CEO Message

茶木正安

To Our Unitholders:

Thank you for visiting our website. On behalf of Fukuoka REIT Corporation (FRC), I would like to express my sincere appreciation to all unitholders for their continued support.

We are pleased to report on the performance results and management status of FRC for the fourteenth fiscal period (March 1, 2011 to August 31, 2011).

FRC was started as Japan’s first REIT specializing in regional properties, contributing to the vitalization of provincial regions and the creation of attractive cities by incorporating high quality properties mainly in Fukuoka and Kyushu areas into the portfolio invested in by prime investors in Japan and abroad. Since our listing in June 2005, we have exhibited steady growth and achieved stable performance through the support of our unitholders and sponsor companies.

In the fourteenth fiscal period, the Japanese economy experienced a major slowdown due to the impact of the Great East Japan Earthquake in March 2011. However, the economy as a whole is slowly bouncing back with the recovery in production, halt in the trend of decrease in exports and other such factors being observed. Nevertheless, difficult conditions still persist, given the impact of the appreciating yen and deflation as well as lingering concerns over the employment situation worsening, among other things. In Kyushu, the prime investment area for FRC, an upturn is seen in production and capital investment amid the fading impact of a limited supply due to the earthquake, and the region as a whole is anticipated to get back on track to recovery. Still, the employment and income situations remain harsh and the future outlook continues to be opaque.

Under such circumstances, FRC used strict selection of assets in its investment activities based on its investment policy and acquired Canal City Hakata B for 28.7 billion yen on March 2, 2011. For existing properties, FRC focused on maintaining and raising occupancy rates while pouring continuous efforts into operations to enhance competitiveness and customer drawing power at major commercial facilities such as Canal City Hakata. As a result, the average occupancy rate rose to 99.6% for all properties FRC owns as of the end of the fourteenth fiscal period. FRC also saw operating revenues, operating income and net income exceed its forecasts, declaring a cash distribution of 16,922 yen per investment unit.

East Building (the second Canal City), a retail facility owned by Fukuoka Jisho Co., Ltd., is scheduled to open in September 2011 in the area adjacent to Canal City Hakata, one of FRC’s flagship properties. The new facility is expected to further enhance the fascination of Canal City Hakata, producing new economic effects and attracting more customers. FRC will continue to exert its strengths as a REIT specializing in regional properties and will quickly respond to market changes, while receiving support and cooperation from powerful sponsors who are leaders in the Kyushu business world. As we do so, we will strive to achieve stable growth of our portfolio in the medium- to long-term through steady asset management and strive to secure stable earnings. We greatly appreciate your continued support and cooperation.

 

Masayasu Saki
CEO and Representative Director
Fukuoka REIT Corporation