1.Financial Policy

Fukuoka REIT dedicates itself to efficiently managing assets including the debt of capital from qualified institutional investors or issuing of investment corporation bonds for the objective of obtaining capital to acquire assets, conduct construction work on for-rent real estate and repay debt. However, the combined total of borrowings and investment corporation bonds shall not surpass a ceiling of 1 trillion yen.

As a financial policy, Fukuoka REIT shall strive to minimize cost increases brought on by hikes in interest rates by obtaining capital primarily through long-term fixed interest loans and by conservatively managing the portfolio with a conservative LTV or low borrowing rate. Additionally, Fukuoka REIT will strive to maximize increases in earnings through the strong economy by increasing rent revenue using sales-linked rents and through external growth at appropriate prices by effectively utilizing the sponsor pipeline. These measures will be used to hedge against the risk of rising interest rates.

2.Financial Strategy

Fukuoka REIT is committed to stabilizing the procurement of capital in the medium to long term by taking out long-term fixed interest loans, entering into loans with a long-term maturity with no collateral and diversifying lenders.

1. Maintaining a ceiling on the ratio of interest-bearing debt
   The ratio of interest-bearing debt (the ratio of the sum total of borrowings and investment corporation bonds to total assets), or LV, is managed as a rule with a ceiling of 60%. Fukuoka REIT is committed to stable finances through management of the LTV within a sound range.
2. Converting interest-bearing debt into long-term and fixed debt
   Fukuoka REIT is committed to stabilizing the cost of raising capital through loans and other means by lengthening the procurement period and pursuing fixed interest rates on raised capital.
3. Spreading out maturities of interest-bearing debt
   Fukuoka REIT will continue to spread out the maturities of interest-bearing debt to reduce the refinancing risk upon maturity of the different debt instruments.
4. Raising capital with no collateral
   Fukuoka REIT as a rule will not procure funds that are secured by capital (only financing with no collateral).
5. Expanding methods and sources for raising capital
   Fukuoka REIT intends to expand the financial institutions it deals with when raising capital. Presently capital is borrowed from the Development Bank of Japan, mega banks, and regional banks primarily in Kyushu, but effort will be devoted to initiating transactions with other financial institutions. Currently capital is borrowed only from the financial institutions, but Fukuoka REIT's expansion of capital-raising methods and sources includes the possibility of floating investment corporation bonds.

3.Debt

The following are the debts of Fukuoka REIT. (as of August 31, 2010)

Type	Lender	Amount (mm yen)	Borrowing Date	Repayment Date	Repayment Method	Annual Interest	Interest	Description
Short-term debt	-	-	-	-	-	-	-	-
	Subtotal	0
Long-term debt scheduled to be re-paid within one year	The Bank of Fukuoka	1,500	June 30, 2008	December 30, 2010	Lump sum upon maturity	0.84000% （※2）	Floating	No collateral No guarantee
	The Bank of Fukuoka	2,000	August 25, 2006	July 29, 2011	Lump sum upon maturity	2.05174%	Fixed
	Nishi-Nippon City Bank	2,000	August 25, 2006	July 29, 2011	Lump sum upon maturity	2.05174%	Fixed
	The Dai-ichi Mutual Life Insurance Company	1,000	August 25, 2006	July 29, 2011	Lump sum upon maturity	2.05174%	Fixed
	Shinsei Bank	1,000	August 25, 2006	July 29, 2011	Lump sum upon maturity	2.00174%	Fixed
	The Sumitomo Trust and Banking Co.	1,000	September 29, 2006	July 29, 2011	Lump sum upon maturity	1.80296%	Fixed
	Subtotal	8,500
Long-term debt
	Nishi-Nippon City Bank	2,500	February 27, 2008	February 28, 2013	Lump sum upon maturity	1.69226%	Fixed	No collateral No guarantee
	The Sumitomo Trust and Banking Co.	2,000	February 28, 2013	February 28, 2013	Lump sum upon maturity	1.69226%	Fixed
	Mizuho Corporate Bank	2,000	February 29, 2008	February 28, 2013	Lump sum upon maturity	1.69226%	Fixed
	Mitsubishi UFJ Trust and Banking	2,000	February 29, 2008	February 28, 2013	Lump sum upon maturity	1.59226%	Fixed
	Aozora Bank	1,000	February 29, 2008	February 28, 2013	Lump sum upon maturity	1.54226%	Fixed
	The Bank of Fukuoka	6,000	June 23, 2008	June 29, 2012	Lump sum upon maturity	0.89000% （※2）	Floating
	Nishi-Nippon City Bank
	Oita Bank
	The Miyazaki Bank
	Shinwa Bank
	The Iyo Bank
	The Bank of Saga
	The Eighteenth Bank
	Yamaguchi Bank
	Aozora Bank	1,000	June 30, 2008	June 28, 2013	Lump sum upon maturity	0.89000% （※2）	Floating
	The Bank of Fukuoka	1,500	June 30, 2008	December 30, 2011	Lump sum upon maturity	0.89000% （※2）	Floating
	Resona Bank	2,000	October 7, 2008	September 28, 2012	Lump sum upon maturity	1.71212%	Fixed
	Development Bank of Japan	2,850	June 30, 2009	June 30, 2017	75 mm yen of principal at every 6 months (the end of December and June), (5%/year) 1,875 mm yen on the last payment date	2.20000%	Fixed
	Development Bank of Japan	4,000	August 31, 2009	August 29, 2014	Lump sum upon maturity	1.71000%	Fixed
	Development Bank of Japan	4,000	August 31, 2009	August 31, 2015	Lump sum upon maturity	1.95000%	Fixed
	Development Bank of Japan	4,000	August 31, 2009	August 31, 2016	Lump sum upon maturity	2.17000%	Fixed
	The Sumitomo Trust and Banking Co.	600	September 30, 2009	September 28, 2012	Lump sum upon maturity	1.54457%	Fixed
	Mitsubishi UFJ Trust and Banking	600	March 31, 2010	March 29, 2013	Lump sum upon maturity	0.99000% (※2)	Floating
	Sumitomo Mitsui Banking Corporation	2,000	June 30, 2010	December 30, 2013	Lump sum upon maturity	1.19000% (※2)	Floating
	Sumitomo Mitsui Banking Corporation	2,000	June 30, 2010	June 30, 2015	Lump sum upon maturity	1.29000% (※2)	Floating
	Mizuho Corporate Bank	10,300	July 30, 2010	July 31, 2014	Lump sum upon maturity	1.41000%	Convert to fixed (*1)
	The Norinchukin Bank
	The Hiroshima Bank
	Yamaguchi Bank
	The Iyo Bank
	The Bank of Saga
	Higo Bank
	Shinwa Bank
	Subtotal	50,350
Commitment line agreement	The Bank of Fukuoka, Resona Bank, Kumamoto Family Bank and Shinwa Bank（※4）	100	August 31, 2010	September 30, 2010	Lump sum upon maturity	0.55154% (※3)	Fixed	No collateral No guarantee
	Nishi-Nippon City Bank(※5)	200	August 31, 2010	September 30, 2010	Lump sum upon maturity	0.55154% (※3)	Fixed	No collateral No guarantee
	Subtotal	300
Total		59,150

Description of Commitment Line Status

Type	Lender	Credit Limit (mm yen)	Commitment Period		Description
			Start	End
Commitment line agreement1	The Bank of Fukuoka, Resona Bank, Kumamoto Family Bank and Shinwa Bank	5,000	August 1, 2010	July 31, 2011	No collateral No guarantee
Commitment line agreement2	Nishi-Nippon City Bank	5,000	March 1, 2010	February 28, 2011	No collateral No guarantee
Total		10,000

• (※1)A swap agreement has been concluded to fix the interest rate on variable interest debt and the indicated interest rate is the rate when the swap agreement is incorporated
• (※2)From June 30,2010 to September 30, 2010 (not including the concerned date)
• (※3)From August 31,2010 to September 30, 2010(not including the concerned date)
• (※4)The debt under commitment line agreement1
• (※5)The debt under commitment line agreement2

4.Maintaining and Improving Our Credit Rating

Fukuoka REIT obtained a long-term company rating of "A-" from Standard & Poor's Rating Service (S&P) in September 2005 soon after listing, and obtained an issuer rating of "A+" from Rating and Investment Information (R&I) in November 2007.