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-first fiscal period (September 1, 2019 to February 29, 2020).
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.
The business conditions of the Fukuoka and Kyushu were expanding moderately but are currently on a somewhat weak note, mainly in terms of consumer spending as well as exports and production, due to the impact of COVID-19 infection that broke out recently, among other factors. On the other hand, the commercial land price in Fukuoka City, the central area of FRC’s investment targets, rose 16.5% year-on-year, according to the government’s 2020 Land Market Value Publication announced in March 2020. The rate of increase is high due to demand competition for office, store and other spaces caused by the Tenjin Big Bang project making progress in the Tenjin area, which induces re-construction of buildings through deregulation and creates new spaces and employment, and by the extension of the City Subway Nanakuma Line (scheduled for fiscal 2022) as well as by the launch of the Hakata Connected, a project designed to enlarge the bustle and vigor of Hakata Station into surrounding areas. The residential land price also rose 6.8% year-on-year in the light of a notable increase in population. As such, the city’s land prices have continued rising for the eighth consecutive year both for commercial land and residential land, marking higher rates of increase.
Occupancy remained solid, with the average period-end occupancy rate of all properties FRC owns standing at 99.7%. FRC posted operating revenues of 9,162 million yen, operating income of 3,273 million yen, ordinary income of 2,900 million yen and profit of 2,899 million yen for the fiscal period under review. The dividend per unit came to 3,642 yen. The actual dividend for the period under review decreased by 8 yen per unit from the forecast at the time of the announcement of the financial results for the 30th fiscal period. This was mainly due to the effects of changes in inbound tourists and the impact of COVID-19 infection. Looking ahead, we will keep 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.
We plan to acquire two new properties (4,990 million yen) in the 32nd fiscal period.
In the fiscal period under review, we concluded an agreement to acquire LOGICITY Wakamiya (Note), the fourth logistics facility for FRC, in June 2020 (the 32nd fiscal period). LOGICITY Wakamiya is located in an industrial park that is near Kyushu Expressway Wakamiya Interchange and has a concentration of logistics providers’ warehouses along with Toyota Motor Kyushu’s automobile plant.
In addition, prior to the acquisition of LOGICITY Wakamiya in the 32nd fiscal period, we plan to acquire Higashi Hie Business Center III (completed in March 2020) from the sponsor, Fukuoka Jisho Co., Ltd. in May 2020. Since the completion of Higashi Hie Business Center in February 2009, the Higashi-Hie Area has been developing a number of office buildings and hotels against the backdrop of excellent transportation infrastructure, and its competitiveness as an office area has improved.
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 dividend per unit level through steady asset management. We at FRC will also pursue our mission of maximizing unitholder interests 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 13, 2020
(Note) The property is currently operating under a different name, but its name will be changed to “LOGICITY Wakamiya” after it is acquired by FRC.
Fukuoka REIT Corporation