Fukuoka REIT Corporation (8968） http://www.fukuoka-reit.

jp

Presentation of Accounts for Fourth Fiscal Period (March 1, 2006 ~ August 31, 2006)

Fukuoka Realty
 Table of Contents

1. Presentation of Accounts for Fourth Fiscal Period …………… 4

2. Property Management Conditions ……………………………………… 11

3. Investment Strategy …………………………………………………………… 21

4. Financial Strategy ……………………………………………………………… 30

5. Compliance ………………………………………………………………………… 35

6. Appendix ……………………………………………………………………………… 39

These materials have been specifically prepared as roadshow materials and do not constitute a prospectus as
designated in the Securities and Exchange Law. When applying to purchase investment units issued by Fukuoka
REIT Corporation, do so based on your own judgment after reading the prospectus on the issuing of new
investment units (and corrections) issued by said investment corporation.

2
REIT Overview
Profile Current Pricing
●Name Fukuoka REIT Corporation ●Unit Price JPY 864,000 yen

●Asset Manager Fukuoka Realty Corporation Limited ●Outstanding Units 107,050

●Sponsors Fukuoka Jisho, Kyushu Electric Power, ●52 Week High JPY 910,000 (June 21, 2005)
Royal Holdings, The Bank of Fukuoka,
The Nishi-Nippon City Bank, Nishi- ●52 Week Low JPY 763,000 (September 15, 2005)
Nippon Railroad, Kyudenko, Saibu Gas,
Kyushu Railway Company

● Listed date June 21, 2005 (TSE and FSE)

Note: The values are arrived at using the assets under

Financial Highlights Portfolio Summary management and scheduled to be acquired (contract base) as
of October 18, 2006. The figures for the total leasable area
and occupancy are the figures for the assets under
●Total Assets JPY 104,183 million management as of August 31, 2006.

(as of August 31, 2006) ●Asset Types Retail 62.8%, Office 34.5% and
●Total Debt JPY 42,700 million yen Residential 2.9%
(as of August 31, 2006) ● Asset Location Fukuoka metropolitan area 71.7%,
●Debt Rating S&P A- (stable) other Kyushu 28.3%

● Properties 13

● Total Leasable Area 277,580.44m2

Dividend Information
● Occupancy 99.4%
●Previous Fiscal Period End August 31, 2006 (semi-annual periods,
every February and August)

●Cash Dividend (actual) JPY 18,632 per unit

●Yield 4.3% (as of October 13, 2006)

●Yield Gap Gap 2.5% (Comparison with 10-year JGB

as of October 13, 2006)

3
Presentation of Accounts
for Fourth Fiscal Period

Fukuoka REIT continues to deliver industry leading dividends

◆ Fourth Fiscal Period JPY18,632 per unit
◆ Fifth Fiscal Period JPY17,000 per unit (forecast)
◆ Sixth Fiscal Period JPY17,600 per unit (forecast)
 Presentation
Presentation of
of Fourth
Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

FRC Posts Gains in Income and Profits

for 2nd Consecutive Fiscal Period FRC Posts Gains in Income and Profits for
2nd Consecutive Fiscal Period
4th Fiscal Period 3rd Fiscal Period Variation Distribution per Unit
Category March 1, 2006 – September 1, 2005 -
August 31, 2006 February 28, 2006 Value ●Settlement (exceeds forecast)
Operating revenues 4,496 mm yen 4,050 mm yen 445 mm yen JPY18,632
Ordinary profit 1,983 mm yen 1,751 mm yen 232 mm yen ●Performance revision (August 17, 2006)
Net profit 1,716 mm yen 1,698 mm yen 17 mm yen JPY18,400
Total distribution 1,715 mm yen 1,697 mm yen 17 mm yen
●Start of period forecast (April 20, 2006)
Distribution per unit 18,632 yen 18,438 yen 194 yen
JPY18,200

Operational period 184 days 181 days Net Income: Factors behind Fluctuation
Properties (period
8 properties 7 properties Positive Factors
end)(note)
Tenants (period end) 250 tenants 181 tenants ● The revenues of Taihaku Street Business Center were included from
the beginning of the period (contribution after depreciation)
Leaseable floor space +JPY167 million
277,580.44m2 262,979.61m2
(period end) ● Distribution from TK equity interest +JPY136 million
Occupancy (average) 99.3% 99.4% ● Increased rent from sales-linked rents resulting from strong sales
at key retail properties +JPY46 million
Occupancy (period end) 99.4% 99.0%
Negative Factors
(Note) This excludes figures for planned acquisitions and TK interests.
● Loss of extraordinary profit last period (consumption tax of tax
exempt operator) -JPY128 million
● Commencement of payment of real property and city taxes on
acquired assets -JPY71 million
● Increase in financing related costs such as initial conversion to
long-term debt costs -JPY50 million
● Increase in paid interest accompanying acquisition of new assets
-JPY38 million

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Presentation of
of Fourth
Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Profit and Loss Statement for the 4th Fiscal Period

(unit: thousand yen) ●Rental income from Taihaku Street
Business Center included from the
4th Fiscal Period 3rd Fiscal Period Variation beginning of the period
March 1, 2006 – August 31, 2006 September 1, 2005 - February 28, 2006 +JPY293 million yen
●Increased rent from sales-linked
Percentage Percentage Percentage
Category Value (%)
Value (%)
Value (%)
rents resulting from strong sales at
key retail properties
I. Operating revenues 4,496,048 100.0 4,050,927 100.0 445,120 11.0 +JPY46 million yen
Real estate leasing revenues 4,231,464 3,879,589 351,875
Other revenues from real
128,583 171,338 (42,754) ● Received penalty and loss of
estate leasing
income in acquisition of property
TK Distribution 136,000 − 136,000 from tenant moving out last
II. Operating expenses 2,512,620 55.9 2,299,570 56.8 213,049 9.3 period -JPY26 million
● Loss of income from recovery to
Real estate leasing expenses 2,123,240 1,959,121 164,118
original state recorded last period
Asset management fees 273,293 249,046 24,246 -JPY25 million
Asset custodian fee 8,344 7,590 754
● Received distribution for
General administration fees 32,192 29,572 2,620 preferred TK interest in CCH
Director compensation 9,600 9,600 − Bridge operation for entire period
Other operating expenses 65,948 44,639 21,309 ● Rental expenses for Taihaku
Operating income 1,983,427 44.1 1,751,357 43.2 232,070 13.3 Street Business Center included
from the beginning of the period
III. Non-operating revenues 368 0.0 131,171 3.2 (130,803) (99.7)
+JPY127 million
Interest received 368 20 347 ● Commence payment of real
Consumption tax for tax property and city taxes for
− 128,104 (128,104)
exempt firm, etc. acquired assets
Other non-operating +JPY71 million
revenues − 3,046 (3,046)
● Loss of expenses for recovery to
IV Non-operating expenses 267,693 6.0 184,240 4.5 83,452 45.3 original state recorded last period
Interest expense 171,148 133,328 37,819 –JPY 22 million
Amortization of
5,595 5,595 −
establishment cost
● Loss of extraordinary profit of
Expense related to financing 89,099 39,334 49,764
last period (consumption tax for
Other non-operating
1,850 5,981 (4,131) tax exempt operator)
expenses
Ordinary profit 1,716,102 38.1 1,698,288 41.9 17,814 1.0
● Increase in borrowing costs
Net income before tax 1,716,102 38.1 1,698,288 41.9 17,814 1.0 accompanying acquisition of the
Corporation, inhabitant and Taihaku Street Business Center
1,048 0.0 1,040 0.0 8 0.8
business tax
Adjustment to corporation tax (0) 0.0 24 0.0 (25) − ● Conversion to long-term debt
Net profit 1,715,054 38.1 1,697,223 41.9 17,831 1.1 expenses, etc.
Profit carrued forward 37 31 5
Unappropriated profit 1,715,092 1,697,255 17,836 6
 Presentation
Presentation of
of Fourth
Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Balance Sheet for the 4th Fiscal Period

(unit: thousand yen) (unit: thousand yen)

4th Fiscal 3rd Fiscal 3rd Fiscal

4th Fiscal Period Variation
Period Period Variation (as of August 31, 2006)
Period
(as of August 31, 2006) (as of February 28, 2006) (as of February 28, 2006)
Percen Percent Percen Percen Percent
Percent
Category Value tage Value age Value tage Category Value age (%)
Value tage Value age
(%) (%) (%) (%) (%)
●Acquisition funds
Assets Liabilities for the Taihaku
I. Current assets ●Retained Amex I. Current assets Street Business
Cash and cash Akasakamon Accrued business fees 232,183 313,223 (81,039) Center +JPY7,000
2,935,049 1,424,770 1,510,279 Tower million
equivalents Short-term debt 8,100,000 15,100,000 (7,000,000)
acquisition ● Repayment of
Cash and deposit in Accounts payable 46,319 41,889 4,430 short-term debt
3,430,267 2,585,615 844,652 funds (as of
trust September 1, Expenses payable 250,629 228,055 22,574 accompanying
Operating 2006) conversion to
333,808 132,641 201,166 Income taxes payable 975 1,036 (61)
receivables long-term debt -
Rent received in JPY16,000 million
Deferred tax assets 19 18 0 535,254 481,088 54,165
advance ● Acquisition funds
Consumption tax Deposits held 736,848 473,399 263,448 for the Amex
89,196 − 89,196
receivables Akasakamon
●Deposit for Total current liabilities 9,902,209 9.5 16,638,691 17.6 (6,736,482) (40.5)
Other current assets 252,634 75,851 176,782 Tower +JPY2,000
acquiring the II. Fixed liabilities million
Total current assets 7,040,976 6.8 4,218,898 4.5 2,822,078 66.9
Cityhouse Tenjin Long-term debt 34,600,000 18,600,000 16,000,000
II. Fixed assets Keyakidori ●Conversion to
Key money and
1. Tangible fixed (tentative name) long-term debt
JPY+114 million security deposits on 103,128 107,661 (4,533)
assets is executed
deposit
Building 140,384 144,085 (3,701)
Key money and
Structure 843 − 843 8,694,810 8,382,254 312,555
security deposits in trust
Land 641,782 641,782 − ●Acquisition of Derivative liabilities 128,594 − 128,594
Building in trust 37,987,229 34,315,688 3,671,541 Taihaku Street Total fixed liabilities 43,526,532 41.8 27,089,916 28.6 16,436,616 60.7
Structure in trust 209,848 210,008 (160) Business Center
Total liabilities 53,428,742 51.3 43,728,608 46.2 9,700,134 22.2
Machinery and
244,503 213,028 31,475 Net Assets
equipment in trust
Tools and fixtures in I. Unitholders’ capital
trust
214,652 183,628 31,023 1. Total capital 49,167,800 47.2 − − 49,167,800 −
Land in trust 54,117,497 51,069,002 3,048,494 2. Reserves
Temporary account Unappropriated profit 1,715,092 − 1,715,092
24,457 38,889 (14,431)
of construction in trust Total reserves 1,715,092 1.6 − − 1,715,092 −
Total tangible assets in Total unitholders’ capital 50,882,892 48.8 − − 50,882,892 −
93,581,200 89.8 86,816,115 91.8 6,765,085 7.8
trust II. Difference of
2. Investment and valuation and conversion
other assets 1. Deferred hedge
Investment (128,594) − (128,594)
3,421,633 3,421,633 − profit/loss
securities Total difference of
Guarantees and (128,594) (0.1) − − (128,594) −
10,000 10,000 − valuation and conversion
deposits Net assets 50,754,298 48.7 − − 50,754,298 −
Long term pre-paid Total liabilities and net
101,252 93,443 7,808 104,183,040 100.0 − − 104,183,040 −
expenses assets
Total investment and Capital
3,532,885 3.4 3,525,077 3.7 7,808 0.2
other assets
I. Total capital
Total fixed assets 97,114,086 93.2 90,341,192 95.5 6,772,894 7.5
Total capital − − 49,167,800 52.0 (49,167,800) −
III. Deferred assets
II. Reserves
Establishment
27,977 33,572 (5,595) Unappropriated profit − − 1,697,255 (1,697,255)
expenses
Total deferred assets 27,977 0.0 33,572 0.0 (5,595) (16.7) Total reserves − − 1,697,255 1.8 (1,697,255) −
Total assets 104,183,040 100.0 94,593,663 100.0 9,589,377 10.1 Total capital
Total liabilities/capital
−
−
−
−
50,865,055
94,593,663
53.8
100.0
(50,865,055)
(94,593,663) −−
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 Presentation
Presentation of
of Fourth
Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Cash Flow Statement for the 4th Fiscal Period (unit: thousand yen)

4th period (184 days) 3rd Fiscal Period (181 days)

March 1, 2006 – August 31, 2006 September 1, 2005 - February 28, 2006
I. Cash flows from operating activities
Income before income taxes 1,716,102 1,698,288
Depreciation 619,112 562,577
Amortization of founding fees 5,595 5,595
Interest received (368) (20)
Interest paid 171,148 133,328
Increased/decreased amount of operations receivables (201,166) 49,316
Increased/decreased amount of uncollected consumption tax (89,196) 1,595,230
Increased/decreased accrued business payments (86,287) 35,576
Increased/decreased unpaid fees 25,103 (99,281)
Increased/decreased unpaid expenses 12,673 (33,046)
Increased/decreased advanced rents 54,165 15,605
Increased/decreased deposits held 251,306 (268,582)
Increased/decreased advance payments (53,923) 40,161
Increased/decreased long-term advance payments (7,808) 16,512
Other (7,898) 33,146
Subtotal 2,408,557 3,784,407
Interest received 368 20
Interest paid (161,247) (99,974)
Corporation tax payment, etc. (1,109) (2,204)
Net cash provided by operation activities 2,246,568 3,682,249
II. Cash flow from investment activities
Expenses from acquiring tangible fixed assets − (786,459)
Expenses from acquiring tangible fixed assets in trust (7,380,419) (4,822,962)
Expenses from commission payments (114,960) −
Income from security deposits and guarantees − 109,928
Expenses from security deposits and guarantees (4,533) ●Acquisition of Taihaku (2,266)
Income from security deposits and guarantees in trust 399,921 Street Business Center 393,015
Expenses from security deposits and guarantees in trust (75,223) (120,276)
Expenses from acquiring investment securities (20,212) (3,401,421)
Net cash used in investment activities (7,195,428) (8,630,441)
III. Cash flow from financing activities
Proceeds from short-term debt 20,700,000 ●Conversion to long-term 8,100,000
Repayment of short-term debt (27,700,000) debt in August 2006 (1,000,000)
Proceeds from long-term debt 16,000,000 −
Distribution payment (1,696,208) (1,740,716)
Net cash provided by financial activities 7,303,791 5,359,283
IV. Increased /decreased cash and cash equivalents 2,354,931 411,091
V. Cash and cash equivalents at start of period 4,010,386 3,599,294
VI. Cash and cash equivalents at end of period 6,365,317 4,010,386
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Presentation of
of Fourth
Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Forecasts for the 5th and 6th Fiscal Periods

Forecast for the Forecast for the 4th fiscal period 3rd fiscal period
6th fiscal period 5th fiscal period results results
Category September 1, 2006 - February 28,
March 1, 2007 – August 31, 2007 March 1, 2006 – August 31, 2006 September 1, 2005 - February 28,
2007
(184 days) (184 days) 2006 (181 days)
(181 days)

Operating revenues 5,088 mm yen 4,803 mm yen 4,496 mm yen 4,050 mm yen
Operating profit － － 1,983 mm yen 1,751 mm yen
Ordinary profit 1,886 mm yen 1,822 mm yen 1,716 mm yen 1,698 mm yen
Net profit 1,884 mm yen 1,819 mm yen 1,715 mm yen 1,697 mm yen
Distribution per
17,600 yen 17,000 yen 18,632 yen 18,438 yen
unit
Premises
●Assets under management Existing AUM (10 properties + TK interest) + 2 properties to be acquired*
[Properties acquired in fifth period] Amex Akasakamon Tower, Square Mall Kagoshima Usuki
*[To be acquired in fifth period] (tentative name) Kumamoto Inter-community SC and
[to be acquired in sixth period] (tentative name) Hara Saty
● Outstanding units 107,050 after public offering (payment by September 7, 2006)
● Interest-bearing liabilities As of end of August 2007, JPY44.5 billion for an LTV of about 38%
● Operating revenues Reflects certain factors for increasing occupancy and varying sales of assets under management
● Operating expenses [Depreciation] February 2007 Period: about JPY671 million,
August 2007 Period: about JPY726 million yen
[Asset management compensation] February 2007 Period:about JPY328 million,
August 2007 Period: about JPY356 million
● Non-operating expenses [Public offering expenses] Write off after recording deferred assets and using the straight line method
[ Borrowing related expenses ] February 2007 Period: about JPY341 million,
August 2007 Period: about JPY413 million
(Note) The above forecast values were calculated based on set premises. There is the possibility that the actual operating revenues, recurring profit, net profit and distribution per unit will change and these
values are not guaranteed by being entered here.
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Presentation of
of Fourth
Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Financial Accounts

Fourth Third
Item Period Period Remarks (Definitions of Indices, etc.)
Results Results

Real management period 184 days 181days

Return on Assets (ROA)

3.4％ 3.8％ Recurring profit/(total assets at start of period + total assets at end of period)/2
*Converted to annual return
Return on Earnings (ROE)
6.7％ 6.7％ Net profit/(net assets at start of period + net assets at end of period)/2
*Converted to annual return

Unitholders’ ratio 48.7％ 53.8％ Net assets/total assets

Ratio of interest-bearing debt to total assets 41.0％ 35.6％ Interest-bearing debt at end of period/total assets at end of period

Ratio of long-term interest-bearing liabilities 81.0％ 55.2％ Long-term borrowings/interest-bearing debt at end of period

DSCR 14.6 17.9 (Net profit + paid interest + depreciation)/paid interest

Net assets per unit JPY551,377 JPY552,580

*Real net assets per unit after the public offering (Total equity at end of fourth period + additional paid-in capital + (real estate appraisal amount – real estate book value))/
JPY636,696 ―
(assumed) outstanding units after public offering of 107,500 units

*Real NAV multiple after public offering

1.33 times ― Investment unit price on September 30, 2006/net assets per unit after public offering (assumed)
(assumed)

FFO per unit JPY25,358 JPY24,550 (Net profit + depreciation this period)/outstanding units at end of period of 92,050 units

Distribution per unit JPY18,632 JPY18,438

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Property Management
Conditions

Sales buoyant at Canal City Hakata, Park Place Oita

and SunLiveCity Kokura
 Presentation
Presentation of
of Fourth
Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Portfolio Map (as of October 18, 2006)

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Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Portfolio Table (as of August 31, 2006)

(Notes 1) The figure for the acquisition (planned) price excludes various expenses (commissions, public charges, etc.) in all cases. (Note 2) The acquisition CAP is calculated by dividing the direct
capitalization method NCF by the acquisition (planned) price described in the appraisal (including the investigation report). (Note 3) The appraisal CAP rate indicates the cap rate of the direct
capitalization method for the appraisal value (including the investigation report). (Note 4) Since the age of properties in the portfolio differ, figures equivalent to the weighted average of the floor area
are indicated. (Note 5) The leasable area of the Taihaku Street Business Center is the sum total of the 11,224.49m2 for the office building and 3,427.38m2 for the residential building. (Note 6) Average
age indicates weighted averaged (age of property under construction is calculated as 0) acquisition (planned) price, average acquisition (planned) price indicates simple average of the acquisition
(planned) price, average occupancy indicates a value calculated by dividing the total leased area by total leasable area of the 8 properties. (Note 7) The assumed IRR is from the Preferred Equity
Investment Profitability Value Study issued by the Japan Real Estate Institute. (Note 8) In the above list, the figures in the parentheses are not included in the figures for each total column. 13
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Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Leasing Business Income and

Expenditure in 4th Fiscal Period (million yen)

Fiscal Period 4th Fiscal 3rd Fiscal Period Variation

Period
March 1, 2006 September 1, 2005 Factors behind Period-on-Period Variation in NOI
(Period) - August 31, - February 28,
2006 2006 Value
Positive Factors
(Operational period) 184 days 181 days
● Including of Taihaku Street Business Center results from beginning
Total Leasing business income ① 4,360 4,050 309 of period +JPY232 million
● Full period operation of acquired assets +JPY46 million
Rent 4,231 3,879 351 -Sanix Hakata Building
(152nd day of third period → whole period) +JPY26 million
-Kominedai Community Mall
Other income 128 171 (42) (71st day of third period → whole period) +JPY20 million
● Increase in rents linked to sales due to buoyant sales at key retail
Total leasing business expenses② 2,123 1,959 164 properties +JPY46 million
SunLiveCity Kokura +JPY28 million
Outstanding fees 920 886 34 Canal City Hakata +JPY13 million
Park Place Oita +JPY5 million
Maintenance costs 39 31 7 Negative Factors
● Start of real property and city tax payments for acquired assets
Repairs cost 2 24 (22) -JPY71 million
-SunLiveCity Kokura -JPY47 million
Tax and other public -Sanix Hakata Building -JPY17 million
300 245 55
charges -Kominedai Community Mall -JPY7 million
Insurance premiums and ● Received penalties and loss of rents due to the departure of the
29 30 (0) preceding tenant -JPY26 million
trust compensation
● Drop in rental revenues due to the low occupancy of the Canal
Depreciation 619 562 56 City Business Center Building (mid-term average 97.7% for the
third period and 95.3% for the fourth period) -JPY12 million
Other expenses 211 177 34

Real estate rental business profit

2,236 2,091 145
(loss) ③（=①－②）

ＮＯＩ ④（=③＋Depreciation） 2,855 2,654 201

ＮＯＩ yield （Annual conversion of ④） 6.2％ 6.4％ ―

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Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Leasing Business Income and Expenditure

(million yen)
Kominedai Canal City Gofukumachi Taihaku
Canal City Park Place SunLiveCity Community Business Business Sanix Hakata Street
Hakata Oita Kokura Mall Center Center Building Business
Building Center
(Fiscal period) 4th 4th 4th 4th 4th 4th 4th 4th

(Operational period) 184 days 184 days 184 days 184 days 184 days 184 days 184 days 169 days
Total Leasing business income
① 1,387 912 290 35 674 559 205 293

Rent 1,363 893 290 34 673 493 190 293

Other Income 24 19 0 1 1 66 15 0
Total leasing business
651 523 105 13 327 281 92 126
expenses ②

Outsourcing fees 322 267 8 1 170 73 19 56

Maintenance expenses 3 14 － 0 5 12 1 1

Tax and public charges 70 74 47 6 46 38 17 －

Insurance premiums
8 6 2 0 5 3 1 1
and trust compensation

Depreciation 174 118 45 3 82 94 35 64

Other expenses 72 42 0 0 16 60 18 2
Real estate rental business
736 388 184 21 347 278 112 167
profit (loss) ③（=①－②）

ＮＯＩ ④（=③＋Depreciation） 910 507 230 25 429 372 147 231

ＮＯＩ yield （Annual conversion

5.6% 6.4% 6.9% 6.9% 5.8% 6.6% 6.7% 7.2%
of ④）

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Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Sales-linked Rents

Breakdown of Lease Types Fluctuation of Hybrid Fixed/Variable Rents

(based on fourth fiscal period lease results) and Variable Rents
(based on rent results for the third and fourth fiscal periods)

Benefit from the Improving Economy via Sales-linked Rents 16

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Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Sales History of Canal City Hakata (as of August 31, 2006)

Tenants Contributing to
Increased Sales
[Comme Ca Store]
Utilized external tenants to renew itself to a
lifestyle-proposing store
(Opened on December 4, 2004)
[ZARA]
Highly popular European clothes SPA opened a
shop – one of its largest in Japan
(Opened on August 12, 2005)
[Brand Off]
Attracted a popular brand shop as its first store
in Kyushu
(Opened on September 16, 2005)
[United Cinemas]
Continuous screening of such popular movies as
The Da Vinci Code and Gedo Senki attracted more
viewers

Replacement of Tenants and Other Measures Keep the Property Fresh,

Fresh, Contributing to 17
Sales Increase Even after 10 Years since its Opening
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Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Sales History of Park Place Oita (as of August 31, 2006)

Topics

Fukuoka REIT Anticipates Additional Visitors as the Surrounding Environment Develops Further 18
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Fourth Period
Period Accounts
Accounts Property
Property Management
Management Conditions
Conditions Investment
Investment Strategy
Strategy Financial
Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Sales History of SunLiveCity Kokura (as of August 31, 2006)

Open

Topics
【Overview of SunLive】
SunLive Sales History

Source: Nihon Keizai Shimbun

(May 18, 2004, May 21, 2005
and June 22, 2006)

Strength of Fresh Foods Sale Has Established SunLiveCity Kokura as the No. 1 Store in the Region 19
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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

History of Occupancy Rate by Property (as of August 31, 2006)

Occupancy of Overall Portfolio (8 Properties) at End of Fourth Fiscal Period: 99.4% 20

Investment Strategy

Posting steady growth through appropriate pricing

and good quality properties
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Appendix

Property Scheduled for Acquisition in Sixth Fiscal Period (tentative name)
Drawing
Hara SATY
Acquisition Planned for March 1, 2007
• Planned acquisition amount: JPY5,410 million
• Appraisal amount: JPY5,550 million
• Acquisition cap rate*: 6.8% (planned)
• This is the amount arrived at by dividing the direct capitalization
method (NCF) result, , which is indicated in the report issued at the
time of contracting for the acquisition by the planned acquisition
price.

Overview (planned)
• Location: 6-chome Hara, Sawara Ward, Fukuoka City
• Floor space: 27,580.75m2 (note)
• Construction period: October 26, 1976 (complete renovation
planned at acquisition)
• Property Manager: Fukuoka Jisho Co., Ltd.
(Note) The figure indicated on the registry

Store
• SATY

(Note) This drawing is the conceptualized building to be constructed based

on the design drawings and may differ from the actual building. Characteristics
1) Excellent location for a retail property in the Fukuoka suburbs
There are 286,000 people within a 3km radius (equivalent to suburbs of Tokyo) and even
more importantly there are no competitors of equal size in the area.
2) This will be the first SATY in Fukuoka once the former Daiei is drastically
renovated
Local residents have strong expectations for the opening of SATY
3) A 12-year lease has been completed with Mycal Kyushu Corporation (a
consolidated subsidiary of AEON)
Fixed rent with sales-linked portion, impossible to terminate during the rental period and
impossible to reduce rents
4) Sales predictions in the market report are JPY6-7 billion (old Daiei had sales of
JPY5-7.5 billion)
The market report states that it is “a store with the ability to reliably pay rents”
Rents have been reduced dramatically since when it was a Daiei

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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Property Scheduled for Acquisition in Sixth Fiscal Period (tentative name) Hara SATY
Higashi Ward
Fukuoka City
Mycal Kyushu Corporation
5km radius
Company Profile
Hakata Ward
Fukuoka City Paid-in capital: JPY900 million
Sales: JPY44.5 billion (year ended in
3km radius
February 2006)
Shareholders: Aeon 66.6%
Kyushu Electric Power 11.1%
The Bank of Fukuoka 5.0%
1km radius
Nishi-Nippon City Bank 5.0%
Fukuoka Jisho 4.4%
Coca-Cola West Japan 3.8%
Zenrin 3.3%
(from the Japan Food Journal dated
December 26, 2003)

Nishi Ward
Sawara Ward Jonan Ward Mycal conducts the general supermarket
Fukuoka City
Fukuoka City Fukuoka City
Minami Ward business within the Aeon Group.
Fukuoka City
Although the trade area is very
Total Population dense, there are few competitors.
Materials: 2000 National Census There is also little risk of new stores
Unit: Person/1 km mesh
of competitors due to the three City
Less than 1,000
Planning Laws.

1,000 ~ less than 5,000

5,000 ~ less than 10,000

10,000 ~ less than 15,000 The stars indicate the supermarkets, food supermarkets and GMS with 5,000m2
15,000 ~ less than 30,000
or more in floor space that exist within a 5km radius with Hara SATY at its center
(market report).
※The store area of Hara SATY is about 17,000m2.

23
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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

External Growth Supported by Sponsors

Utilize strong sponsor network to avoid excessive competition
and realize steady growth of good quality

Realize External Growth Maintaining High CAP Rates without Getting Involved in Property Acquisition Race 24
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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

A Selection of Fukuoka Jisho Group’s Developments

Company Overview of Fukuoka Jisho (May 2006 Accounts Settlement)
Sales: JPY19.4 billion Recurring profit: JPY3.4 billion Total assets: JPY86.4 billion Unitholders’ equity:JPY14.3 billion
Business description: City, residential, retail and office development and management centering on Fukuoka

Riverwalk Kitakyushu Marinoa City Fukuoka Tenjin Kirameki Dori Building

(Iwataya Shinkan)

Hakataza Nishigin Hakata Ekimae Business Center Nexus Momochi

Redevelopment Building

Grand Hyatt Fukuoka Hyatt Regency Fukuoka Hyatt Residential Suites Fukuoka
Note) As of October 20, 2006, Fukuoka REIT has no plans to acquire any of these properties.

The Fukuoka Jisho Group is developing more properties in the present strong economic climate 25
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Appendix

External Growth Roadmap

(Note 1) This is the preferred TK

interest in CCH Bridge YK,
an SPC operating the
Canal City SPC owned
portion as a managed
asset.

(Note 2) This is based on the

acquisition prices of
properties owned as of
October 18, 2006.

Fukuoka REIT Aims to Create the Best Portfolio for a Fukuoka/Kyushu Dedicated REIT 26
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Appendix

Investment Categories

(Note) This is calculated using the acquisition (planned) prices of assets under management as of October 18, 2006 and planned acquisitions (contract base).

Fukuoka REIT intends to acquire a greater share of urban shopping centers in the medium-term 27
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Appendix

Evolution of the Shopping Center Format

Shopping centers are broadly evolving in three directions to meet the diversification of consumer needs 28
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Primary Shopping Centers

of Kyushu
Kitakyushu
metropolitan
area
Fukuoka metropolitan area

Sasebo metropolitan area

Saga Kurume metropolitan area
metropolitan
area
Oita
metropolit
an area

Nagasaki metropolitan area

Kumamoto
metropolitan area

(Source) Floor area: Kyushu Factbook (2006 edition) published by

the Fukuoka Branch of the Development Bank of Japan;
the shopping centers with floor spaces of at least
15,000m2 were entered
Population: the 2000 national census issued by the Miyazaki metropolitan
Statistics Bureau of the Ministry of Internal Affairs and area
Communications
(Note 1) The length of the graph illustrates the floor area size
(Note 2) Metropolitan Areas are the central cities and municipalities
where at least 10% of their populations work or study in
the central cities and this is based on the workers due to Floor Area
residence, workers who are 15 or older in the Miyakonojo
municipalities and students commuting who are 15 or metropolitan
older in the 2000 national census issued by the Statistics 33,000m2
area
Bureau of the Ministry of Internal Affairs and Kagoshima metropolitan area
Communications. Population
100,000

500,000

1,000,000

Fukuoka REIT Carefully Discerns the Scope of the Trade Area and Competitive Environment in Selecting its Strategic Focus Areas
Areas 29
Financial Strategy

Creation of spare LTV through capital increase and

realization of greater ratio of fixed interest debt
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Strategy Compliance
Compliance Appendix
Appendix

Overview of August – September 2006 Offering

Offering form Domestic offering

Additional investment units 15,000

Post-offering outstanding units 107,050

Launch date August 17 (Thu), 2006

Bookbuilding period August 28 (Mon) ~ August 30 (Wed), 2006

Finalization of issuance price August 30 (Wed), 2006

Transfer date September 8 (Fri), 2006

Discount rate 2.0%

Issuance price JPY766,360 yen

Total offering amount JPY11,495 million

Co-managers Nikko Citigroup Limited

Mitsubishi UFJ Securities Co., Ltd.

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Compliance Appendix
Appendix

Use of Spare LTV Ratio

Planned Acquisition Date March 1, 2007 (tentative) Hara SATY
Forecast fifth period distribution
17,000 yen
↓
Forecast sixth period distribution
17,600 yen

(Note) This considers repayment of JPY2 billion short-term bridge loan for acquiring Amex Akasakamon Tower.

Fukuoka REIT realized external growth by applying part of spare LTV created through the PO 32
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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Fukuoka REIT Increases Ratio of Fixed Debt

February 2006 Breakdown of September 2006 Breakdown of Diversification of Repayment Maturities

Fixed and Floating Debt Fixed and Floating Debt September 2006
JPY billion
14
12
12
Fixed Floating
10
10
35.6% Floating Fixed 26.6% 7
8 6.6
64.4% (Note）

73.4% 6
3.9
4

2
0
(Note) The fixed includes borrowings (floating interest) that had 0
their interest fixed through an interest rate swap. 2006 2007 2008 2009 2010 2011

Repayment Maturity
February 2006 September 2006
●Weighted average ● Weighted average
interest 0.84% interest 1.50%
● Duration 1.9 years
● Duration 3.0 years

● Commenced transactions with Mizuho Corporate Bank, The Norinchukin Bank, The Dai-ichi Mutual Life Insurance,
Shinkin Central Bank, the Sumitomo Trust and Banking, etc.
● Procured a JPY10 billion non-collateral syndicate loan arranged by the Mizuho Financial Group

Fukuoka REIT has successfully fixed the interest on a greater share of our debt 33
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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Itemization of Borrowings (as of September 30, 2006)

Repayment Payment
Type Lender Amount (JPY) Borrowing Date Annual Interest Description
Maturity Method
0.79000%
No collateral
Nishi-Nippon City Bank 3,400,000,000 2006.2.27 2007.2.27 From September 30, 2006 to
Lump sum No guarantee
Short- October 31, 2006 (*1)
upon
term 0.79000%
maturity No collateral
debt Nishi-Nippon City Bank 500,000,000 2006.3.31 2007.3.31 From September 30, 2006 to
No guarantee
October 31, 2006 (*1)
Subtotal 3,900,000,000
Collateral
Development Bank of Japan 12,000,000,000 2004.11.9 2009.8.31 1.39000％（※2）
No guarantee
Aozora Bank, The Bank of Fukuoka, Nishi- 0.94000%
Nippon City Bank, Oita Bank, Iyo Bank, The Collateral
From September 26, 2006 to
Bank of Saga, Eighteenth Bank, Miyazaki 6,600,000,000 2005.6.29 2008.6.23
December 25, 2006 (*1) No guarantee
Bank, Yamaguchi Bank, Shinwa Bank,
Chikuho Bank
Mizuho Corporate Bank, Norinchukin Bank,
Shinkin Central Bank, Hiroshima Bank, Iyo Collateral
10,000,000,000 2006.8.25 2010.7.30 1.92250%（※3）
Long- Bank, The Bank of Saga, Yamaguchi Bank, Lump sum No guarantee
term Higo Bank, Shinwa Bank upon
debt maturity Collateral
The Bank of Fukuoka 2,000,000,000 2006.8.25 2011.7.29 2.05174％（※2）
No guarantee
Collateral
Nishi-Nihon City Bank 2,000,000,000 2006.8.25 2011.7.29 2.05174％（※2）
No guarantee
Collateral
The Dai-ichi Mutual Life Insurance 1,000,000,000 2006.8.25 2011.7.29 2.05174％（※2）
No guarantee
Collateral
Shinsei Bank 1,000,000,000 2006.8.25 2011.7.29 2.00174％（※2）
No guarantee
Collateral
Sumitomo Trust and Banking 1,000,000,000 2006.9.29 2011.7.29 1.80296%（※2）
No guarantee
Subtotal 35,600,000,000
Total 39,500,000,000

Commitment Period
Type Lender Credit Limit (JPY) Description
Start End
Commitment line No collateral
The Bank of Fukuoka 3,000,000,000 2006.6.29 2007.6.29
agreement (1) (*4) No guarantee
Commitment line No collateral
The Bank of Fukuoka 5,000,000,000 2006.8.25 2007.8.23
agreement (2) (*4) No guarantee
Total 8,000,000,000

(*1) This is a floating interest loan. (*2) This is a fixed interest loan. (*3) This is a floating interest loan but a swap contract has been concluded to fix the interest and the interest rate when the
swap contract is combined has been entered. (*4) The funds will be used for working capital and facility funds (including funds to make additional acquisitions of assets).

Fukuoka REIT has reinforced its banking strategy by commencing transactions with central financial institutions 34
Compliance

Fukuoka REIT has established a strong compliance system

that matches the risk perception of the capital markets.
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Strategy Compliance
Compliance Appendix
Appendix

The Property Selection and Decision-Making Process

Japan Real Estate Institute (7 properties)

Tanizawa Sogo Appraisal (3 properties)
Daiwa Real Estate Appraisal (2 properties)
All Real Estate Appraisers Network (1 property)

Fukuoka REIT has a strict compliance system that matches the risk perception of capital markets 36
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Appendix

Corporate Governance System

Periodical internal audits are conducted by the Compliance Officer (active licensed lawyer) 37
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Appendix

Measures against Natural Disaster Risks

[Reference]
地震・水災への備え Classifications of
Earthquake Insurance
■Measures against water disaster risks
Casualty Profit Indemnificati
insurance insurance on amount
(Note 1) (Note 2)

Amex
1,278,560
Akasakamon － 0 yen
thousand yen
Tower
Other Class 1
1.0 billion yen 1.0 billion yen 30,000 yen Class 2
properties
Class 3
■Measures against earthquake risks Class 4

Casualty Profit Indemnificati

insurance insurance on amount
Amex
639,280
Akasakamon － 0 yen
thousand yen
Tower
10,000
Other
1.5 billion yen － thousand
prooerties
yen
(Note 1）All insurance coverage represents a coverage for a single accident.
Earthquake insurance policies can be
(Note 2) Profit insurance insures profits lost because of accidents, such as the cases in which tenants cannot pay
rents. concluded at relatively small costs since
（(Note 3) Properties owned by Fukuoka REIT (except for Amex Akasakamon Tower) are covered in a lump sum by Fukuoka and the Kyushu regions have
a comprehensive insurance for corporate assets. Reasons of insurance payment by the comprehensive
insurance for corporate assets also include fire, thunderbolt explosion, explosion, wind, hailstone, snow
earthquake insurance classifications of
disaster, electrical and mechanical accidents and other accidental incidents. Amex Akasakamon Tower is class 1 or 2
insured separately.
Source: Overview of Earthquake Insurance on
Ministry of Finance Website

Covers Natural Disaster Risks including Earthquakes and Water Disaster 38

Appendix

1. Concept
2. Investment Policy
3. Portfolio Summary
4. Construction Confirmation Inspection Body
5. Property Overview
6. Prefectural Land Price Report for 2005 and 2006
7. Major Office Buildings in Central Fukuoka
8. Market Trends for Office Rents
9. Population Growth
10. Consumption Trends
11. Investment Unit Pricing History
12. Newsweek
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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Concept
1. Regional REIT
Fukuoka REIT aims to maximize
investor profit by applying the
information strength and
expertise of the asset manager,
which is well versed in the
individual and unique
circumstances of Kyushu.

2. Contribution to Regional Regeneration and Forming an Attractive City

Fukuoka REIT is helping to regenerate
the Fukuoka and Kyushu region by
attracting Japanese and foreign
investor funds to the regional real
estate and financial markets.
Simultaneously, the regional growth is
reflected in the returns to investors by
distributing the revenues from these
assets under management.

Fukuoka REIT has Unique Characteristics as a Regional REIT Specialized in Fukuoka (Kyushu) 40
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Strategy Compliance
Compliance Appendix
Appendix

Investment Policy

(Note) These figures are based on the

assets under management as of
October 18, 2006 and planned
acquisition properties (contract
base). The planned acquisition
prices were used for (tentative)
Kumamoto Inter-Community SC,
Amex Akasakamon Tower,
(tentative) City House Tenjin
Keyaki Dori and (tentative) Hara
SATY. The TK equity interest is
not included in the calculations.

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Financial Strategy
Strategy Compliance
Compliance Appendix
Appendix

Portfolio Summary 10年以上 (as of August 31, 2006)

15年未満
45.2％ (based on acquisition price; Note 2)

(Note 1) The store names are written for the retail properties.
(Note 2) The figures are calculated using the assets under management as of October 18,
2006 and the planned acquisition properties (contract base). The properties that haven’t been
constructed yet are counted as less than five years after the completion of construction.
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Compliance Appendix
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Construction Confirmation Inspection Agencies

Construction Construction
Property Name Construction Name Design Companies Contractor Confirmation Confirmation
Agency Inspection Agency
Fukuoka Jisho First Class Architect’s Office,
Canal City Hakata New Construction
New construction and FJ Urban Development, Takenaka
Canal City Hakata District 1 Construction Joint Venture and Fukuoka City Fukuoka City
renovation work Corporation and Zenitaka Corporation
Takenaka Corporation
Consortium (Note 1)

Asanuma Corporation Kyushu Branch First

Class Architect’s Office Asanuma Corporation, Fujita
Park Place Oita New construction Oita City Oita City
Fujita Corporation Kyushu Branch First Corporation
Class Architect’s Office
SunLiveCity Kokura New construction Matsui and Kono Joint Design Venture Penta-Ocean Construction Co., Ltd. Japan ERI Co., Ltd. Japan ERI Co., Ltd.

Gofukumachi Business Center New construction Institute of New Architecture Inc. Takenaka Corporation Fukuoka City Fukuoka City

New construction and
Canal City Business Center Building
renovation work
Fukuoka Jisho First Class Architect’s Office, Canal City Hakata New Construction
FJ Urban Development First Class District 2 Construction Joint Venture, Fukuoka City Fukuoka City
Architect’s Office Zenitaka Corporation

Maeda Corporation First Class Architect’s

Sanix Hakata Building New construction Maeda Corporation Kyushu Branch Fukuoka City Fukuoka City
Office

Super Kyowa Building New construction Shintoku Design Office Shinwa Co., Ltd. Kitakyushu City Kitakyushu City
Kominedai
Community Mall New construction and
Daiso Building Watanabe Architects & Associates Shinwa Co., Ltd. Kitakyushu City －(Note 2)
extension work
Gusto Building New construction Tesco Design Office Shinwa Co., Ltd. Kitakyushu City Kitakyushu City

Mister Donut Building New construction Shintoku Design Office Shinwa Co., Ltd. Kitakyushu City Kitakyushu City

Taihaku Street Business Center New construction Yamashita Sekkei, Inc. Takenaka Corporation Fukuoka City Fukuoka City
Square Mall Kagoshima Ushuku New construction Yamashita Sekkei, Inc. Fujita Corporation Kagoshima City Kagoshima City
－(Not constructed)
(Tentative) Kumamoto Intercommunity SC New construction Kajima Corporation Kajima Corporation Japan ERI Co., Ltd.

Amex Akasakamon Tower New construction Masaki Architect & Associates Tada Corporation Kyushu Branch Japan ERI Co., Ltd. Japan ERI Co., Ltd.

(Tentative) City House Tenjin Keyaki Dori New construction Planning Office LECS Co., Ltd. Daiho Co., Ltd. Kyushu Branch Japan ERI Co., Ltd. －(Not constructed)

(Tentative) Hara SATY New construction Pal Corporation Obayashi Corporation Fukuoka City Fukuoka City
Notes 1. The consortium is the joint design venture by the designers of each zone.
2. This building didn’t undergo a completion inspection when it was newly built and an inspection certificate has not been issued, but Japan ERI Co., Ltd. conducted a suitability study for all the regulations in the Construction Standards Law and submitted a report
that the building can be judged as suitable. 43
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Property Overview
Urban SC

Canal City Hakata

Characteristics
• Within walking distance from Hakata Station and located near the
popular area of Nakasu
• Renowned tourist destination in Fukuoka with over 10 million visitors a
year
• Distinguished design by Jon Jerde renowned for his work on Las Vegas’
Fremont Mall and Tokyo’s Roppongi Hills

Stores Overview
• Washington Hotel • Address: 1-chome, Sumiyoshi,
• Comme Ca Store Hakata Ward, Fukuoka City
• United Cinema • Total leasable area: 47,909.65m2
(cinema complex) • Built: April 15, 1996
• OPA (Canal City OPA) • Property manager: Fukuoka Jisho
• Sports Authority
• Others

Urban SC

Preferred TK Investment
Characteristics
• Acquired the preferred TK investment interest (3,400 million yen) to CCH Bridge YK, an SPC.
• A contract to reserve acquisition of “Canal City Hakata SPC owned section” of the subject real estate was also
signed simultaneously (execution of the reservation fulfillment right by Fukuoka REIT will establish the
transaction contract at a price appraised by the Tanizawa Appraisal Office or the Japan Real Estate Institute).

Main tenants of the section owned by

the Canal City Hakata SPC
• Top luxury hotel in the region: Grand Hyatt
Fukuoka (370 guest rooms)
• OPA Shopping Mall (more than 100 specialty
shops)
• One of the largest MUJI (Mujirushi Ryohin)
Stores in Kyushu
• Fukuoka City Theater of Shiki Theater
Company
• Others

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Property Overview
Regional SC

Park Place Oita

Characteristics
• Located in new town development next to Oita Prefectural Sports Park
(World Cup Soccer Stadium)
• Near Oita-Mera Interchange with parking for about 4,000 cars
• Designed as an open mall in a forest by Jon Jerde

Stores Overview
• Jusco • Address: 2-chome, Koen Dori
• K’s Denki Nishi, Oita City
• T Joy • Total leasable area: 100,664.83m2
• Sports Authority • Built: March 26, 2002
• Plaza Capcom April 17, 2002
• Others April 28, 2004
• Property manager: FJ Real Estate

Regional SC

SunLiveCity Kokura
Characteristics
• Lies along National Highway 10 and near the Kokura Higashi
Interchange on the Kyushu Expressway with parking for about 2,000
cars
• Leading regional mall in Kitakyushu region with about 110 specialty
stores centering on the SunLive Supermarket
• Core development in the Kami Kuzuhara Rezoning District (about
66,000m2), a large commercial zone
Overview
Store • Address: 2-chome, Kami Kuzuhara,
• SunLive Kokura Minami Ward,
Kitakyushu City
• Total leasable area: 61,450.22m2
• Built: March 17, 2005
• Property manager: Fukuoka Jisho

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Property Overview
Regional SC

Hara SATY (tentative)

Characteristics
• Excellent location for a retail property in the Fukuoka suburbs
There are 286,000 people within a 3km radius (equivalent to suburbs of
Tokyo) and even more importantly there are no competitors of equal
size in the area
• Will be the first SATY in Fukuoka once the former Daiei is drastically
renovated
• 12-year lease has been completed with Mycal Kyushu Corporation (a
consolidated subsidiary of AEON)
Fixed rent with sales-linked portion, impossible to terminate during the
rental period and impossible to reduce rents
• Sales predictions in the market report are JPY6-7 billion (old Daiei had
sales of JPY5-7.5 billion)

Store (planned) Overview

・SATY ・Location: Sawara Ward, Fukuoka City
・Floor space: 27,580.75m2 (note)
・Construction period: October 26, 1976 (complete
Community SC renovation planned in Spring 2007)
・Property Manager: Fukuoka Jisho Co., Ltd.
Kominedai Community Mall (Note) From the entries of the confirmation certificate

Characteristics
• Located along the main thoroughfare National Highway 211 and right in
front of the Komine Interchange Exit on Kitakyushu Urban Expressway
No. 4
• The center of the about 8,000m2 site has a sufficient single level
parking lot
• Comprised of four tenants centering on a community entrenched fresh
food supermarket

Stores Overview
・Super Kyowa ・Address: 1-chome Kominedai,
・Daiso Yahatanishi Ward,
・Gusto Kitakyushu City
・Mister Donut ・Total leasable area: 3,743.12m2
・Constructed: June 3, 1972, March 15, 1997,
May 12, 1997 and June 9, 1997
・Property manager: Fukuoka Jisho

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Property Overview
Community SC

Square Mall Kagoshima Usuki

Characteristics
• One of the busiest thoroughfares of Kyushu (along Prefectural Highway 217)
42,000 cars on average travel on Prefectural Highway 217 every 12 hours (fiscal
1999), which exceeds National Highway 3, Taihaku Street, Watanabe Dori and other
major thoroughfares in central Fukuoka (each with 35,000-40,000 cars every 12
hours)
• Leading category killers of each industry as tenants
Sports Depot, Right On, Golf5Nishimatsuya, Honeys, ABC Mart, Best Denki, etc.
• Design by John Jerde
• Concluded long-term fixed leases with tenants that enjoy a high level of credibility
5-20 years, inability in principle to terminate contracts during mid-contractual period,
impossibility to reduce leases (excluding 1 tenant)

Overview (planned)
• Address: Usuki 2-chome, Kagoshima City
• Total leasable area: 14,663.41m2
• Constructed: September 28, 2006
• Property manager: Fukuoka Jisho

Community SC

Kumamoto Intercommunity SC (tentative)

Characteristics
• One of Kyushu’s busiest thoroughfares (located along National Highway 57 East Bypass)
39,000 cars on average travel on National Highway 57 every 12 hours (fiscal 1999),
which is almost equal to National Highway 3, Taihaku Street, Watanabe Dori and
other major thoroughfares in central Fukuoka (each with 35,000-40,000 cars every
12 hours)
• Plan to conclude fixed long-term leasehold contracts with highly regarded tenants
20 years, inability in principle to terminate contracts during mid-contractual period,
impossibility to reduce leases
Stores (planned) Overview (planned)
• Sports Depot and Golf 5 • Address: Kozono 1-chome,
(major sporting goods chain) Kumamoto City
First Sports Depot store to be opened by Alpen • Floor area: 9,684.52m2（Note）
in Kumamoto and it will have an enormous • Property manager: Fukuoka Jisho
sales space of 2,000 tsubos. (Note) Entries are from the Confirmation Certificate
• Starbucks (drive thru coffee shop) and represent the totals for the two buildings.

This is the second drive thru Starbucks in

Kumamoto and the fourth in Kyushu.

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Property Overview
A Class Building

Canal City Business Center Building

Characteristics
• Pioneer of multi-use complexes
• Synergy between popularity and name recognition of Canal City Hakata
• Used by TOTO Ltd. as Fukuoka office and showroom

Tenants Overview
• TOTO • Address: 1-chome, Sumiyoshi,
• Bell System 24 Hakata Ward,
• USEN Corporation Fukuoka City
• Aflac Japan • Total leasable area: 23,011.85m2
• Mitsubishi Electric Building • Built: April 15, 1996
Techno-Service • Property manager: Fukuoka Jisho
• Others

A Class Building

Gofukumachi Business Center

Characteristics
• Faces Meiji Dori and Taihaku Street and directly connected to Gofukumachi
Subway Station
• Designed by Michael Graves, designer of the Museum of New Ark
• Top Quality Specs in Region
- 1 floor: 620 tsubos
- Ceiling height: 2,900mm
- Optic fiber cables
• Sanyo Shimpan, NTT West Kyushu Corporation, Sony Life Insurance and
other leading firms use the premises as a call center
Tenants
• Sanyo Shimpan Overview
• NTT West Kyushu • Address: Kami Gofukumachi,
Corporation Hakata Ward,
• Sony Life Insurance Fukuoka City
• Suntory • Total leasable area: 19,906.21m2
• Sunny • Built: October 16, 2003
• Others • Property manager: Fukuoka Jisho

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Property Overview
A Class Building

Sanix Hakata Building

Characteristics
• Two-minute walk from Hakata Station (Shinkansen), and Fukuoka Airport is
a mere five-minute subway ride away
• The concentration of hotels and government offices surrounding the
building make it an optimal location for business
• High-quality and flexible specifications:
- Free access floors / independent air conditioning systems
- Each floor can be partitioned / optical fiber cables

Tenants Overview
• Sanix • Address: Hakataeki Higashi,
• The Nishi-Nippon Hakata Ward,
City Bank Fukuoka City
• ROHM • Total leasable area: 6,293.67m2
• Idemitsu Kosan • Built: March 31, 2001
• Others • Property manager: Fukuoka Jisho

A Class Building

Taihaku Street Business Center

Characteristics
• Superbly located with excellent accessibility: ten-minute walk from Hakata
Station and a two-minute walk from Gion Subway Station; standing along
the trunk road “Taihaku Street”
• Leading facility standard for Fukuoka City office buildings:
- Exemplary functional space of 333-tsubo can be partitioned to a
minimum 18 tsubos
- 2.7m ceiling height / Free access floor of 100mm
- Optional cables / Independent air conditioning systems
• Accompanied by luxurious 59-room residential tower- Housing 1LDK – 3LDK
rooms to meet requirements of downtown commuters

Tenants
• NTT Comware Overview
• Yokogawa Electric • Address: Gokushomachi, Hakata Ward,
• The Tokio Marine Nichido Fukuoka City
Outsourcing Business • Total leasable area: Office Tower: 11,244.49m2
• Fujitsu Network solutions Residential Tower:3,427.38m2
• Tokio Marine & Nichido • Built: March 7, 2002
Life • Property manager: Fukuoka Jisho
• Others
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Property Overview
Residential

City House Tenjin Keyaki Dori (tentative)

Characteristics
• Near the Tenjin district with good access
• New rental condominium in a popular residential area with excellent transportation and
living conveniences
• 15-minute walk from the Nishitetsu Fukuoka Station on the Nishitetsu Tenjin Omuta
Line, 9-minute walk from Akasaka Station on the Municipal Subway Line and 11-minute
walk from Sakurazaka on the same line
• Planned to have 13 stories above ground (total floor area of 3,531.37m2) and have
thirty 2LDK units (about 58m2 per) and twelve 3LDK units (about 75m2 per unit)
• Earthquake resistance structure for high safety and security

Overview
• Address: Kego 2-chome, Chuo Ward, Fukuoka City
• Total floor area: 3,531.37m2
• Scheduled completion date: November 30, 2007
• Property manager: DMC (a member of the Daio Group, a giant
residential management company in the Tenjin area)

Residential

Amex Akasakamon Tower

Characteristics
• Property is near the Tenjin area and enjoys strong transit convenience (within
walking distance of the metro subway’s Akasaka and Tenjin stations)
• A tower-type rental condominium with 2LDK（55.58m2）to 4LDK (144.84m2) units.

Overview
• Address: 2-chome Maizuru, Chuo Ward, Fukuoka City
• Leasable area: 4,755.14m2
• Built: July 26, 2005
• Property manager: DMC (a member of the Daio Group, a giant residential
management company in the Tenjin area)

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Land Price Survey by Prefecture (2005-2006)

Fukuoka City Land Price Trends (2004 – 2005) Fukuoka City Land Price Trends (2005 - 2006)

(Source) Land Price Survey by Fukuoka Prefecture (2004-2006)

Numerical Map 25,000 by the Geographical Survey Institute (based on space data)
(Note 1) The map indicates all land price survey standard sites located in the center of Fukuoka City.
(Note 2) The red columns in the map indicate places where land price rose, with the land price increase rate shown in figures in red. The blue
columns indicate places where land price dropped, with the land price decrease rate shown in figures in blue.

The Land Price Survey Announced in September 2006 Shows 45 Places with Year-on-Year Price Increase 51
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Main Office Buildings in Central Fukuoka City

Gion Gofukumachi
District
Average advertised rent: 14,567 yen/tsubo
(common expenses included)
Tenjin District
Average advertised rent: 18,287 yen/tsubo Average vacancy: 2.36%
(common expenses included)
Average vacancy: 6.47%

Hakata Station Front

District
Akasaka Daimyo District Average advertised rent: 16,047 yen/tsubo
Average advertised rent :14,483 yen/tsubo (common expenses included)
(common expenses included)
Average vacancy: 8.34% Hakata Station East and
Average vacancy: 4.22%
South District
Average advertised rent: 14,462 yen/tsubo
(common expenses included)
Yakuin and Watanabe Average vacancy: 5.45%
Dori District
Average advertised rent): 15,215 yen/tsubo Floor space
(common expenses included) 5,000
(tsubos)
Average vacancy: 6.92%

(Source) Researched by Miki Shoji Co., Ltd.

Notes 1. This only contains figures for buildings with 2,000 or more tsubos of floor space that meet the new anti-seismic standards.
2. The length of the graphs represents the floor area.
3. The data for each district represents a tabulation of the concerned buildings.

The office market of central Fukuoka City is divided into six districts and the main office buildings are concentrated
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Office Lease Market Trends

Vacancy Rate of Office

Average Rent of Office Buildings
Buildings
(%) Yen

Source: "Office Building Market Report by Region" issued by Miki Shoji Co., Ltd. (Compilation and analysis of office buildings that are located in major business districts in each city and are
above certain standards in floor areas, standard floor areas and other factors)
(Note 1) Average rents do not include common service charges.
(Note 2) Figures for 2006 are as of the end of August.

The Office Lease Market in Fukuoka is Recovering 53

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Population Growth

Population including Students Continue to Flow from the Entire Kyushu into Fukuoka 54
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Consumption Trends

Fluctuations in Monthly Comparisons of Large Retail Store Sales

(June 2005 – May 2006)
108.0

106.0

104.0

102.0

100.0 100

98.0

96.0

Fukuoka City (department store total)

94.0 Kyushu (large retail store total)
National (department store total)
National (large retail store total)
92.0

90.0
July 2005 Aug. 2005 Sept. 2005 Oct. 2005 Nov. 2005 Dec. 2005 Jan. 2006 Feb. 2006 Mar. 2006 Apr. 2006 May 2006

Source: Current Survey of Commerce by the Ministry of Economy, Trade and Industry

Retail Sales are Steadily Growing in Fukuoka 55

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Performance on Pricing

As of October 13, 2006

Stock Price: 864,000 yen
(closing price)
High: 910,000 yen (June 21, 2005)
Low: 763,000 yen (September 15, 2005)

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Las Vegas Beyong the Strip

(U.S.) Long the fastest-growing metropolis in
America, sin city is building more than casinos.
10 HIGH ROLLERS Fukuoka City of Substance
(Japan) There are many would-be ‘Gateways to Asia.’ This
one’s for real.

Munich Rich and Richer

(Germany) A bright spot in the gloaming, but for how long?

Capital of Magnet
London London’s gain is Manchester’s loss, but Brits worry
(U.K.) more about Shanghai.

Toulouse ‘It’s Airbusville’

(France) An ancient city has evolved into a new type: the
multinational town.

Nanchang Welcome, World

(China) A star marks the unlikely epicenter of China’s
second-city explosion.

Moscow The Great Pump

(Russia) Moscow draws all the new arrivals, from babies to
fortune seekers.

Ghaziabad Ring of Change

(India) A factory suburb of Delhi, now surrounded by posh
high rises.

Goyang Lovely Little Rebels

(South Korea) Built by the state, an affluent enclave is now battling
it.

Florianopolis Bigger yet Better

On ‘Magic island,’ a virtuous cycle began with a ban
(Brazil)
on heavy industry.

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POINT 1
• Capital investment in the manufacturing
industry in Kyushu has grown as fast as
52% in recent years
• Fukuoka residents refer to Kyushu as Car
Island, or Silicon Island

POINT 2
• 50% increase in containers handled at
Hakata Port, the main port of Fukuoka City,
over the past six years
• Toyota established its second manufacturing
base in Japan in Kyushu and started shipping
Lexus models to China from Hakata this year

POINT 3
• Cultural assets and festivals that attract
tourists
• 50% increase in foreign tourists over the
past six years
• Consumption propelled by Asian tourists and
young visitors from other Kyushu areas

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POINT 1 POINT 1

Large Manufacturers Reinforce Proactive Investment in Kyushu Capital Investment in Kyushu is Making Steady Progress

Distribution of Primary Automobile and Long-term Fluctuations in Capital Investment

IT Plants in Kyushu by Manufacturers
Toyota Motors Kyushu, Kanda Plant
(Kanda-machi, Fukuoka Prefecture)
DENSO Kitakyushu Plant
(Kitakyushu City) Nissan Motor, Kyushu Plant
(Kanda-machi, Fukuoka Prefecture)
Toyota Motors Kyushu, Kanda Plant
(Miyawaka City, Fukuoka Prefecture) ROHM Fukuoka
(Yukuhashi City, Fukuoka Prefecture)
Power Device Division,
Mitsubishi Electronic Daihatsu Auto Body
(Fukuoka City) (Nakatsu City, Oita Prefecture)

Oita Canon
Tokyo Electron Kyushu (Kunisaki City, Oita Prefecture)
(Tosu City, Saga Prefecture)

Toshiba, Oita Plant

(Oita Prefecture)
Nagasaki Technology Center, NEC Kyushu
Sony Semiconductor Kyushu (Kumamoto Prefecture)
(Isahaya City, Nagasaki Prefecture)
Asahi Kasei
Aishin Kyushu Microsystems Kyushu
(Jonan Town, Honda Motor, (Nobeoka City,
Kumamoto Prefecture) Kumamoto Plant Miyazaki Prefecture)
(Ozu-Town, Kumamoto Prefecture)
Fuji Photo Film
(Kikyuyo Town,
Kumamoto Prefecture)
Miyazaki Oki Electric
Fujitsu Integrated (Kiyotake Town, Miyazaki Prefecture)
Microtechnology, Kyushu Plant
(Satsuma-Sendai City, Kagoshima
Prefecture) KYOCERA Corporation Kagoshima
Kokubu Plant
(Kirishima City, Kagoshima Prefecture)

Automobile
IT Source: Nihon Keizai Shimbun, April 29, 2006

Automobiles and Semiconductors Support Expansion in Capital Investment 59

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POINT 2 POINT 2

Port of Hakata Expands Handling of Containers Toyota Establishing Second Largest Production Base in Japan

History of Handling Volume of International Trade Sales of Toyota Motor Kyushu

Containers (comparison among principal ports)

300
Port of Tokyo
Port of Yokohama
250
Port of Nagoya
Port of Kobe
Port of Osaka
200
Port of Hakata
Japan total

150

100

50

0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

(Note) Graph formed after establishing the figures in 1996 as 100

Source: Institute for Advanced Port Transportation of Japan
Ports and Harbours Bureau of the Ministry of Land, Infrastructure and Transport Source: Nihon Keizai Shimbun, July 6, 2006

Toyota Motor Kyushu Leads Expansion of Exports 60

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POINT 3 POINT 3
Increasing Number of Foreign Tourists Fukuoka Has Strong Asian Features

Fluctuation in the Number of Foreigners Regional Breakdown of Foreigners

Entering Japan Entering Japan
(people) Breakdown by Principal Seaport 1.0
160,000 100% 3.5
Port of Tokyo
3.2
Port of Yokohama 3.0
140,000 Port
Port
of
of
Osaka
Kobe
14.1
Port of Shimonoseki
Port of Hakata 80%
120,000 12.2

No nationality
100,000
60% Oceania
South America
80,000 North America
92.7 Africa
40% Europe
60,000
68.2 Asia

40,000
20%

20,000

0 0%
2000 2001 2002 2003 2004 All of Japan Fukuoka
Source: Immigration Bureau of Japan of the Ministry of Justice
Source: Immigration Bureau of Japan of the Ministry of Justice

POINT 3
Cultural Assets and Festivals that Attract Tourists

Hakata Gion Yamagasa Festival Hakata Dontaku Festival Kyushu National Museum Kyokusui-no-en festival at Dazaifu
Tenmangu shrine

Tourists from Asia are Increasing 61