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 39th fiscal period (September 1, 2023, to February 29, 2024).

During the fiscal period under review (the 39th 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, in particular, brought results of the replacement of existing shops by new ones due to the renewal of the South building, in addition to the still-recovering inbound tourism in Asia (except for China).
FRC posted operating revenues of 9,326 million yen, operating income of 3,462 million yen, ordinary income of 3,031 million yen, and profit of 3,030 million yen for the fiscal period under review. The dividend per unit came to 3,807 yen, a record high, which represents an increase of 52 yen over the dividend forecast of 3,755 yen disclosed at the time of the announcement of the financial results for the 38th fiscal period.

With regard to external growth, as a result of an endeavor to achieve an asset size of 250 billion yen while diversifying risks in terms of the portfolio structure, FRC acquired an office building, Hakata FD Business Center (acquisition price: 14.1 billion yen), on September 1, 2023. With these acquisitions, the ratio of retail properties in the entire portfolio has decreased to less than 50%.

As for internal growth, and among retail properties recorded higher sales. Meanwhile, upward rent revisions have been achieved upon tenant replacement and contract renewal, mainly for residential 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 84.6%, 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.

April 16, 2024