Message from Executive Director
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-third fiscal period (September 1, 2020 to February 28, 2021).
FRC was listed in June 2005 and started as Japan’s first REIT specializing in regional properties. Since then, we have exhibited consistent growth and achieved stable performance through the support of our unitholders and sponsor companies.
During the fiscal period under review (the 33rd fiscal period), the Japanese economy continued to show a pickup trend amid a severe situation still persisting under the impact of the novel coronavirus (COVID-19) infection despite weakness in some areas. As for the outlook, the economy is expected to further pick up due in part to the effects of various political measures, although attention should be paid to the impact of changes in the financial and capital markets, etc.
In the Fukuoka and Kyushu area, the core investment target area for FRC, the economy is picking up amid a severe situation, with public spending at a high level. The pickup trend in consumer spending has come to a temporary pause, however, and supply-and-demand conditions for labor and compensation of employees are both on a weak note. As we foresee, we must be wary of the impact of the trend of COVID-19 on corporate and household sentiments, among other factors.
Under such circumstances, FRC’s portfolio achieved solid performance in the asset types of office buildings, logistics facilities, and residential properties. Sales of Canal City Hakata and other major retail properties increased period-on-period, counter to the emergency declaration period against the spread of COVID-19 in the 32nd fiscal period, while hotels failed to recover as demand from tourists, etc. did not return strongly.
Against such a backdrop, FRC managed its assets steadily in the 33rd fiscal period and without any large-scale move-outs of tenants or major rent reductions, etc. Moreover, from a perspective of dispersing risks through diversification of the portfolio, FRC decided to dispose part of its co-ownership interest in Grand Building of Canal City Hakata・B, a commercial complex, and acquire land with leasehold interest of an office building located in Tenjin, an urban center of Fukuoka. The disposition and the acquisition will be conducted on June 1, 2021 (the 34th fiscal period). We will aim to achieve an asset size of 250.0 billion yen as the next target going forward, while working to reconsider the portfolio as a REIT with comprehensive asset types specializing in regional properties. We will also continue to flexibly investigate property replacement and other measures if we find any favorable opportunities.
Occupancy remained solid, with the average period-end occupancy rate of all properties FRC owns standing at 99.5%. FRC posted operating revenues of 8,904 million yen, operating income of 3,061 million yen, ordinary income of 2,677 million yen, and profit of 2,675 million yen for the fiscal period under review. The dividend per unit came to 3,361 yen. The actual dividend per unit for the period represents an increase by 111 yen from the previous fiscal period and by 61 yen from the dividend forecast at the time of the announcement of the financial results for the 32nd fiscal period. The increase is due to more customers attracted to our retail properties by such hit movies as Demon Slayer (Kimetsu-no-Yaiba) and the government’s “Go To” campaigns, and due to better earnings through such factors as smooth recovery at our retail properties that serve people’s daily needs. On top of these, we successfully achieved upward revision of rents for office buildings for the ninth consecutive fiscal period while maintaining high occupancy and continued endeavors to reduce costs including administration and operation expenses. These efforts also contributed to the increase. Looking ahead, we will continue our endeavors to maintain and increase dividends in a stable manner by acquiring excellent properties to generate stable cash flows and continuously taking strategic initiatives.
Going forward, FRC will continue to exert its strengths as a REIT specializing in regional properties and quickly respond to market changes while receiving support and cooperation from powerful sponsors leading the Kyushu business world. We will also strive to maintain and increase the level of dividend per unit through steady asset management. We at FRC will also pursue our mission of maximizing the interests of unitholders over the medium to long term based on our management philosophy of “Act Local, Think Global.”
We greatly appreciate your continued support and cooperation.
April 15, 2021