Fukuoka REIT : Integrated Report 2022 (for display)

Fukuoka REIT Corporation

Integrated Report 2022

Contents

Who We Are

1. Fukuoka REIT Corporation in Numbers
2. Overview of Fukuoka REIT Corporation

1. Relationship with Fukuoka Realty Co., Ltd.

1. Value-CreationStory

1. Value-CreationActivities

1. Materiality

1. History of Asset Portfolio Expansion

1. Financial/Non-FinancialHighlights (5-Year Graph)

Growth Strategy

16 CEO's Message

1. External Environment (Initiatives of Fukuoka City)

1. Risks and Opportunities

1. Investment Strategy
2. Management Strategy
3. Financial Strategy

Sustainability

29 Sustainability

1. Environmental Issues

1. Social Issues

1. Organizational Issues

Data Section

1. External Environmental Data

1. Overview of Properties Owned

44 Financial/Non-Financial Highlights (11-Year/22-Period Summary)

Editorial Policy

We have issued our Integrated Report since fiscal

2019 with the aim of imparting knowledge concerning the value creation process of the investment corporation and the asset management company. The Report has been positioned as an important tool for engaging with our unitholders, investors, and other stakeholders. The International Reporting Framework recommended by the IFRS Foundation and the

Ministry of Economy, Trade and Industry's Guidance for Collaborative Value Creation have been referenced in the preparation of this Report to ensure ease of understanding.

Through this Report, we aim to increase understanding of our efforts to enhance corporate value based on the basic philosophies of the investment corporation and the asset management company as well as the value we create in working to realize a sustainable society. We will continue striving to make the Report an effective tool for facilitating constructive dialogue.

Positioning of This Report

Financial

Information

・Earnings report ・Securities report

・Asset management report

・Operating systems report

Non-Financial

Information

Integrated ・Financial briefing materials

Report ・Online disclosure of sustainability information

・Corporate profile

・PR information disclosure

International Initiatives We Focus On

Sustainable Development Goals (SDGs)

The SDGs refer to the international goals set forth in the 2030 Agenda for Sustainable

Development adopted at the United Nations Summit in September 2015 as the successor to the Millennium Development Goals (MDGs) established

in 2001. Given the medium- to long-term expectations stakeholders have for the resolution of these challenges, our priority issues (materiality) were established in September 2019 with reference to the SDGs.

Principles for Responsible Investment (PRI)

PRI comprises an international network of

financial institutions working to realize six principles for the finance industry with the aim of encouraging the incorporation of environmental,

social, and governance ("ESG") issues into investment decision-making processes. Fukuoka Realty Co., Ltd., endorsed and became a signatory of PRI in September 2018 to promote the consideration of ESG issues in real estate investment management operations and practices that conform to international standards.

Fukuoka REIT Corporation in Numbers

Properties owned

Occupancy rate

Asset size

33

99.4%

206,339

million yen

Dividend

3,523

per unit

yen

Investment

Others

Credit ratings★

Dividend yield

14.0%

JCR: AA

4.1%

type

based on

Office buildings

(stable)

( acquisition price )

33.0%

R&I: A+

Retail

gain

53.0%

LTV★

(stable)

Unrealized

41.7

43,026

Investment

Other

%

areas

Kyushu areas

million yen

based on

22.9%

( acquisition price )

Securities code

Accounting periods

Fukuoka

8968

February

metropolitan area*
77.1%	August

• The Fukuoka metropolitan area includes Fukuoka City, Chikushino City, Kasuga City, Onojo City, Munakata City, Dazaifu City, Koga City, Fukutsu City, Itoshima City, Nakagawa City, Umi Town, Sasaguri Town, Shime Town, Sue Town, Shingu Town, Hisayama Town, and Kasuya Town.

Who We Are

Growth Strategy

Sustainability

Glossary Credit rating

A grade that reflects the safety and creditworthiness of a company and its ability to pay the principal and interest of bonds issued by the company based on an analysis of the company's performance and financial condition.

LTV

An abbreviation for Loan to Value, and an indicator of a company's borrowing ratio as well as a measure of stability in borrowing. The lower the value, the greater the degree of safety against redemption of debt.

[Calculation method] LTV (%): Interest-bearing debt / Total assets multiplied by 100

Task Force on Climate-related Financial Disclosures (TCFD)

Cognizant of the fact that climate change is a major issue facing the international community, in September 2022 we became a signatory of

the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB), having endorsed the recommendations of the TCFD that were announced in June 2017. We will strive to disclose the impact of climate change and implement specific measures based

on the recommendations of the TCFD in addition to continuing to reduce environmental impact and contribute to the local community.

These materials might contain future performance projections, plans, management targets, and strategies. These forward-looking descriptions are based on present assumptions on future events and trends in the business environment, but

such assumptions might not necessarily be accurate. Actual results could differ materially due to various factors. Neither Fukuoka REIT Corporation nor Fukuoka Realty Co., Ltd., shall be liable for the accuracy, rationality, and completeness of information contained in these materials, whether they were prepared by Fukuoka REIT Corporation or Fukuoka Realty Co., Ltd., or provided by a third party.

Note that all information in this document is current at the time of preparation and is subject to change without prior notice.

These materials have not been prepared to entice investment.

When applying to purchase investment units issued by Fukuoka REIT Corporation, do so based on your own judgment and responsibility.

Any unauthorized reprinting, use, reproduction, distribution, or modification of all or part of the content contained in this Report is expressly prohibited.

Note: Regarding amount, percentage, and ratio rounding: Unless otherwise noted, in these materials, monetary amounts are rounded down to the nearest whole unit, and percentages and ratios are rounded off to one decimal place.

Data Section

Fukuoka REIT Corporation 2022

01

Overview of Fukuoka REIT Corporation

Name	Fukuoka REIT Corporation
Representative	Zenji Koike, Executive Director
Security code	8968
Listed date	June 21, 2005
(Tokyo Stock Exchange, Fukuoka Stock Exchange)
Fiscal period	February and August

Asset manager	Fukuoka Realty Co., Ltd.
Sponsors	Fukuoka Jisho Co., Ltd.	SAIBU GAS HOLDINGS CO., LTD.
Kyushu Electric Power Co., Inc.
(Shareholders of the	Kyudenko Corporation
THE BANK OF FUKUOKA, LTD.
asset management	Kyushu Railway Company
THE NISHI-NIPPON CITY BANK, LTD.
company)	Development Bank of Japan Inc.
Nishi-Nippon Railroad Co., Ltd.

	History of Fukuoka REIT Corporation	Fukuoka Kyushu Actions
2005	● Listed on the Tokyo Stock Exchange and Fukuoka Stock Exchange	● Nanakuma subway line opens
● Property acquisitions: SunLive City Kokura, Sanix Hakata Building	● Kyushu National Museum opens
	●1st public offering (Offer price: 153,272 yen*)
2006	●10th anniversary of the opening of Canal City Hakata	● New Kitakyushu Airport opens
● Property acquisitions: Taihaku Street Business Center, Amex Akasakamon Tower, Square Mall
	Kagoshima Usuki, Kumamoto Intercommunity SC
2007	● Property acquisitions: Hanahata SC, City House Keyaki Dori	● Tenjin LOFT opens
2008	● Canal City Hakata South Building renovation (2nd floor)	● Kurume City, Fukuoka Prefecture, becomes a core city
● Property acquisitions: Kurume Higashi Kushiwara SC, K's Denki Kagoshima
2009	● Property acquisition: Higashi Hie Business Center	● Kyushu University Ropponmatsu Campus closes
(redevelopment project zone)
2010	● Canal City Hakata common space and Park Place Oita common space, tenant floor renovations	● Fukuoka Parco opens
	●2nd public offering (Offer price: 115,217 yen*)
2011	● IR Kyushu Workshop launch	● Kyushu Shinkansen Kagoshima route fully opens
● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2011
	● Property acquisition: Canal City Hakata・B
	● Opened LAOX/XEBIO in the Canal City Hakata South Building
2012	● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2012	● Fukuoka Urban Expressway fully opens and Kanjo Line opens
	● Property acquisition: Aqualia Chihaya
	●3rd public offering (Offer price: 142,116 yen*)	● Fukuoka City population tops 1.5 million
	●1st investment corporation bond issuance
2013	● JR Kyushu Cruise Train "Seven Stars in Kyushu"
● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2013
	begins operations
	● Property acquisitions: Tenjin Nishi-Dori Business Center Building, D-Wing Tower, Hotel FORZA Oita, Tenjin North Front Building
	●5:1 investment unit split implemented	● Fukuoka City designated a National Strategic Special Zone
2014	● Received the IR Excellent Company Encouragement Award (organized by Japan Investor Relations Association)
● Number of cruise ship port calls: 115
	● Property acquisitions: Tosu Logistics Center, Granfore Yakuin Minami
	●4th public offering (Offer price: 212,257 yen*)	● Tenjin Big Bang begins
2015	● Fukuoka REIT Corporation 10th anniversary	● Number of cruise ship port calls: 259 (shopping sprees)
	● Property acquisitions: LOGICITY Minato Kashii, Marinoa City Fukuoka (Marina Side Building)	● JR Oita City opens
	● Canal City Hakata 20th anniversary	● Higashi-Kyushu Expressway fully opens
2016	● Number of cruise ship port calls: 328
● Japan's largest 3D projection mapping and new Aqua Panorama fountain installed at Canal City Hakata
	● Vegefru stadium (new fresh produce market) begins at Island City
	●2nd investment corporation bond issuance
	● Park Place Oita 15th anniversary renovation	● Fukuoka City Science Museum opens
	● Canal City Hakata inbound sets new visitor record (17.02 million in fiscal 2017)
2017	● World Cultural Heritage registers heritage sites related to
● Property acquisition: LOGICITY Hisayama
	Kami-yadoru shima Munakata and Okinoshima
	(Asset management company)
	● Formulated Policies for Customer-Oriented Business Operations
	●5th public offering (Offer price: 164,414 yen*/3rd investment corporation bond issuance)
2018	● Property acquisitions: Konoha Mall Hashimoto, Higashi Hie Business Center II, Tissage Hotel Naha	● Fukuoka Jisho Co., Ltd., becomes a premium partner of
(Asset management company)
Avispa Fukuoka
	● Formulated the Sustainability Policy/Endorsed the Principles for Responsible Investment (PRI) and the Principles for
	Financial Action for the 21st Century (PFA21)/Certified as a "Fukuoka 'Work Style Reform' Promotion Company"
2019	● Received the rating of "4 stars" and "Green Star" in the GRESB Real Estate Assessment	● Private-sector outsourcing of Fukuoka Airport
● Became the first company in Kyushu to conduct borrowing via green loans	operations begins
	● Became the first J-REIT to publish an integrated report	● COVID-19 outbreak
2020	● Received the rating of "3 stars" and "Green Star" in the GRESB Real Estate Assessment	● TEAM FUKUOKA launched to attract international financial
	● Property acquisitions: Higashi Hie Business Center III, LOGICITY Wakamiya	functions to Fukuoka
	● Canal City Hakata opening 25th anniversary/Nitori Canal City Hakata opens
2021	● Received the rating of "4 stars" and "Green Star" in the GRESB Real Estate Assessment	● Tenjin Big Bang, Tenjin Business Center completed
● Selected as a AAA website All Japanese Listed Companies' Website Ranking for fiscal 2021
	● Property acquisition: Tenjin Nishi-Dori Business Center (Land with leasehold interest)
	● Partial revision to management guidelines/Set targets for materiality KPIs/Conducted borrowing via a
	sustainability-linked loan /Endorsed the TCFD recommendations
	● Received the rating of "4 stars" and "Green Star" in the GRESB Real Estate Assessment/Top "A" in
	the GRESB Public Disclosure	● Dontaku parade held for the first time in three years
2022	● Renewal opening of Park Place Oita's 3-floor,Shangri-la Zone	● Oiyama event of Hakata Gion Yamakasa Festival held for
	● Property acquisitions: Hakata Chikushi-Dori Center Building, Island City Minato Bay related site (land	the first time in three years
	with leasehold interest; conclusion of agreement; tentative name)
	(Asset management company)

• • Registration with Fukuoka City Well-Being & SDGs Registration System "Master"
• The investment corporation undertook a five-for-one investment unit split effective March 1, 2014. Accordingly, offer prices for the first to third public offerings have been divided by five.

Glossary Sustainability-linked loan

Sustainability-linked loans are loans that encourage borrowers to meet ambitious sustainability performance targets (SPTs).

02

Investment corporation bond

Bonds issued by investment corporations in accordance with the Act on Investment Trusts and Investment Corporations and are equivalent to corporate bonds of stock companies. Bonds are issued as a means of fund procurement, and are used mainly for acquisition of real estate, repair, and maintenance of existing properties, and repayment and redemption of borrowings.

FRC's Characteristics

FRC has the following five main strengths.

1 Japan's first	2	Excellent portfolio	3	Solid support from a
region-specific		centered on the Fukuoka		sponsor company involved
REIT		metropolitan area		in property development
Asset management	A portfolio of carefully	Asset portfolio expansion and
leveraging our in-depth	selected investments in the	high occupancy rates facilitated
knowledge of the real	high growth area of Fukuoka	through coordination with our
estate environment	City, which is gaining attention	sponsors
of the Fukuoka and	in Japan and abroad
Kyushu areas

Canal City Hakata

〜Redevelopment project that took approximately 20 years to complete〜

Canal City Hakata is a multipurpose retail facility that opened in 1996 as an urban redevelopment project based on the concept of "urban theater."

Canal City Hakata is located between the Tenjin district̶which forms the commercial center of Fukuoka City̶and the business district centering on JR Hakata Station, and is close to the famous entertainment area Nakasu and Kushida Shrine, which once flourished as a community of Hakata merchants and is famous throughout Japan for the Hakata Yamakasa Festival. Canal City Hakata was designed by American architect Jon Jerde. The project site was the former location of the Hakata Silk Cotton Spinning Company (later the Hakata Factory of Kanegafuchi Spinning, hereafter the "Kanebo Factory"). It had become a forgotten plot of land at the heart of Fukuoka City that had lost the urban functions that once helped develop modern society.

In 1977, Fukuoka Jisho acquired a portion of the former Kanebo Factory site, which is an area of approximately 3,000 tsubo. At the time, the area was being planned as a redevelopment for condominiums, but the concept was reworked many times in the hope of "reviving Hakata as a commercial city." In 1982, a basic development concept was formulated and a master plan was announced the following year, but the redevelopment was temporarily postponed due to the poor earnings for key tenants. In 1988, a major step toward realization was finally taken, and Canal City Hakata opened on April 20, 1996, as a catalyst to revitalize the central part of the downtown area, which had become stagnant, and to promote the balanced development of the entire city center. Traffic congestion on surrounding roads that had been a concern before the opening was addressed through road maintenance in cooperation with the local government, and a pedestrian bridge was constructed to connect to the Kamikawabata Shopping Arcade. Accordingly, the opening of Canal City Hakata has led to the revitalization of the Kamikawabata Shopping Arcade and surrounding areas.

Source: Prepared by Fukuoka Realty Co., Ltd., based on the Canal City Hakata Concept Book

4	Establishment	5	Stable dividends
	of a stable		and steady NAV
	financial base		growth since listing
Conservative control	Appropriate management of
of the interest-bearing	real estate investments
debt ratio and long-
term diversification of
repayment deadlines

• Before completion

Kanebo Factory in 1957. The Japan National Railways tracks and a service line are visible in the foreground.

• Completion

Fulfilling new urban functions, enhances circulation to Tenjin and Hakata while connecting the surrounding areas of Kawabata and Sumiyoshi.

• After Completion

Five million people visited Canal City Hakata in the first two months after its opening. The "urban theater" was born, creating a variety of ripple effects in the surrounding area.

Who We Are

Growth Strategy

Sustainability

Data Section

Glossary NAV
NAV is an abbreviation for Net Asset Value at an investment trust. Net assets are defined as total	[Calculation method] NAV: Net assets + Unrealized gains or losses - Dividends
investment trust balance sheet assets minus liabilities, with the base price based on the number	Market net assets value per unit: NAV / Total number of units issued
of units. For REITs, the term net assets refers to net assets plus unrealized gains or losses	Fukuoka REIT Corporation 2022
reflecting the difference between the book value of the property owned and the appraised value.

03