Reference 2: Location of the land to be sold (Note) This shows the location map of the entire plan land including land to be sold. This property to be acquired by FRC is scheduled to become a land portion after subdivision equivalent to 95.05% of the total planned land for subdivision, but its location has not yet been determined. – 9 – Reference 3: Map of FRC’s Portfolio – 10 – Reference 4: List of FRC’s Portfolio Use Property Name Acquisition Date (scheduled) Acquisition Price (planned) (mm yen) (Note 1) Investment Ratio (Note 2) Retail Office buildings Others Canal City Hakata Canal City Hakata・B Park Place Oita SunLive City Kokura Konoha Mall Hashimoto Square Mall Kagoshima Usuki Kumamoto Intercommunity SC Hanahata SC Kurume Higashi Kushiwara SC K’s Denki Kagoshima Marinoa City Fukuoka (Marina Side Building) Canal City Business Center Building Gofukumachi Business Center Sanix Hakata Building Taihaku Street Business Center Higashi Hie Business Center Tenjin Nishi-Dori Center Building Tenjin North Front Building Higashi Hie Business Center II Higashi Hie Business Center III Tenjin Nishi-Dori Business Center (Land with leasehold interest) Hakata Chikushi-Dori Center Building Tosu Logistics Center LOGICITY Minato Kashii LOGICITY Hisayama LOGICITY Wakamiya Island City Minato Bay related site (Land with leasehold interest) (tentative) Amex Akasakamon Tower City House Keyaki Dori Aqualia Chihaya D-Wing Tower Granfore Yakuin Minami Hotel FORZA Oita Tissage Hotel Naha Logistics Residence Others Total of all properties Nov. 9, 2004 Mar. 2, 2011 Nov. 9, 2004 Jul. 1, 2005 Mar. 1, 2018 Sep. 28, 2006 Nov. 30, 2006 Sep. 3, 2007 Feb. 1, 2008 Mar. 27, 2008 May 1, 2015 Nov. 9, 2004 Nov. 9, 2004 Sep. 30, 2005 Mar. 16, 2006 Mar. 13, 2009 Feb. 1, 2013 Mar. 28, 2013 Mar. 1, 2018 May 29, 2020 Jun.1, 2021 Mar. 1, 2022 Mar. 28, 2014 Mar. 27, 2015 Jun. 1, 2017 Jun. 30, 2020 32,000 21,060 19,610 6,633 10,000 5,300 2,400 1,130 2,500 3,550 5,250 14,600 11,200 4,400 7,000 5,900 2,600 2,800 4,230 3,290 7,700 4,320 1,250 8,150 5,050 1,700 14.9% 9.8% 9.1% 3.1% 4.7% 2.5% 1.1% 0.5% 1.2% 1.7% 2.4% 6.8% 5.2% 2.1% 3.3% 2.8% 1.2% 1.3% 2.0% 1.5% 3.6% 2.0% 0.6% 3.8% 2.4% 0.8% Mar. 31, 2029 8,082 3.8% Sep. 1, 2006 Dec. 20, 2007 Mar. 1, 2012 Mar. 1, 2013 Nov. 4, 2014 Mar. 1, 2013 Dec. 7, 2018 － 2,060 1,111 1,280 2,800 1,100 1,530 2,835 214,421 1.0% 0.5% 0.6% 1.3% 0.5% 0.7% 1.3% 100.0% (Note 1) All figures in the Acquisition Price (planned) column indicate the acquisition price written in the sales agreement between FRC and the seller, and exclude charges, taxes and other expenses. (Note 2) The ratio is rounded off to one decimal places. – 11 –