Fukuoka REIT : Integrated Report 2022～Sustainability～

Financial Strategy

Dividends and TSR

Sustainability

Planning

Department

Figure 1 shows FRC's past dividends and dividend yields. Among listed REITs, our dividends are extremely stable.

In contrast, the dividend yield has fluctuated between 3.8% and 4.7% over the past eight years, indicating that investment unit prices have shifted due to changes in the stock market, interest rate trends, and fluctuations in market supply and demand.

Table 1 and Figure 2 show the total shareholder return (TSR), taking into account FRC's dividends and capital gains. TSR performance has been 8.1% annually over the past 10 years. In contrast, returns have remained flat over the past year as the TSE REIT Index weakened.

Who We Are

• Figure 1. Past Dividends and Dividend Yields

		Dividend per investment unit (Yen)		Dividend yield (as of the end of the fiscal period) (%)
(Yen)		（％）

4,000	3,574	3,479			3,512	3,593	3,687	3,693	3,642			3,539	3,536	3,523	8
	3,398	3,422				3,250	3,361
3,000															6
							4.4			4.7			4.5
						4.2		4.3
				4.1	4.1	4.1					4.1
						4.0	4.0
			3.9
	3.7	3.7
2,000															4
1,000															2
0	23rd	24th	25th	26th	27th	28th	29th	30th	31st	32nd	33rd	34th	35th	36th	0

Feb. 2016 Aug. 2016 Feb. 2017 Aug. 2017 Feb. 2018 Aug. 2018 Feb. 2019 Aug. 2019 Feb. 2020 Aug. 2020 Feb. 2021 Aug. 2021 Feb. 2022 Aug. 2022

• Table 1. TSR Over the Past 10 Years

	Past 1 year	Past 3 years	Past 5 years	Past 10 years
		Cumulative	Annual	Cumulative	Annual	Cumulative	Annual
		total	rate	total	rate	total	rate
FRC	(0.9)%	7.2%	2.3%	25.2%	4.6%	118.6%	8.1%
TOPIX Real	6.9%	14.0%	4.5%	25.0%	4.6%	126.5%	8.5%
Estate Index
TSE REIT	(1.5)%	19.3%	6.1%	60.0%	9.9%	232.3%	12.8%
Index

Note: Annual rate conversion is the geometric mean of cumulative returns.

General Manager of the Planning Department and

General Manager of Sustainability Promotion Office

Keishi Tamura

The Role of the Planning Department

The Planning Department is in charge of matters relating to management policy, general affairs, personnel affairs, accounting, and sustainability. We believe in

Growth Strategy

Note: Dividend yield = (Dividend per investment unit / Operating days x 365) / Investment unit price as of the end of the fiscal period

• Figure 2. Investment Unit Price Performance (10 years, including dividends)

FRC		TOPIX Real Estate Index		TSE REIT Index

(Index)

400

Investment Unit Price Performance for the Most Recent Fiscal Year

FRC		TOPIX Real Estate Index		TSE REIT Index

(Index)

120

110
100
90
80
August 2021	February 2022	August 2022

the importance of creating an environment in which all employees can fulfill their potential in order to contribute to regional revitalization and the development of attractive communities, based on an understanding of the activities of our asset management company and under the basic policy of Act Local, Think Global.

Framework for Sustainable Initiatives

Sustainability

300

200

100

In 2018, FRC established the Sustainability Policy and Regulations Concerning Sustainability Management to promote sustainability in consideration of environmental, social, and governance (ESG) issues and set up the Sustainability Promotion Committee comprised of full-time directors, executive directors, and general managers. The committee establishes internal organizations, collaborates

with outside parties, examines specific goals and measures relating to information disclosure policy and other matters, and identifies the progress made in measures being implemented. Sustainability officers are responsible for practical matters relating to achieving the goals set by

the committee with the General Manager of the Planning Department providing general oversight.

Data Section

0	Aug. Dec. Apr. Aug. Dec. Apr.	Aug.	Dec.	Apr.	Aug.	Dec.	Apr. Aug. Dec. Apr. Aug. Dec. Apr. Aug. Dec. Apr.	Aug. Dec. Apr. Aug. Dec. Apr. Aug. Dec. Apr. Aug.
	2012	2012	2013	2013	2013	2014	2014	2014	2015	2015	2015	2016	2016	2016	2017	2017	2017	2018	2018	2018	2019	2019	2019	2020	2020	2020	2021	2021	2021	2022	2022

Note: FRC's investment unit price performance is expressed as an index, using the investment unit price as of August 31, 2012, as 100. TSR over the past 10 years considers dividends and investment unit prices in indicating the profitability of investments made on August 31, 2012, as of August 31, 2022. The TOPIX Real Estate Index and the TSE REIT Index are indexed in the same way, using dividend-included data. Similarly, the graph for the most recent fiscal year is indexed with the investment unit price as of August 31, 2021, as 100.

Sustainability Initiatives and GRESB

FRC has been conducting sustainability initiatives since	We believe it is necessary to make efforts in line with
our listing that include obtaining DBJ Green Building	global standards, and in 2017 we decided to take part in
Certification. ESG-related inquiries from investors started	the Global Real Estate Sustainability Benchmark (GRESB)
to increase in 2017 at investor relations activities overseas.	system to further promote our sustainability initiatives.

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Fukuoka REIT Corporation 2022

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Sustainability

We worked to increase an understanding of ESG issues and sustainability with related parties to effectively set goals for our sustainability activities. This included endorsing the Principles for Responsible Investment (PRI) and

the Principles for Financial Action for the 21st Century (PFA21) and inviting investors, analysts, and REIT issuers engaged in advanced sustainability activities to a workshop concerning disclosure of non-financial information at the

IR Kyushu Workshop run jointly by FRC and the Japan Investor Relations Association.

We attained a 4-star rating in our first GRESB Real Estate Assessment in 2018 and have received ratings every year since. In 2022, we received another 4-star rating in this category as was the case in 2021 and obtained an A-level rating in the GRESB Real Estate Public Disclosure evaluation.

Sustainability Finance

In July 2019, FRC was the first company headquartered in the	syndicate was formed in which the Development Bank of Japan,
Kyushu region to be issued a green loan and the first J-REIT to	one of our sponsor banks, serves as the coordinator with
take out a syndicate-based green loan. Following this, we have	collaboration from The Nishi-Nippon City Bank and The Bank of
procured funds that included a donation to a COVID-19 vaccine	Fukuoka. Through this loan, the sponsor banks and FRC team
development research fund at Nagasaki University and procured	up to set Sustainability Performance Targets in consideration of
funds through a sustainability-linked loan. With the latter, a	the environment and strive to reduce CO2 emissions.

Who We Are

Materiality and ESG Initiatives

Task Force on Climate-related Financial Disclosures (TCFD)

As part of our sustainability initiatives, we identified material issues (materiality) for the first time in 2019 when we published our inaugural Integrated Report. In April 2022, we set targets and key performance indicators (KPIs) for each issue. The status of initiatives being undertaken for each of these issues is outlined below.

Environment
In terms of environmental efforts, we are switching	reduction in CO2 emissions by 2030 relative to 2019. We
to LED lighting in the properties we own. We plan to	are also looking to acquire Green Building Certification

One current focus concerns the Task Force on Climate- related Financial Disclosures (TCFD). In September 2022, we established a Policy on Climate Change and Resilience that states measures regarding the risks and opportunities associated with climate change as well as the resilience (strength and buoyancy) of operations and strategies relative to climate-related issues. We also announced our endorsement of the recommendations of the TCFD and joined the TCFD

Consortium, an organization of Japanese companies expressing their support of the TCFD.

The TCFD requests companies to evaluate the climate- related risks and opportunities to their business and to assess and disclose the financial impact. FRC has started analyzing different climate scenarios to identify the risks, opportunities, and financial impact in order to formulate a viable strategy.

Growth Strategy

continue installing e.g. LED lighting in our commercial	and have done so for 77.8% of our properties to date.
facilities this fiscal year as well. In addition, we are in talks	We aim to increase this number to 85% or higher by
with property management companies regarding ways	2030 by maintaining and improving the environmental
we can reduce energy consumption when it comes time	performance of existing properties and by adopting a
for facilities to be upgraded and have targeted a 35%	careful selection process for new properties.

We will continue to conduct asset management in consideration of sustainability as Japan's first region-specific REIT that promotes community development and economic revitalization in the Fukuoka and Kyushu areas.

• Climate Change Scenario Analysis

We conducted an analysis to be used for the purpose of assessing the validity of current climate change measures and developing future strategies. Risks, opportunities, and financial impacts as shown in the table are assessed below.

Society

As one social initiative, we aim to create an appealing workplace for employees. In 2018, FRC was recognized by Fukuoka City as a company that actively seeks to promote work-style reform. We were highly praised

for our efforts to enhance productivity by supporting personal development and for our campaign encouraging no overtime.

In 2022, Fukuoka City launched a registration system for businesses committed to achieving the well- being of their workers and the SDGs with the aims of enhancing the satisfaction of people's lives and realizing a sustainable environment, society, and economy. This is the first such initiative in Japan. FRC registered and has been certified as a "master" under the system.

We are also actively communicating with the local community, including through Twitter since 2010.

			4℃ scenario		15℃ scenario
	Risk/Opportunity factors	Financial impacts	Short	Medium	Long	Short	Medium	Long
	term	term	term	term	term	term
	Taxation of CO2 emissions due to introduction of carbon tax	Increased taxation on CO2 emissions for owned properties	S	S	S	S	M	M
Policy and	Stricter energy-saving standards for existing real estate and	Increased renovation costs for purpose of compliance	S	S	S	S	M	L
introduction of carbon emission-related restrictions	Increased environmental certification acquisition costs
law
	Stricter mandatory emissions reporting requirements in the	Increased payments to external companies for purpose of handling reporting	S	S	S	S	S	S
	Energy Efficiency Act
Technology	Evolution/Spread of renewable energy and energy-saving	Increased costs of introducing new technology to prevent facilities in owned properties	S	S	S	S	M	L
technology	from becoming technologically obsolete
Transition
Changing social values relating to environmental performance	Increased financing costs for properties with poor environmental performance	S	S	S	S	S	S
risks
	Decrease in asset value due to delayed environmental	Relative decrease in institutional investors' investment appetite due to delayed	S	S	S	S	S	S
	compliance at owned properties	environmental compliance
Markets	Increased importance of transition risks	Increased financing costs due to properties being assessed as having high transition risks	S	S	S	S	S	S
	Increased value related to environmental performance	Reduced property value and average rents due to environmental certifications such as	S	S	S	S	M	L
	DBJ Green Building Certification not being acquired
	Tenant needs relating to environmental performance	Decreased revenue due to owned properties' environmental performance becoming	S	S	S	S	M	L
	relatively low, creating stranded assets
		Increased repair costs and insurance premiums: loss of sales opportunities due to
Acute	Damage to owned properties due to typhoons/heavy rain	flooding, decreased asset value of owned properties with high flooding risks, increased	S	S	M	S	S	S
		countermeasure costs

Sustainability

Data Section

Governance
In terms of governance-related efforts, we adopted all	Since then, we have been disclosing information on the
seven principles set forth in the Principles for Customer-	status of this initiative. With regard to risk management,
Oriented Business Conduct established by the Financial	we update our risk matrix in a timely manner and
Services Agency in 2017 and formulated our own	regularly conduct drills as part of our business continuity
Policies for Customer-Oriented Business Operations.	plan (BCP) to confirm its effectiveness.

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Physical
risks		Flooding at owned properties in low-elevation areas due to sea	Increased flooding countermeasure costs	S	S	M	S	S	S
	Chronic	level rise
		Increased need for A/C due to rising temperatures	Increased A/C operation, maintenance, and repair costs	S	S	M	S	S	S
	Energy
	Introduction of renewable energy at sites	Reduction in externally procured utility costs	S	S	S	S	S	S
	sources
	Products and
	Attracting tenants, occupants, and users by offering low-	Increased revenue by attracting tenants and occupants	S	S	S	S	M	L
	services	emission facilities and services
Opportunities
		Expanding the client base by continuing to provide rental	Increased revenue from higher rents and improved tenant acquisition and retention	S	S	S	S	M	L
		properties aligned with changing tenant and occupant tastes
	Markets
	Expanding the investor base	Use of green bonds: increased financing by adapting/appealing to investors who	S	S	S	S	S	S
		prioritize environmental issues, decreased financing costs
					Fukuoka REIT Corporation 2022

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Environmental Issues

Related Materiality

・Reduction of environmental load

Environmental Initiatives IC

Retail Natural Environment Conservation and Creation

At Canal City Hakata and Park Place Oita, we are making efforts to

Retail	Canal Water Filtration System (rainwater reuse system)

Canal City Hakata's symbolic canal has both a recreational

IC Investment Corporation (FRC) AMCAsset Management Company

Environmental Performance Data	IC

Although values increased for the fiscal period ended February 2022 compared to the interval in which we closed facilities due to the spread of the COVID-19 pandemic, we still recorded a reduction of 8.84% in electricity usage and 31.14% in water consumption compared with the period ended February 2019.

coexist with various natural environments by providing green space in communal areas, installing aquatic spaces, and creating shaded spaces. We are creating habitats for wild fauna and flora that contribute to the preservation of biodiversity, as well as providing places where employees and visitors can relax and interact with nature.

function and is a source of water to fight fires in the case of an emergency. At all times, this canal holds roughly 1,200 tons of water, and rainwater is used to conserve resources.

• Electricity Usage

(Data coverage)

(MWh)	70.1%	70.1	70.2%	70.2%	00.070.2%	(Basic unit)
	％	％			％	190
90,000	81,339	79,474
		74,150
				71,192
	184
60,000		180				175
					167	160
30,000
			160
0	28th・29th	30th・31st		32nd・33rd	34th・35th	145
	March 2018-February 2019	March 2019-February 2020	March 2020-February 2021	March 2021-February 2022

• Water Consumption

（m3）		(Data coverage)	70.2％	(Basic unit)
70.1％%	70.1％	70.2%	70.2%
800,000						2.00
	607,352	596,007				1.50
600,000
	1.37	1.35		405,366	418,232
				1.00
400,000
				0.94
				0.91
200,000						0.50
0	28th・29th	30th・31st		32nd・33rd	34th・35th	0.00
	March 2018-February 2019	March 2019-February 2020	March 2020-February 2021	March 2021-February 2022

Who We Are

Retail

Greywater Plant (kitchen drainage reuse system)

Retail Introducing Renewable Energy Equipment

Note: Total value for 11 properties, including four retail facilities and seven office buildings. Per unit is calculated by adjusting the total floor area（m2）by the occupancy rate. Data coverage is the area ratio of properties subject to data aggregation as compared to all properties and is calculated at the end of the fiscal period. The figure for Canal City Hakata, Canal City Hakata・B, and Canal City Business Center Building reflects total electricity and water usage for all buildings, including electricity and water usage by some theater areas not owned by FRC. The figure for Park Place Oita covers only the main building section and excludes the section for independently run stores.

Green Finance IC

Growth Strategy

At Canal City Hakata and Konoha Mall Hashimoto, kitchen wastewater discharged by restaurants is collected and processed as reclaimed water. It is then used as tap water in on-site restrooms.

At Konoha Mall Hashimoto, we have installed solar panels on the rooftops to generate renewable energy and contribute to the formation of a recycling-based society.

With the goal of further promoting ESG activities and expanding financing options through an enhanced investor base, FRC established the Green Finance Framework in 2019 in line with the Green Loan Principles, the Green Bond Guidelines 2017 from the Ministry of the Environment, and the Green Bond Principles 2018 to ensure implementation of green financing, including sustainability-linked loans and green loans. The funds procured through green finance will be allocated toward the acquisition of eligible Green Projects, the repayment of borrowings required

in the acquisition of eligible green assets, or the redemption of investment corporation bonds issued and outstanding.

Eligible Green Projects are specified assets held by FRC that have received or are scheduled to receive one of the following certifications from third-party certification organizations at the time of procurement or the reporting date.

1. DBJ Green Building Certification of 4 or 5 stars or a 3-star evaluation
2. CASBEE certification of S, A, or B+ rank
3. BELS evaluation of 3, 4, or 5 stars

Sustainability

Office Buildings Energy-Saving Initiatives Based on the Promotion of LED Lighting

We are focusing on converting each property to LED-based lighting to reduce energy consumption.

〈Office buildings already converted to LED〉

• Gofukumachi Business Center (e.g., interior shared spaces, some external areas, exterior wall lighting)
• Sanix Hakata Building (interior recessed lighting)
• Taihaku Street Business Center (e.g., entrance, interior shared spaces)
• Tenjin North Front Building (common spaces)

LED lighting being used at the Sanix Hakata Building

Others (logistics facilities) Introducing Renewable Energy Equipment

At LOGICITY Hisayama and LOGICITY Minato Kashii, we have installed solar panels on the rooftops to generate renewable energy and contribute to the formation of a recycling-based society.

Solar panels

LOGICITY Hisayama

		★★★		★★★★★
			（5-star）		Maximum green finance
Total properties	Eligible Green	（3-star）	Eligible Green		Total assets LTV
owned		Projects		procurement amount
206.3 billion yen	Projects	131.8 billion yen	41.7%	Eligible Green Project liability
(acquisition price)	63.9%		10 properties
33 properties					54.9 billion yen
			★★★★
			（4-star）

After procuring green finance, FRC will announce the total amount of eligible Green Projects, the amount of liabilities related to eligible Green Projects, and the amount of funds from green finance as of the end of each fiscal period (February and August each year). The investment corporation will also announce the following indicators related to eligible Green Projects as of the end of February each year.

• The number of properties classified as eligible Green Projects, and the number and type of obtained environmental certifications.

• Sustainable Finance（Actual）

			Category	Lender	Balance (Millions of yen)	Average interest rate	Date	Term	Description
			Long-term debt	Mizuho Bank/The Bank of Saga/	2,200	0.52100%*1	July 31, 2019	10 years	Green loan assessment: Green 1*2
	（green loan）	The Higo Bank
			Long-term debt	The Juhachi-Shinwa Bank	1,000	0.59000%	March 31, 2021	10 years	Donate part of the interest as funds for research into the
	（donation-type loan）	development of a new COVID vaccine at Nagasaki University
			Long-term debt	Sumitomo Mitsui Banking
	NEW	1,600	0.72625%	June 30, 2022	7 years	Green loan assessment: Green 1*2
	（green loan）	Corporation
			Long-term debt	Development Bank of Japan/The Nishi-
	NEW	4,900	0.91875%*3	August 31, 2022	10 years	Third-party opinion on sustainability-linked loan*4
	（sustainability-linked loan）	Nippon City Bank/The Bank of Fukuoka

*1 FRC has concluded a swap agreement to practically fix the interest rate on debt. The indicated interest rate reflects the effect of the swap agreement.

*2 FRC was assigned the comprehensive assessment of Green 1, the highest rank, regarding compatibility with the Green Loan Principles from Japan Credit Rating Agency, Ltd.（JCR）. *3 If the CO2 reduction target is achieved, a preferential interest rate is applied from August 2031 until the repayment date from the interest rate of the initial loan.

*4 A third-party opinion has been obtained from Japan Credit Rating Agency, Ltd.（JCR）.

Glossary Green bonds	Sustainability-linked loan
These are bonds issued by companies and local governments to raise the funds	A sustainability-linked loan is a loan that encourages borrowers to achieve ambitious
necessary for Green Projects in Japan and overseas.	sustainability performance targets (SPTs).
Green loan
A loan in which the use of funds is limited to environmentally friendly businesses.

Data Section

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Environmental Issues

Related Materiality

・Maintenance and enhancement of environmental and construction performance

Initiatives for Facility and Building Management	IC

Individual Facility Initiatives

IC Investment Corporation (FRC) AMCAsset Management Company

Initiatives We Support and External Certifications	IC AMC

FRC makes continuous improvements through feedback on the results it receives from acquiring external certifications.

Retail Renovation of Food Court NEW

The food court at Konoha Mall Hashimoto was renovated to address the lack of adequate seating at busy times on Saturdays and Sundays and to enhance the overall environment. In addition to increasing the number of seats, we provided seating that meets diverse needs such as for families with young children to make the area easier to use and more comfortable.

Office BuildingsRenovation of Common Areas NEW

At the Sanix Hakata Building, we overhauled the common space to maintain the aesthetic appeal of the building and enhance tenant satisfaction.

Initiatives for Disaster Risk	IC

Kids box seats		Baby food seats	Garden court seats

Before

After

• Endorsement of the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)

In September 2022, we announced our endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board (FSB) to examine climate-related disclosures and how financial institutions should respond.

At the same time, we became a member of the TCFD Consortium, a group of companies in Japan that supports the TCFD.

• Other Initiatives We Support

In September 2018, Fukuoka Realty Co., Ltd., endorsed the basic philosophies of the Principles for Responsible Investment (PRI) and the Principles for Financial Action for the 21st Century (PFA21) and became a signatory to these initiatives. Through ESG-conscious asset management, the company is contributing still further to the achievement of a sustainable society.

• Participation in GRESB Assessment 2022

The Global Real Estate Sustainability Benchmark (GRESB) was established by a group of European pension funds and is the benchmark for measuring sustainability in real estate companies and managing organizations in 2009. FRC was given "Green Stars,""4 stars (on a 5-star scale)" and disclosure assessment, "A Level" for the GRESB Real Estate Assessment conducted in 2022.

Who We Are

Growth Strategy

Countermeasures to Flooding Risks

Severe damage from flooding in Fukuoka City on June 29, 1999, contributed to the formulation of the Storm Water Management Action Plan

• Capacity of Storm Water Storage Facilities of Fukuoka City

• Ratio of Properties Certified as Green Buildings

and the upgrading of rainwater drainage facilities in the areas where the flooding was particularly harsh. Ongoing efforts to implement antiflooding measures have greatly improved flood safety within the city limits.

• Replacing and Installing New Water Stops (July 2020)

We reviewed the specifications and installation locations of existing water stops throughout the Canal City Hakata premises and either repaired or installed equipment as part of our countermeasures to river flooding as a result of typhoons and locally heavy rains, which appear likely to come more frequently and increase in severity due to global warming.

Storm water management capacity increased from 59.1 mm/h

to 79.5 mm/h (city center)

• Instances of Building Inundation in Fukuoka City

(Number of buildings)

4,000					From FY2000
		Instances of inundation		and FY2022
3,173
		Storm water drainage
			have steadily declined
3,000					capacity has increased
		1,721			significantly
2,000
	1,122

As of the end of August 2022, the ratio of properties within the entire portfolio certified as green buildings was 77.8%.

The DBJ Green Building Certification is a third-party certification system established by the Development Bank of Japan for real estate properties that feature excellent environmental and social considerations. FRC has acquired certification for 12 of its owned properties that exhibit environmental and social awareness (including six properties that were recertified in March 2022).

In addition, the Building Energy-Efficiency Labeling System (BELS) is a system in which third parties evaluate, indicate, and certify the energy conservation performance of non-residential buildings, based on the Evaluation Guidelines for the Building Energy-Efficiency Labeling System for Non-Residential Buildings (2013). FRC has acquired certification for four of its owned properties.

Sustainability

Canal City Hakata (north side of the building)

Canal City Business Center Building

											Since the launch of the
1,000
										project in FY2000
									3		Instances of
	June 29, 1999	July 19, 2003	July 24, 2009 August 30, 2013	inundation have
Maximum hourly		79.5		104		116	72.5		steadily declined
precipitation (mm/h)

Source: Prepared by Fukuoka Realty Co., Ltd. based on data from the "Storm Water Management Action Plan 2026" pamphlet about the Fukuoka City Stormwater Emergency Control Plan.

Properties with	77.8%
Green Building	(	based on total	)
Certification
floor space

• Canal City Hakata (2022) Canal City Hakata・B (2022)

• Park Place Oita (2022) Konoha Mall Hashimoto (2020)

Canal City Business Center Building (2022)

Gofukumachi Business Center (2022)

★★★	Higashi Hie Business Center (2022)
LOGICITY Minato Kashii (2020)

Earthquake Risk Countermeasures

Other Disaster Prevention Measures

LOGICITY Hisayama (2020)

Higashi Hie Business Center II (2020)

• SunLive City Kokura (2019)
  Marinoa City Fukuoka (Marina Side Building) (2019)

Data Section

Fukuoka Prefecture is an area in which there are relatively few earthquakes. According to the probabilistic earthquake prediction map from the Office of the Headquarters for Earthquake Research Promotion, Earthquake and Disaster-Reduction Research Division, Research and Development Bureau, Ministry of Education, Culture, Sports, Science and Technology, the probability of an earthquake with an intensity of six or greater over the next 30 years is lower in Fukuoka Prefecture than in the Kanto, Chubu, and Kansai areas. FRC establishes the insurance value of each property based on its replacement value, earthquake PML value, and other factors, and maintains earthquake insurance for all its properties (buildings). In addition, FRC continues to conduct annual property surveys through external organizations to estimate earthquake damage to properties based on various scenarios.

• Emergency Drills We have conducted comprehensive disaster drills at Canal City Hakata since 2017, with all tenants participating (not held in 2020 or 2021 due to COVID-19).The drills were conducted in November 2022.

Glossary Earthquake PML

Refers to the probable maximum loss as a percentage of the expected maximum damage (Probable Maximum Loss) caused by an earthquake. The higher the PML value, the higher the building's seismic risk. [Calculation method] PML: Expected maximum damage / Replacement cost

	Higashi Hie Business Center	Higashi Hie Business Center II	LOGICITY Minato Kashii	LOGICITY Hisayama
	(acquired in March 2016)	(acquired in September 2015)	(acquired in May 2015)	(acquired in March 2016)

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Social Issues

Related Materiality

・Creation of pleasant workplaces

Initiatives for Employees and Tenants

Initiatives for Employees AMC

Related Materiality

IC Investment Corporation (FRC) AMCAsset Management Company

・Contributions toward boosting the attractiveness and revitalization of Fukuoka and Kyushu ・Co-creation with the local community

Initiatives for Local Communities

Initiatives for Local Communities IC AMC

Fukuoka Realty: Numbers of credentialed personnel

As of August 31, 2022

The average number of years of continuous service of permanent employees

9 years and 4 months

Full-time personnel

Support for Flexible Work Styles

・Child-rearing support (maternity leave, childcare leave system, and nursery
support system)
・Nursing care leave
・Leave for voluntary work
・Employee welfare (401K, cumulative investment system, etc.)
・Encouraging use of paid holidays,	etc.

Annual Events		Cleanup Days		Participation in Community Events

Who We Are

	41［Male: 18 Female: 23］	Gender ratio Male: 43.9％ Female: 56.1％
・Employees seconded from sponsors:	3
・Employees seconded to a sponsor:	8
	Number of credentialed personnel
・Real estate brokers:		23
・ARES Certified Masters:		18
・Certified Building Administrators:	3
・MBA:		2
・CMA:		2
・First-class registered architect:	1
・Real estate appraiser:		1
・Attorney:		1
・Administrative Scrivener:		1
・SME management consultant:	1

・Licensed Representative of Condominium Management Company: 1

Training for Employees

・Regular lectures by Kyushu Economic Research Center
・Compliance training
・Sustainability training
・Nursing care training
・In-house recreation,	etc.

Career Development Support

・Employee satisfaction survey ・Self-assessment system

・Career interview

・Secondment system (dispatching of employees to e.g. sponsor companies) ・Promotion from contract employee to permanent employee status

・Offering of training programs tailored to each management level

・System for supporting acquisition of qualifications (Real Estate Transaction

Agent, ARES Certified Masters, etc.)
・Support for language learning,	etc.

At Canal City Hakata, employees of the asset management company participate in events that involve sprinkling water on sidewalks to cool them down and promote well-being as part of efforts to enhance the environment.

Safety Town Council

At Park Place Oita, we established a "Safety Town Council" that partners with related institutions and groups to conduct crime-prevention patrols and proactively strive to prevent youth misconduct.

Asset management company executives and employees actively participate in cleanup activities, of which there had been 300 as of September 15, 2022.

Various Events Held

At Canal City Hakata, we implemented an eco-friendly water station campaign as part of the Blue Earth Project, an environmental awareness-raising activity with a local high school. With the participation of restaurants in the facility, customers who brought their own bottles were offered free drinking water. (Period: September 17 to 25, 2022)

Every year, employees of the asset management company participate in the Hakata Gion Yamakasa Festival. President Zenji Koike rode on one of the Yamakasa floats.

Growth Strategy

Health Management/Improvement of Office Environment

・Initiatives to prevent infectious diseases such as influenza (implementation of influenza vaccination and full coverage of vaccination costs)

・Initiatives for preventing the spread of COVID-19 (such as the installation of thermographic monitors to measure temperature at office entrances; installation of anti-splash panels and ozone sterilization equipment; distribution of masks, thermometers and antiseptic solution; periodical disinfection of tables, chairs, and door knobs, etc.)

・Mandatory health checkups and comprehensive medical examinations ・Health counseling by public health nurses

・Application system to restrict excessive overtime work ・Assistance for use of sports clubs

・COVID-19 vaccination at workplaces

Special leave for illness after COVID-19 vaccination

・Installation of personal booths, meeting booths, plants, etc. ・Installation of personal lockers

Installing thermographic monitors

NEW

Gatherings for Real Estate, Finance, and the Economy	AMC

We have held gatherings annually since 2008 with the cooperation of the Japan Real Estate Institute (not held in 2020 due to concerns over COVID-19).

Local real estate companies, financial institutions, and government agencies participate in the conference, which contributes to networking and further

stimulation of the local economy. It has been designated as a continuing education course for The Association for Real Estate

Securitization (ARES) masters.

The Kyushu Economic Research Center AMC

Fukuoka Realty Co., Ltd., and the Kyushu Economic Research Center have concluded a memorandum of understanding in a bid to promote increased cooperation in the macroeconomic analysis and the Kyushu economy. Through this initiative, both signatories to the memorandum will share information on the current state of the Fukuoka-Kyushu economy as well as

issues to be faced, thereby revitalizing economic activity throughout the region. In addition, study groups on seasonal topics that are specific to Fukuoka and Kyushu are held on a regular basis.

Sustainability

Creating a Comfortable Working Environment	AMC
		NEW

Certified as a "Fukuoka 'Work-	Registration with Fukuoka City
Style Reform' Promotion	Well-Being & SDGs Registration
Company" (August 2018)	System (July 2022)

Meeting booths

Tenant Initiatives	IC

With a focus on the health and comfort of tenant employees, we are improving the employee lounge environments within retail facilities and renovating office building common areas. Moreover, FRC is engaging in a variety of initiatives for tenants as a part of efforts to promote sustainability.

・Improvement of employee lounge
・Implementation of tenant satisfaction surveys
・Distribution of sustainability guidebooks
・Sustainability training,	etc.

Other Activities AMC

・IR Kyushu Workshop

The Workshop, which entered its 12th year in 2022, was established in cooperation with the Japan Investor Relations Association. The Workshop assists in learning about the latest IR trends with IR employees of companies located in Fukuoka and Kyushu and fosters the forming of networks between participating companies. Impacted by COVID-19, the study groups were held in a hybrid style that combined online tools with face-to-face interaction.

• Details of the Study Group

Date	Theme and lecturer
1st workshop	"The Future of Information Disclosure and Investor Dialogue: Focus on ESG, Post-COVID, and Human Capital"
Professor Shoichi Tsumuraya, Graduate School of Business Administration, Hitotsubashi University
July 2022	(Visiting researcher, Japan Investor Relations Association)
	Note: Information on the lecturers is that for the workshops held by the IR Kyushu Workshop.

Data Section

36

Fukuoka REIT Corporation 2022

37