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 thirty-sixth fiscal period (March 1, 2022 to August 31, 2022).

During the fiscal period under review (the 36th fiscal period), the Japanese economy showed a mild pickup trend. As for the outlook, with social and economic activities increasingly normalized under thorough measures taken against COVID-19 infection, the economy is expected to pick up due in part to the effects of various political measures, although a downturn in overseas economies in the face of global monetary tightening, etc. poses a risk of downward pressure on the domestic economy.

Under such circumstances, FRC’s portfolio achieved solid performance in the asset types of office buildings, logistic facilities, residential properties and community-based retail properties. On the other hand, the impact of COVID-19 continued to linger at Canal City Hakata, a city-center retail property, while hotels remained unable to recover as tourism demand, etc. did not return strongly.

Amid such a situation, in the 36th fiscal period, FRC acquired Hakata Chikushi-Dori Center Building (acquisition price: 4.32 billiion yen) on March 1, 2022. Moreover, the occupancy rate remained solid, with the average period-end occupancy rate of all properties FRC owns standing at 99.4%.
Consequently, FRC posted operating revenues of 8,830 million yen, operating income of 3,181 million yen, ordinary income of 2,805 million yen, and profit of 2,804 million yen for the fiscal period under review. Dividend per unit came to 3,523 yen, which represents an increase of 23 yen over the dividend forecast of 3,500 yen disclosed at the time of the announcement of the financial results for the 35th fiscal period.

As for future external growth, we will aim to expand the asset size by taking advantage of our local-specific information-gathering ability. In June 2022, we decided to acquire a logistics site (Island City Minato Bay related site (Land with leasehold interest) (tentative)) from Fukuoka City (scheduled for acquisition on March 31, 2029), in coordination with Fukuoka Jisho Co., Ltd., one of our sponsors.

In terms of internal growth, we will work to raise rent upon tenant replacement and contract renewal at the properties mainly in office buildings and residential properties. On top of this, we will manage our properties in retail properties and hotels in an appropriate manner, taking into account the relaxation of the government’s border measures against COVID-19 and resumption of measures to support tourism.

In the meantime, as part of our initiatives on sustainability, we announced our support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in September 2022. 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 will continuously strive to maintain and enhance dividend per unit in a stable manner by conducting steady asset management as well as quickly responding to market changes while receiving support and cooperation from powerful sponsors leading the Kyushu business world. We are resolved to make 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 19, 2022