We would like to express our sincere appreciation to all unitholders for your continued support of Fukuoka REIT Corporation (FRC).

We are pleased to report on the performance results and management status of FRC for the 40th fiscal period (March 1, 2024, to August 31, 2024).

During the fiscal period under review (the 40th fiscal period), despite a recent standstill, the Japanese economy showed a mild pickup trend. Looking to the future, the economy is expected to keep recovering due in part to the effects of various political measures amid improvements in the employment and income environment. On the other hand, with monetary tightening and other measures continuing globally, a downturn in overseas economies poses a risk of placing downward pressure on the domestic economy.

Under such circumstances, FRC’s portfolio achieved solid performance overall across all asset types in the fiscal period. Among them, Canal City Hakata, a city-center retail property, to the still-recovering inbound tourism in Asia (except for China).
FRC posted operating revenues of 9,652 million yen, operating income of 3,664 million yen, ordinary income of 3,225 million yen, and profit of 3,223 million yen for the fiscal period under review. In addition, the "Special Provisions for Taxation in Cases of Repurchase of Specified Assets" was applied, and a portion of the amount was retained internally as a reserve for tax purpose reduction entry of 157 million yen, resulting in a dividend per unit of 3,850 yen.
With regard to external growth, in August we entered into an agreement for the acquisition of Mifune Logistics Center (tentative name) (acquisition price: 11 billion yen, to be acquired on March 27, 2025) and Axion Otemon Premium (acquisition price: 1.8 billion yen, to be acquired on March 28, 2025).

As for property dispositions, FRC disposed of the Tenjin North Front Building, an office building, at a price higher than the appraisal value. The trust beneficiary interest of the property is scheduled to be transferred after being divided into six portions, which is expected to contribute to maintaining a stable level of dividend.

In addition, 76,000 new investment units were issued in September, raising 10,325 million yen. The funds will be used for the acquisition of Mifune Logistics Center (tentative name) and Axion Otemon Premium, etc.

With these property acquisitions and dispositions, asset size totaled 230.1 billion yen. Furthermore, the dividend per unit is achieving solid growth and expected to increase to 3,900 yen for the 41st fiscal period from the forecasted dividend of 3,600 yen announced at the release of financial results for the 39th fiscal period, and to 3,900 yen for the 42nd fiscal period.

With regard to internal growth, in addition to increased sales at retail properties, we were able to increase rents in association with contract renewals, especially at logistics facilities, and an upward rent revision of up to approximately 15% has been achieved at the two existing properties.In terms of “initiatives on sustainability,” one of the key measures of FRC, we have endeavored to “maintain and enhance building performance and environmental performance,” which covers the E (environment) area. This has resulted in the ratio of properties certified as green buildings to the entire portfolio standing at 83.9%, against the 2030 goal of 85% or more. As an external evaluation, we have obtained “4 Stars” for three consecutive years and “Green Star” in the GRESB Real Estate Assessment for six consecutive years. We will continue our proactive endeavors to reduce CO2 emissions, coordinate with local communities, and provide sustainability information to our unitholders through the issuance of integrated reports and other measures.

As a REIT specializing in regional properties, FRC continuously strives to maintain and enhance dividend per unit in a stable manner by conducting steady asset management and quickly responding to market changes while receiving support and cooperation from powerful sponsors leading the Kyushu business world. We are resolved to make the utmost efforts to secure stable earnings over the medium to long term and continuously offer stable dividends into the future based on our management philosophy of “Act Local, Think Global.”

We greatly appreciate your continued support and cooperation.

October 18, 2024