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 41st fiscal period (September 1, 2024, to February 28, 2025).

During the fiscal period under review (the 40th fiscal period), despite a recent standstill, the Japanese economy showed a mild pickup trend. Looking to the future, the economy is expected to keep recovering due in part to the effects of various political measures amid improvements in the employment and income environment. On the other hand, with monetary tightening and other measures continuing globally, a downturn in overseas economies poses a risk of placing downward pressure on the domestic economy.

Under such circumstances, FRC’s portfolio achieved solid performance overall across all asset types in the fiscal period. Among them, Canal City Hakata, a city-center retail property, to the still-recovering inbound tourism in Asia (except for China).

For the fiscal period under review, operating revenues totaled 10,400 mm yen and operating income after excluding operating expenses such as expenses related to leasing business and asset management fees totaled 4,408 mm yen. Ordinary income was 3,967 mm yen and profit amounted to 3,966 mm yen Regarding the dividend, management decided to declare a dividend of 4,096 yen per unit after deducting the provision for the reserve for reduction as stipulated in Article 65-7 of the Act on Special Measures Concerning Taxation of Japan (Act No. 26 of 1957, including subsequent revisions) from unappropriated profit for the period under review, and distribute virtually all the remaining balance as dividends. This is an increase of 196 yen from the forecasted dividend per unit of 3,900 yen announced at the beginning of the period and an increase of 59 yen from the forecasted dividend per unit of 4,037 yen announced on February 5, 2025. The dividend per unit was a record high for 4 fiscal periods consecutively.

With regard to external growth, 76,000 new investment units were issued in September, raising 10,325 mm yen. The funds raised were used to acquire LOGICITY Kumamoto Mifune (acquisition price: 11,120 mm yen), a logistics facility, on March 27, 2025, and Axiom Otemon Premium (1,800 mm yen), a residential property, on March 28, 2025.
As for property dispositions, the disposition of the building portion of Marinoa City Fukuoka (Marina Side Building), a commercial facility, was completed on September 2, 2024, and the second disposition of the Tenjin North Front Building, an office building, was completed on February 27, 2025, carrying through the property replacement.

Furthermore, FRC decided to repurchase investment units on April 16, 2025. By doing so, the FRC aims to improve dividends per unit and NAV per unit, thereby improving unitholder value over the medium to long term.

With regard to internal growth, we were able to increase rents, especially at residential properties, in line with the replacement of tenants. In the period under review, rent increases were achieved in all 25 cases of tenant replacement. In addition, the ADR (average daily rate) and RevPAR (revenue per available room) of the Tissage Hotel Naha are on a recovery trend thanks to a surge in inbound tourism.

terms of “initiatives on sustainability,” one of the key measures of FRC, we have endeavored to “maintain and enhance building performance and environmental performance,” which covers the E (environment) area. This has resulted in the ratio of properties certified as green buildings to the entire portfolio standing at 83.9%, against the 2030 goal of 85% or more. As an external evaluation, we have obtained “4 Stars” for three consecutive years and “Green Star” in the GRESB Real Estate Assessment for six consecutive years. We will continue our proactive endeavors to reduce CO2 emissions, coordinate with local communities, and provide sustainability information to our unitholders through the issuance of integrated reports and other measures.

As a REIT specializing in regional properties, FRC continuously strives to maintain and enhance dividend per unit in a stable manner by conducting steady asset management and quickly responding to market changes while receiving support and cooperation from powerful sponsors leading the Kyushu business world. We are resolved to make the utmost efforts to secure stable earnings over the medium to long term and continuously offer stable dividends into the future based on our management philosophy of “Act Local, Think Global.”

We greatly appreciate your continued support and cooperation.

April 16, 2025