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-second fiscal period (March 1, 2020 to August 31, 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.
In the fiscal period under review, the spread of the novel coronavirus (COVID-19) infection caused the government to announce the declaration of a state of emergency in Japan, posing a significant impact on daily lives and economic activities throughout society. As we foresee, the Japanese economy is expected to continue picking up due to various political measures proving effective, although full attention should be paid to the COVID-19 trends and fluctuations in the financial and capital markets. Given the emergency declaration in April, some of the retail properties FRC owns suspended operations throughout the buildings (excluding certain stores), taking the security and safety of the community residents and the tenants’ employees into consideration first. Operations were resumed after the emergency declaration was lifted, but sales of Canal City Hakata have decreased year-on-year as the decline of inbound tourism continues to have an affect. As our operation policy under the COVID-19 pandemic, we plan to implement measures to encourage customers in neighboring and wider areas in Japan to visit the facilities, while thoroughly taking measures against the infection.
Under such circumstances, FRC newly acquired three properties, including an office building, for 5,980 million yen in total in the 32nd fiscal period. With the acquisitions, the asset size of FRC reached 200.0 billion yen. We will aim to achieve 250.0 billion yen as the next target going forward, while working to dissipate risks by diversifying the portfolio as a REIT with comprehensive asset types specializing in regional properties. We will also flexibly investigate property replacement and other measures if we find any favorable opportunities.
Occupancy remained solid, with the average period-end occupancy rate of all properties FRC owns standing at 99.7%. FRC posted operating revenues of 8,518 million yen, operating income of 2,966 million yen, ordinary income of 2,587 million yen and profit of 2,586 million yen for the fiscal period under review. The dividend per unit came to 3,250 yen. The actual dividend for the period increased by 100 yen per unit from the forecast at the time of the announcement of the financial results for the 31st fiscal period. The increase was attained due to sales of community-based retail facilities recovering successfully thanks to demand from stay at home; upward rent revision of rents for office buildings achieved for the 8th straight period while keeping them at high occupancy; and our endeavors to reduce costs including administration and operation expenses. Looking ahead, we will keep our endeavors to maintain and increase dividends in a stable manner by acquiring blue-chip properties to generate stable cash flows and continuously taking strategic initiatives.
Going forward, FRC will continue to exert its strengths as a REIT specializing in regional properties and quickly respond to market changes, while receiving support and cooperation from powerful sponsors leading the Kyushu business world. We will also strive to maintain and increase the 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.
October 16, 2020
Fukuoka REIT Corporation