Securities Code 3487

Financial Results Briefing for the 7th Period
Ended December 2019 (July 1, 2019 to December 31, 2019)

LogiSquare Soka
The property has excellent access to expressways, situated approximately 2.9 km from Gaikan Misato-nishi IC (Tokyo Gaikan
Expressway) and approximately 4.5 km from Yashio-minami IC (Misato Route of the Metropolitan Expressway) and also
provides accessto all major
expressways
via the Tokyo
Copyright(C) 2020
CRE Logistics
REIT,Gaikan
Inc. AllExpressway.
Rights Reserved.

February 17, 2020
CRE REIT Advisers, Inc.

Contents
Contents

GLOSSARY
Term

1. Second Capital Increase by Public Offeringand Asset Acquisitions

2. Financial Results and Forecasts
3. Growth Strategies

2914

4. Characteristics of CRE Logistics REIT, Inc.

22

5. Market Environment

36

6. Appendix

43

Definition

Appraisal value

The appraisal value or an investigated value as of the end of the period is stated based on theCertificate of Incorporation of the Investment Corporation and the Regulation on Accountings ofInvestment Corporations (Cabinet Office Order No.47 of 2006 including subsequent revisions)

Unrealized gains(Appraisal value) - (Book value) as of the end of the period (Acquisition price in the case of newly
acquired assets)

LTV(Outstanding balance of interest-bearing debt) / (Total Assets)

LTV based on
appraisal value(Outstanding balance of interest-bearing debt) / (Total assets + Unrealized gains)

NAV per unit

(Net assets + Unrealized gains - Total amount of distributions) / Total number of investment units
outstanding

Acquisition price

Acquisition price is the purchase agreement price for each of the trust beneficiary rights stated in
the sales agreement and does not include national and local consumption taxes or salescommission and other expenses that are incurred in the acquisition.

NOI yield

Ratio of actual NOI of the portfolio assets to their acquisition priceAppraisal NOI yield

Ratio of appraisal NOI of each asset to the acquisition price (refers to appraisal NOI based on theappraisal report with December 31, 2019 as the date of the value opinion in the case of each asset
held and appraisal NOI based on the appraisal report with November 30, 2019 as the date of thevalue opinion in the case of newly acquired assets)

CRE

CRE, INC.

CRE Group

CRE, INC. and its subsidiaries and affiliates• This material is not a disclosure material under the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations or the
Securities Listing Regulations of the Tokyo Stock Exchange.
• The purpose of this material is to provide information and not to offer, solicit the purchase of or sell certain products. When you make an investment, please do so at
your own discretion and risk.
• The market price of investment securities of the Investment Corporation will be affected by the demand and supply of investors at an exchange and will fluctuate under
the influence of the interest rate environment, economic conditions, the real estate market conditions and other factors surrounding the market. Accordingly, theinvestment securities may possibly not be sold at a higher price than the acquisition price, and investors could suffer a loss as a result.
• The investment securities of the Investment Corporation need to be purchased and sold through a securities company with which you undertake business. At that time,please read the contents of the document provided before concluding the contract (or a prospectus) carefully.
• While this material contains forward-looking statements and results forecasts, these statements do not guarantee the future results and financial conditions of theInvestment Corporation.
• In this material, amounts are rounded off to the unit and ratios are rounded to the nearest one decimal place, unless otherwise noted. Any average or ratio pertaining toassets is the weighted average based on the acquisition price, unless otherwise noted.
Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

11. Second Capital Increase by Public Offering and Asset Acquisitions

LogiSquare Soka
Copyright(C) for
2020
CREtrucks
Logistics
REIT,
Inc. All Rights
Reserved.
The property
has capacity
34 large
to dock
simultaneously
and also
offers 65 car parking spaces and waiting space for large trucks.

2

1. Second Capital Increase by Public Offering and Asset Acquisitions

Summary of Second Capital Increase by Public Offering
Externally acquire properties at appropriate price above implied cap
rate
M-10 LogiSquare Yashio

M-12 LogiSquare Mizuho B

Number of properties(Ended December 2019)

Acquisition price100.0%

100.0%

Average borrowing rate

0.510%

0.532%
3.3 years

2.6 years

Occupancy rate

Average appraisal NOI yield

100.0%

4.7%

Increase in borrowing

9,000 million yen

9 properties

13 properties

54,115 million yen

73,675 million yen

Average appraisal NOI yield

4.9%

4.9%

Number of tenants

12

16

Number of properties
Acquisition priceTokyo Metropolitan Area

94.7%

96.1%

Occupancy rate

100.0%

100.0%

Ratio of properties developed
by CRE

100.0%

100.0%

45.6%

Realize external growth that contributes to improvement in
distributions per unit and NAV per unit

Improve quality of portfolio through investment in LogiSquare(Ended December 2019)

Estimate for
December 31, 2020

Ratio of fixed interest rates

Average duration ofinterest-bearing debt

After acquisition ofassets（February 3, 2020）

47.7%

19,560 million yen

End of 7th Period

After the Borrowing

ＬＴＶ

４ properties

NAV per unit
Net assets

AssetsEnd of 7th Period

M-11 LogiSquare Mizuho A

Liabilities

M-9 LogiSquare Soka

Promote reduction of LTV and long-term debt

After first capitalincrease by public
offering

After second capitalincrease by public
offering

December 31, 2019

After second capital increaseby public offering

122,212 yen

Initial estimate for period ended
December 2019

Distributions per unit
(including OPD)

2,940 yen

Estimate at first PO for period
ending June 2020

3,029 yen

Number of new investment
units to be issued

88,000 units

Total issue value

12,118 million yen

Form of offering

Domestic offering

129,163 yen (+5.7%)

Estimate on normalised level
after second PO for period
ending December 2020

3,160 yen (+7.5%)(+4.3%)(33.9% of total issued and outstanding investment units)

Note: Please refer to the notes on page 1 or on each page from page 4 for the definition of each term and the calculation method of each figure on this page.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

3

1. Second Capital Increase by Public Offering and Asset Acquisitions

Enhance unitholder value through external growth that contributes to improvement in
DPU and NAV per unit
Raise normalised DPU by 7.5% within one year by increasing capital in two consecutive periods
DPU +7.5%
DPU +4.3%

DPU +3.0%
3,500
3,000
2,500
2,000

2,940

2,990

3,012

3,029

3,040

372

365

365

365

314

2,568

2,625

2,647

2,664

2,726

1,000
(Yen)

Initial（Note 2）estimate
第７期

Estimate at
first PO（Note 3）

ResultEPU

At normalised level
after first PO（2020年67th period (ended December 2019)月期）

Achieve higher NAV per unit
150,000

118,187（2020年12
OPD per unit

49%

129,163

48%
47%

47.9%

47.7%
47.4%

46%

110,000

45%

90,000Note 1:
Note 2:
Note 3:Note 4:Note 5:巡航期
At normalised level
after second PO

Reduce LTV

NAV per unit
+5.7%
122,212Estimate at
secondPO
第9期

9th period
月期） 2020)(ending December

8th period
月期）(ending June 2020)

Earnings per unit (EPU)

(Yen)

2,837

2,940

Estimate at
Estimate at
first POsecond PO（Note 4）
第８期（2019年1270,000323

Adjustment for
temporaryfactors -103

+10.5%At initialnormalised level

130,000

323

EPU +6.5%

EPU +3.7%

1,500

3,160

3,263

44%
6th period(ended June 2019)

7th period(ended December 2019)（注5）
After第２回PO後
second PO(Note 5)

46.0%

46.6%

LTV
-2.1%

45.6%

6th period
7th period
8th period estimate 9th period estimate(ended June 2019) (ended December (ending June 2020) (ending December
2019)
2020)
ResultSecond PO presentation materials dated January 7, 2020
Summary of financial results dated February 14, 2020

“DPU” indicates distributions per unit (including OPD), and “EPU” indicates distributions of earnings per unit.
“Initial estimate” is based on Summary of Financial Results for the 5th Fiscal Period Ended December 31, 2018 dated February 18, 2019.
“Estimate at first PO” is based on “Notice Concerning Revision of Forecasts of Operating Results for the Period ending December 31, 2019 and Forecasts of Operating Results for the Period ending June 30, 2020” dated June 27, 2019.
“Estimate at second PO” is based on “Notice Concerning Revision of Forecasts of Operating Results for the Period ending June 30, 2020 and Forecasts of Operating Results for the Period ending December 31, 2020” dated January 7, 2020.
“NAV per unit” after the second PO is calculated by the equation shown below.
NAV per unit after the second PO = (NAV at end of 7th Period (ended December 31, 2019) + Total issue value + Sum total of appraisal values of newly acquired assets - Sum total of acquisition prices of newly acquired assets) / Total issued and outstanding investment units of CRE-REIT
after the Issue

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

4

1. Second Capital Increase by Public Offering and Asset Acquisitions

Newly acquire properties in Tokyo Gaikan Expressway/Western Tokyo Area
Locations of Assets Held, Newly Acquired Assets and Pipeline

Portfolio
Newly acquired
assetsExclusive Negotiation
Rights Granted

Under Development

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

5

1. Second Capital Increase by Public Offering and Asset Acquisitions

Achieve further portfolio diversification through twice capital increase by public offering
two years after listing
7 properties at listing

13 properties after second capital increase by public offering
Top 5 tenants
67.8%

Tenantdiversification(based onleased area)

Top 5 tenants
48.9%

Number oftenants

Number oftenants

16

10

At listing

19.5%

20.0%
18.0%

After second capital increase by public offering

18.2%

16.2%

16.0%
14.0%
12.0%

Diversification oflease terms(based onleased area)

13.0%

12.1%

10.0%

9.3%
7.9% 7.9%

8.0%

8.0%

12.1%

10.8%
8.1%

6.8%

5.8% 5.4%

5.2% 5.2%

6.0%

10.2%

9.2%

4.0%

6.8%

2.4%

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

2032/122032/62031/122031/62030/122030/62029/122029/62028/122028/62027/122027/62026/122026/62025/122025/62024/122024/62023/122023/62022/122022/62021/122021/62020/122020/60.0%

2019/12

2.0%

6

1. Second Capital Increase by Public Offering and Asset Acquisitions

Ensure same high quality as that of existing portfolio

7th period

After acquisition of
newly acquired assets

Newly acquired assets(2019/12)

9 properties

4 properties

13 properties

Acquisition price54,115 million yen

19,560 million yen

73,675 million yen

Appraisal value (Estimated value)

57,880 million yen

20,610 million yen

78,490 million yen

Average appraisal NOI yield

4.9%

4.7%

4.9%

Average appraisal NOI yield

3.8%

Average property age(Note 2)

2.8 years

Occupancy rate

100.0%

100.0%

100.0%

Average lease term

9.0 years

8.4 years

8.8 years

Average remaining lease term(Note 3)

6.4 years

5.7 years

6.2 years

12

4

16

100.0%

100.0%

100.0%

Number of properties

after depreciation(Note 1)

Number of tenants
Ratio of properties developed by
CRE(Note 4)+

4.1%
8.5 years=

3.8%
4.3 years

Note 1: “Average appraisal NOI yield after depreciation” is the ratio of the sum total of the appraisal NOI of each asset less forecast depreciation to the sum total of the acquisition price of each asset.
Note 2: “Average property age” indicates the weighted average (rounded to one decimal place) of the ages (refers to number of years from date of registration of new construction of each property in real property register to December 31, 2019) of each
asset.
Note 3: “Average remaining lease term” indicates the weighted average of the periods from December 31, 2019 to the expiration date of the lease agreement stipulated in the lease agreement of each asset.
Note 4: “Ratio of properties developed by CRE” is ratio of properties developed by CRE or Commercial RE Co., Ltd. before transfer to CRE.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

7

1. Second Capital Increase by Public Offering and Asset Acquisitions

Ensure same high quality as that of existing portfolio

Newly acquired assets

No.

Property nameLocation(Planned)
Appraisalacquisition price value(Note 1)(million yen)(million yen)Appraisal
NOI yield(%)

Total floorarea(Note 2) (m2)Age(years)Numberof tenants

BTS(Note 3)

Occupancy
ratio
(%)

Developer

M-1

LogiSquare Kuki

Kuki-shi,
Saitama

9,759

10,3004.8

40,907.13

3.6

1 BTS

100.0

CRE

M-2

LogiSquare Hanyu

Hanyu-shi,
Saitama

6,830

7,080

5.0

33,999.61

3.5

1 BTS

100.0

CRE

M-3

LogiSquare Kuki II

Kuki-shi,
Saitama

2,079

2,170

5.1

11,511.22

2.9

1 BTS

100.0

CRE

M-4

LogiSquare Urawa Misono

Saitama-shi,
Saitama

13,06014,300

4.7

48,738.29

2.8

3

―

100.0

CRE

M-5

LogiSquare Niiza

Niiza-shi,
Saitama

6,960

7,390

4.9

25,355.82

2.8

1

―

100.0

CRE

M-6

LogiSquare Moriya

Moriya-shi,
Ibaraki

6,157

6,640

5.2

32,904.90

2.7

2

―

100.0

CRE

M-7

LogiSquare Kawagoe

Kawagoe-shi,
Saitama

1,490

1,570

5.0

7,542.56

1.9

1

―

100.0

CRE

M-8

LogiSquare Kasukabe

Kasukabe-shi,
Saitama

4,900

5,300

5.1

21,315.54

1.6

1 BTS

100.0

CRE

M-9

LogiSquare Soka

Soka-shi,
Saitama

8,109

8,580

4.6

28,817.59

6.5

1

―

100.0

CRE

M-10 LogiSquare Yashio

Yashio-shi,
Saitama

5,073

5,330

4.6

19,068.60

5.9

1

―

100.0

CRE

M-11 LogiSquare Mizuho A

Mizuho-machi,
Tokyo

2,794

2,940

4.9

13,755.16

12.9

1 BTS

100.0

CRE

M-12 LogiSquare Mizuho B

Mizuho-machi,
Tokyo

3,584

3,760

4.8

16,016.37

12.9

1 BTS

100.0

CRE

O-1

Tosu-shi,
Saga

2,880

3,130

5.2

16,739.40

1.9

1 BTS

100.0

CRE

73,67578,4904.9

316,672.19

4.3

16

100.0

―

LogiSquare Tosu

Total/Average

Note 1: Appraisal value with November 30, 2019 as the date of the value opinion in the case of newly acquired assets.
Note 2: For “Total floor area,” the total floor area of each property presented in the real estate register is stated. It also includes the floor area of annex building.
Note 3: “BTS” stands for build-to-suit. It is logistics real estate developed by incorporating a specific company’s demands in its specifications.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

―8

2. Financial Results and Forecasts

LogisSquare Hanyu
From the selection of the land, the facility was developed based on the needs of the tenant, which is a leading logistics company, and was designed to offer(C)heavy
2020loads.
CRE Logistics REIT, Inc. All Rights Reserved.
versatility andCopyrightto withstand92. Financial Results and Forecasts

Highlights on the 7th Period―Achieved better-than-anticipated results due to stable management
Distributions per unit

NAV per unit
3,012 yen

7th period Results(2019/12)(Compared to forecast: Up 22 yen, Up 0.7%)

8th period Forecasts

3,040 yen

9th period Forecasts

3,263 yen(2020/6)(2020/12)

Forecasts
Results

122,212 yen(up 4,024 yen, up 3.4%
from 6th period)

7th period Results(2019/12)

114,936

3,297 3,351

Portfolio

117,317

118,187

122,2123,263

2,940 2,952

2,990 3,012

3,040

6th period

7th period

8th period

2,540 2,585(Yen) 4th period

5th period(Yen)

9th period

Asset

4th period

5th period

6th period

7th period

Debt
7th period(2019/12)

Compared to
6th period

Portfolio size

9 properties 54.1 billion yen

Occupancy rate

100.0%

Average remaining
lease term

6.4 years

Average property age

2.8 years

Ratio of fixed-termleases100.0%

Ratio of fixed-rate rents

100.0%

Equity7th period(2019/12)

Compared to
6th period

7th period(2019/12)

Compared to
6th period

Appraisal value

57,880 million yen +7,400 million yen

Interest-bearing
debt

Unrealized gains

4,723 million yen +1,262 million yen

LTV

47.7%

-0.2%

NAV
NAV per unit

122,212 yen+4,024 yen

Total number ofinvestment units
outstanding

259,250 units+28,100 units

26,719 million yen +2,899 million yen

Unrealized gains ratio

8.9%

+1.5%

LTV based on
appraisal value

44.0%

-0.8%

NOI yield

4.9%

+0.0%

Ratio of fixedinterest debt

100.0%+11.3%NOI yield after
depreciation

3.7%

+0.0%

Ratio of long-term
debt

100.0%―%

Repair expense

1 million yen+0 million yen

0.510%-0.023%

Capital expenditure― million yen― million yen

Averageborrowing interest
rate

Note: As of December 31, 2019, before second capital increase by public offering

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Net assets per unit

107,005 yen+835 yen

31,683 million yen +4,364 million yen

One characteristic of logistics facilities is that the ratio of building value to landis typically high, and so depreciation expense tends to be higher than for otherasset classes. Since unrealized gains are the difference between appraisal
value at end of period and book value after deduction of depreciation expense,
CRE-REIT, which holds fairly new properties and has minimal capital
expenditure, tends to record increasing unrealized gains because, at the endof each period, the sum of depreciation expense and any increase in appraisal
value at the end of the period is added to unrealized gains at the end of theprevious period.

10

2. Financial Results and Forecasts

Results for the 7th Period (Ended December 2019)
Unit: million yen

Difference vs.
Difference vs.
Previous
Forecast
period(C) - (B)(C) - (A)

6th period(2019/6)
Results (A)

7th period(2019/12)
Forecasts (B)

7th period(2019/12)
Results (C)

1,411

1,578

1,580

+168

245

254

254

+9

+0

1, 166

1,324

1,325

+159

+1

287

316

316

+29

+0

879

1,008

1,009

1

+130

+1

160

184

181

2

+20

718

823

828

+109

+4

Non-operating income

0

―

0

+0

+0

Non-operating expenses

121

141

141

+19

-0

Ordinary income

597

681

687

+89

+5

Net income

596

680

686

+89

+5

Operating revenues
Leasing expenses (excluding
depreciation)

NOI
Depreciation
Net leasing revenues (NOI Dep.)
General and administrative
expenses, etc.
Operating income

3

4

5

+1

-3

Major factors fordifference<Vs. previous period>
1 Net leasing revenues +130
• Increased due to 2 newly acquired
properties +131

2 General and administrative
expenses, etc. +20• Increase in asset management fees+16
• Occurrence of expenses related to
first PO +2• Occurrence of expenses for General
Meeting of Unitholders +2

3 Non-operating expenses +19• Increase in loan-related expenses +9• Increase of interest expenses +5• Occurrence of expenses related toissue of investment units for first PO+3<Vs. forecast>
4 Operating revenues +1• Increase in utilities income +1

Distributions per unit (yen)

2,952

2,990

3,012

+60

+22

Earnings per unit (yen)

2,580

2,625

2,647

+67

+22

372

365

365

-7

―

OPD per unit (yen)Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

5 General and administrative
expenses, etc. -3• Reduction of expenses for General
Meeting of Unitholders -3

11

2. Financial Results and Forecasts

Forecasts for the 8th and 9th Periods (Ending June 2020 and December 2020)
Unit: million yen

Difference(B) - (A)

9th period(2020/12)
Forecasts (C)Difference(C) - (B)

1

+444

2,122

+97

2

+49

309

+5

1,721

+395

1,812

+91

316

364

+48

374

+9

Net leasing revenues (NOI - Dep.)

1,009

1,356

+347

1,438

5

General and administrative
expenses, etc.

181

223

+42

244

6

828

1,133

+304

1,194

+60

Non-operating income

0

―

-0

―

―

Non-operating expenses

141

185

+44

172

Ordinary income

687

947

+260

1,021

+74

Net income

686

946

+260

1,020

+74

Operating revenues

Leasing expenses (excluding
depreciation)

NOI
Depreciation

Operating income

7th period(2019/12)
Results (A)

8th period(2020/6)
Forecasts (B)

1,580

2,024

254

303

1,325

3

4

7

+82
+21

-13

Distributions per unit (yen)

3,012

3,040

+28

3,263

+223

Earnings per unit (yen)

2,647

2,726

+79

2,940

+214

365

314

-51

323

+9

OPD per unit (yen)Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Major factors forDifference<8th period>
1 Operating revenues +444

• Increased due to 4 newly acquired properties+430• Full-period contribution of 2 properties newly
acquired in 7th period +14

2 Leasing expenses (excluding depreciation） +49• Increased due to 4 newly acquired properties+32• Increase due to the expensing of fixed asset taxes
and city planning taxes on 2 properties acquired inthe 7th period +18

3 General and administrative expenses, etc.
+42
•
•
•
•

Increase in asset management fees +34
Non-occurrence of expenses related to first PO -2
Occurrence of expenses related to second PO +2
Non-occurrence of expenses for General Meeting ofUnitholders -2

4 Non-operating expenses +44• Increase in loan-related expenses and interest
expenses +33• Increase in amortization of expenses related toissue of investment units +2• Non-occurrence of expenses related to issue ofinvestment units for first PO -3• Occurrence of expenses related to issue ofinvestment units for second PO +10<9th period>
5 Net leasing revenues +82• Full-period contribution of 4 properties newly
acquired in 8th period +82

6 General and administrative expenses, etc.
+21
• Increase in asset management fees +13• Increase in asset custody and administrative
service fees +2• Non-occurrence of expenses related to second PO-2

7 Non-operating expenses -13• Increase in loan-related expenses and interest
expenses +2• Non-occurrence of expenses related to issue ofinvestment units for second PO -10

122. Financial Results and Forecasts

Comparison between Each Period
3,500

3,000

3,012

2,990
365

2,500

Increasein NOI

Reduction of
expenses for
General Meetingof Unitholders

Others

+4

+11

+5

365

Increase in
net leasing
revenues+12

Decrease in
SGA, etc.

+55

3,040

Decreasein nonoperating
expenses

314

+236

Increase in
SGA, etc.

-60

Decrease in
non-operating
expenses

3,263
323

+38

+10

2,000

2,625

Increase in
net leasing
revenues

2,726

2,647

2,940

1,500

1,000

period(Yen) 7th第７期
Ended
Dec. 20192019年12月期
Forecasts
予想

7th第７期periodEnded
Dec. 20192019年12月期
Results
実績
Earnings per unit (EPU)

8th第８期periodEndingJun. 20202020年6月期
Forecasts
予想

9th第９期periodEndingDec. 20202020年12月期
Forecasts
予想

OPD per unit

Note 1: Calculated on the assumption that the total number of investment units issued and outstanding at the end of the 7th Period is 259,250 units and the total number of investment units issued and outstanding at theend of the 8th and 9th Periods is 347,250 units.
Note 2: The components do not add up to the difference between each period because the components are rounded off to the nearest one yen.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

13

3. Growth Strategies

LogiSquare Yashio
The property has excellent access to expressways, situated approximately 3.8 km from Soka IC (Tokyo Gaikan Expressway) and approximately 4.0 km from Yashio-minami IC (Misato Routeof the Metropolitan Expressway) and also provides access to all major expressways via the Tokyo Gaikan Expressway.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

14

3. Growth Strategies

Portfolio after Acquisition of Newly Acquired Properties and Similar-sized Pipeline
Continue to promote property acquisitions at a reasonable price, aiming for continuous growth in distributions, based on cooperation
with the CRE Group companies
Portfolio after acquisition of
newly acquired properties

Pipeline(Note 1)

10 properties Total floor area 310,411.75 m2 + α (Property in Fujimino-shi, Saitama)
LogiSquare Chitose(1) November 2017(2) 19,760.00 m2(3) Chitose-shi, Hokkaido

Under planning

LogiSquare Ageo
(1) April 2019(2) 19,142.84 m2(3) Ageo-shi, Saitama

13 properties

Total floor area 316,672.19 m2
Total acquisition price 73.6 billion yen

LogiSquare Kawagoe II(1) June 2019(2) 14,786.36 m2(3) Kawagoe-shi, Saitama

LogiSquare Kobe nishi(1) April 2020(2) 16,000 m2(3) Kobe-shi, Hyogo

Sayama Hidaka IC
Development Plan(provisional)(1) June 2020(2) 84,132 m2(3) Hanno-shi, Saitama

LogiSquare Miyoshi(1) June 2020
(2) 40,752 m2(3) Miyoshi-machi, Saitama

LogiSquare Osaka Katano(1) January 2021
(2) 80,661.39 m2(3) Katano-shi, Osaka

LogiSquare Miyoshi II(1) March 2021
(2) 18,096 m2(3) Miyoshi-machi, Saitama

new!

Suminoe Logistics Center(1) January 1992
(2) 17,081.16 m2(3) Osaka-shi, Osaka

Name TBD(1) From 2022
(2) TBD (Site: 123,389 m2)(3) Fujimino-shi, Saitama

LogiSquare Kuki

LogiSquare Hanyu

LogiSquare Kuki II

LogiSquare Urawa Misono

LogiSquare Niiza

LogiSquare Moriya

LogiSquare Tosu

LogiSquare Kawagoe

LogiSquare Kasukabe

LogiSquare Soka

LogiSquare Yashio

LogiSquare Mizuho B

LogiSquare Mizuho A(1) Completion month and year
(planned)(2) Total area (planned)(3) Location
Newly acquired assets
Properties with firstrefusal rightAs a general rule, CRE-REIT is given the opportunity to acquire all
logistics facilities developed and owned by CRE(Note 2)
Note 1: As of February 14, 2020, CRE-REIT has not engaged in specific negotiations with the CRE Group companies on this pipeline, nor does it have any plan to acquire them at the present time or guarantee future acquisiti on. This slide shows thepipeline as of February 14, 2020 but first refusal rights will be granted at any time on other properties besides these properties and CRE Group companies will proceed at any time with the development of other properties besides theseproperties.
Note 2: Unless the grounds for exclusion from application stipulated in the Sponsor Support Agreement apply.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

15

3. Growth Strategies

The Investment Corporation’s Approach to Property Acquisitions/CRE’s Approach toProperty Sales and Development
The Investment Corporation’s Approach to Property Acquisitions• Acquisition of property without dilution of distribution per unit/NAV per unit is a prerequisite for the improvement of unitholder value.

In both the first and second capital increases by public offering, CRE acquired properties at a NOI cap above the implied cap rate and upheld the above prerequisite. CRE-REITplans to maintain this approach moving forward.

• Achieve flexible external growth, taking investment unit price into consideration, including utilizing the bridge function.

CRE-REIT acquired three properties from leasing company at IPO and one property from leasing company at first capital increase by public offering. The timing of the Sponsor’s
property sales and the REIT’s acquisitions can be adjusted.

• Acquisition of medium-sized properties and acquisition of quasi co-ownership interests using funds on hand is also possible.

Properties with total floor area of 5,000 m 2 or larger are the investment targets and the acquisition of properties ranging from several hundred million yen to several billion yen ispossible using funds on hand equivalent to depreciation expense.

• Achieve medium-term asset size target of 100 billion yen alongside improvement in unitholder value rather than focusing on early
achievement.

Take investment unit price into consideration when achieving target asset size two or three years after listing stated in materials for Financial Results Briefing for the 4th Period(June 2018), rather than focusing on early achievement as stated above.

CRE’s Approach to Property Sales and Development

Stable operation of CRE-REIT over medium and long term is
CRE’s top priority
CRE’s Positioning of Asset Management Business

The Asset Management Company is involved from the time ofsite acquisition to implement development with discipline
Leasing
Development• Grow asset management business into second pillar of stockbusiness.
Asset Management• Continuously earn asset management fees and property
management fees by selling properties developed by CRE to CREREIT.

Construction
Management
Leasing

Source: Prepared by the Asset Management Company based on the Long-term Management Policy(September 12, 2016) of CRE, Inc.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Rent assessment (scoring of location,road access, etc.)
Formulation of plan incorporating
development risks
Sharing of level of cap rates onacquisitions in REIT market
Appropriate cost control
Attraction of tenants

Generation of higher profits than planned

16

3. Growth Strategies

Promote Reduction of LTV, Borrowing from New Lenders, Long-term Debt andDistribution of Repayment Dates
Reduce LTV and Promote Long-term Debt
After theBorrowing(Note 1)

Difference

35,719 million yen(Note 2) 45.6%+9,000 million yen-2.1%

100.0%

100.0%―%

100.0%

100.0%―%

0.510%

0.532%+0.022%

2.6 years

3.3 years+0.6 years

7th period(2019/12)

Interest-bearing debt
LTV
Ratio of fixed interest
debt
Ratio of long-termdebt(Note 3)
Average borrowinginterest rate
Average life of interestbearing debt(Note 4)

Borrowing a new from The Bank of Fukuoka, Ltd.

26,719 million yen
47.7%(as of February 3, 2020)

Bank Formation after the Borrowing
Sumitomo Mitsui The Bank of
Trust Bank, Limited Fukuoka, Ltd.
2.8%
4.6%
The Nishi-Nippon
City Bank, Ltd.
11.0%

Development Bank ofJapan Inc.
13.4%

Approach to Liabilities

The Borrowing

5,600

6,000

3,700

4,000

3,574 3,680

3,680
2,400

2,900

3,680

3,400

3,105

2,000

0
(Million yen)

2020/62020/122021/62021/122022/62022/122023/62023/122024/6

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

2024/122025/6

Mizuho Bank, Ltd.
20.1%

Resona Bank,
Limited. 12.4%

Promotion of Distribution of Repayment Dates Over the Period
Existing loans

Sumitomo Mitsui
Banking
Corporation 23.9%

MUFG Bank, Ltd.
11.7%

Note 1: “The Borrowing” refers to borrowing executed on February 3, 2020 to finance the acquisition of the
newly acquired assets and expenses incidental thereto.
Note 2: Forecast for end of Period ending December 2020
Note 3: Current portion of long-term debt is included in long-term debt.
Note 4: “Average life of interest-bearing debt” is calculated by finding the weighted average life based on thebalance of each interest-bearing debt over the period from February 3, 2020 to the repayment date ofeach interest-bearing debt.

8,000

new!

2025/12•

CRE-REIT’s LTV is set at around 45% and the upper limit of
LTV is 50% in principle.

•

The above level is slightly higher than that of other logistics
REITs but since cash flow is stable due to long-term contracts,
CRE-REIT has the option to make effective use of loans.

•

CRE-REIT conducts financial operations with emphasis on
long-term stability by taking out long-term loans with fixedinterest rates.

•

After examining using funds on hand for property acquisitions,
CRE-REIT examines using them to repay loans in order toincrease financial strength and reduce borrowing costs.

2026/617

3. Growth Strategies

Efficient Cash Management
Efficient use of funds on hand from depreciation for maximization of distributions and expansion of financial reserve
400,000

Repayment ofloans payable

300,000

Reduction of
LTV

Funds on hand
261,930

200,000

Repayment
before maturity,
200,000
Depreciation,
287,097

Appropriation topropertyacquisitions
Depreciation,
221,481374,092

Depreciation,
287,097

316,107

100,000

Surplus cash
distribution,
85,987
0(Thousand yen)

Acquisition of properties
or quasi co-ownershipinterests amounting toseveral hundred millions
or billions of yen

Appropriation topropertyacquisitions
201,110 Depreciation,

Surplus cash
distribution,
85,987

Surplus cash
distribution,
94,626

Surplus cash
distribution,
112,161

Capitalexpenditures, 682

Target ongoingsurplus
distributions
equivalent to
30% of thedepreciation
expenseMaximizationof distributions
Ongoing surplus
distributions every period,in principle, subject toexamination of otheroptions

After acquisition of
5th period
6th period
7th period
newly acquired(December 2018) (June 2019) (December 2019)assetsCopyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

18

3. Growth Strategies

Strengthening of Governance (1) Revision of Asset Management Fee Structure More
Aligned with Unitholder Interests
Overview of Revisions to Asset Management Fee Structure• Amend Articles of Incorporation at the General Meeting of Unitholders held on September 27, 2019 and revise fee
structure from the Period ending June 2020
• Introduce fee structure more aligned with unitholder interests by decreasing management fees based on total assets andincome before income taxes and establishing a new management fee based on earnings per unit to increase linkage withearnings per unit
• Repeal fee on sale to prevent fee being charged even in the case of the sale of property that is detrimental to the interestsof unitholders because a loss on sale is recognized

Before Changes

After Changes

Management fee 1

Total assets  0.4% (Upper limit)

ReduceTotal assets  0.325% (Upper limit)

Management fee 2

Income before income taxes  5.0% (Upper limit)

ReduceIncome before income taxes  4.0% (Upper limit)

Newly
establish

Earnings per unit  10,000

Management fee 3
Fee on acquisition
Fee on sale―
Acquisition cost  1.0% (Upper limit)

Acquisition cost  1.0% (Upper limit)(0.5% (Upper limit) in case of transactions with interested party)(0.5% (Upper limit) in case of transactions with interested party)

Sale price  0.5% (Upper limit)

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Repeal―19

3. Growth Strategies

Strengthening of Governance (2) Holding of Investment Units by Management ofSponsor and the Asset Management Company Respectively
Holding of Investment Units by Management of Sponsor and the Asset Management Company Respectively• At the time of the first capital increase by public offering, the management of the sponsor and the Asset Management Company
respectively acquired investment units held by the sponsor, strengthening their commitment to CRE-REIT.
(July 2019)500 units(Note 1)

Representative Director and President of CRE
Tadahide Kameyama

1,000 units(Note 1)

Holding of Investment Units by Officers and Employees of theAsset Management Company• Almost all officers and employees of the Asset Management Company holdinvestment units of CRE-REIT(Note 3) based on a cumulative investment
system (purchases started in October 2018) and internal regulations.

Name

Representative Director andPresident

Tsuyoshi Ito

1,093 units

Managing Director

Takeshi Oka

33 units

Tsuyoshi Ito

58 units(Note 2)

1,058 units

Independence of the Asset Management Company• Given that the Asset Management Company was established as anindependent asset management company, all its members are proper
employees and CRE is not involved in their recruitment or personnel
evaluation.

Category(December 31, 2019)

8 out of 9 other employees hold investment units

710 units

Executive Director of the Investment Corporation
Representative Director and President of AssetManagement Company

Units heldTitle

210 units

Number of
persons(Note 3)

Standing directors

2

Employees

9

Total

11

Note 1: On July 17, 2019, CRE, which is the sponsor of the Investment Corporation, sold, at a price equal to the issue price in the first capital increase by public offering, 1,000 units of the investment units to
Tsuyoshi Ito, who is Executive Director of the Investment Corporation and Representative Director and President of the Asset Management Company, and 500 units of the investment units to Tadahide
Kameyama, who is Director of the Asset Management Company and Representative Director and President of CRE.
Note 2: As of May 31, 2019
Note 3: As of January 31, 2020

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

20

3. Growth Strategies

Initiatives for ESG
70% of properties have acquired BELS and/or CASBEE certification (based on acquisition price).

Newly acquired
assetsProperty name

BELS

CASBEE

Installation of Solar Panels

Sandwich Panels

LED Lights

CRE-REIT leases roof top
space and the lessees
contribute to the creation ofrenewable energy throughphotovoltaic power generation.

All the properties use sandwich
panels with outstanding design
and a high heat insulating effectfor their exterior walls to reduce
the thermal load when
refrigerating and heating
equipment is installed.

The use of LED lights contributes
not only to energy savings and the
reduction of CO2, but also the
reduction of electric bills, which
are to be paid by tenants, alongwith the replacement cost oflighting and an improvement in theworking environment.

70% of properties have acquired(based on acquisition price).

70% of properties have acquired(based on acquisition price).

M-1 LogiSquare Kuki★★★★★

Saitama Prefecture Rank A







M-2 LogiSquare Hanyu★★★★★

Saitama Prefecture Rank B+







M-3 LogiSquare Kuki II★★★★★

Saitama Prefecture Rank A







M-4 LogiSquare Urawa Misono★★★★★

Saitama Prefecture Rank A

―





M-5 LogiSquare Niiza★★★★★

Saitama Prefecture Rank A







M-6 LogiSquare Moriya

★★★★★

―







M-7 LogiSquare Kawagoe

★★★★

―

―





M-8 LogiSquare Kasukabe★★★★★

Saitama Prefecture Rank A







M-9 LogiSquare Soka―

Saitama Prefecture Rank A





―

M-10 LogiSquare Yashio―

Saitama Prefecture Rank A





―

M-11 LogiSquare Mizuho A

―

―

―

―

―

M-12 LogiSquare Mizuho B

―

―

―

―

―

★★★★★

―

―





O-1 LogiSquare Tosu

Reduction of paper used to print
prospectus

Corrected information gap between investors andrationalized disclosures• Helped protect the environment by omitting
the pages printed in color below the front
cover of the prospectus.

• Pursued fair disclosure and rationalization of disclosuresby producing more substantial presentation materials.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

21

4. Characteristics of CRE Logistics REIT, Inc.

LogiSquare Soka
The property uses signs that visualize functions inside the facility. The signs use different colors for each floor to enable the workers to easily identify their present location, and the scale
marks on columns are used as a guide when loading cargo.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

22

4. Characteristics of CRE Logistics REIT, Inc.

Character-istics

Characteristics/Advantages of CRE-REIT
1. Portfolio focused on LogiSquare

2. Long-term, stable asset management

3. Distinct external growth strategy

High-quality portfolio(1) Stable cash flow
(2) Long-term contracts withdiverse tenants(3) Good location

Occupancy rate

Ratio of fixed-term leases

Ratio of fixed-rate rents

Average lease contract term

Average remaining lease term

Ratio of single-tenantfacilities

100.0%

100.0%

8.8 years

6.2 years

100.0%

73.9%

Average mileage
to interchange

Within 10 mins’ walk of
public transportation

Companies that have concluded
lease contracts with CRE directly

Leasing by CRE on its own

Holding of private viewings, including
for other listed REITs

Managed floor area

PM entrusted by othercompanies(Note 2)

Ratio of Tokyo Metropolitan Area

96.1%

3.4 km97.2%

Advantages

Sponsor is real estate company specializing in logistics properties(Note 1)(1) Leasing capability(2) Property management (PM)capability(3) Development capability

1,100 companies

1,581 properties 4,920,000m2

141 properties
Approx.７0%

PM entrusted by other listed REITs

1,020,000 m2• Tenant requirements obtained through day-to-day management and leasing activities are fully reflected in facility
development.
• Has been developing suitable properties for REIT since 2006 when real estate securitization first appeared in Japan.

Capable of flexibly acquiring properties, taking consideration into investment unit price• Able to utilize bridge function. Already acquired three properties at IPO and one property at the first capital increase by public offering by utilizing thebridge function.
• Also able to acquire mid-sized properties and quasi-co-ownership interests using cash on hand.
• Already secured pipeline of ten properties with total floor area of 310,000 m2 which is similar in size to the portfolio after acquisition of newly acquired
properties.
Note 1: As of the end of July 2019. Produced by the Asset Management Company based on data provided by CRE. Figures include data relating to property management of other real estate besides logistics facilities and master leases.
Note 2: “PM entrusted by other companies” is area managed by CRE less area relating to PM contracts with the Investment Corporation and area relating to properties in which CRE is involved as master lessee (area managed under PM contracts
with other listed logistics REITs and private funds, etc.) as a ratio of the total area managed by CRE.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

23

4. Characteristics of CRE Logistics REIT, Inc.

High-quality Portfolio (1) Stable cash flow
Form of contract that enables stable operation••

Inclusion of relatively new properties

Tenants who cancel early before the end of the contract term are required to pay the equivalent ofrent for the whole remaining lease term as a penalty for breach of contract.
Intention for renewal or termination is ascertained a year before contract expiry.

Ratio of fixed-term lease contracts

Ratio of fixed-rate rents

Ratio of fixedterm lease
contracts

10 years or more
8.7%
5 years or more but
less than 10 years
17.9%

Ratio of fixedrate rents

Less than
3 years
50.9%

Average age

4.3 years

100.0%

100.0%

Average age

3 years or more but
less than 5 years
22.5%

Repair expenses and capital expenditure remain at a low level•

The existing portfolio consists of relatively new properties and, partly thanks to appropriate property management by CRE, which provides property management services foreach property, repair expenses and capital expenditure have remained at a low level until the end of fiscal period ended December 2019.

Repair Expenses

Capital Expenditure
Forecast

4,000

2,000

0

(Thousand yen)

3,260

2,600

2,200
972

4th period

4th
period(2018/6)(2018/6)

2,100
869

5th period
第５期(2018/12)

Forecast

Result

3,000
2,000

1,151

746
6th period
第６期(2019/6)

7th period
第７期(2019/12)（2018年12月期） （2019年6月期） （2019年12月期）

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Ruesult

1,412
682

1,000
0
(Thousand yen)――

4th period
第４期(2018/6)―
5th period
第５期(2018/12)―

6th period
第６期(2019/6)――

7th period
第７期(2019/12)（2018年6月期） （2018年12月期） （2019年6月期） （2019年12月期）

24

4. Characteristics of CRE Logistics REIT, Inc.

High-quality Portfolio (2) Long-term lease contracts

Long-term contracts can be concluded as tenants use properties as dedicated centers.

Average lease contract termLess than 5 years
9.4%

Average

8.8 years

Average remaining lease term
10 years or more and lessthan 15 years
2.8%

Tenant composition

Multi-tenant
26.1%
Less than
5 years
33.3%

5 years or more andless than 10 years
22.9%

Average

6.2 years
5 years or more andless than 10 years
63.8%

10 years or more
67.6%

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Exclusive usage

73.9%

Exclusive
usage
73.9%

25

4. Characteristics of CRE Logistics REIT, Inc.

High-quality Portfolio (3) Good location
Properties are mostly in locations suited to logistics facilities where strong demand is expected, withtenants’ need to secure labor also taken into consideration.
Ratio in Tokyo Metropolitan Area
Outside Tokyo
Metropolitan Area
3.9%

Over 5 km
8.7%

Ratio in Tokyo
Metropolitan
Area

96.1%

Time required from public transportation
facilities

Mileage to an interchange

Over 3 km
and less than 5 km
19.0%

Walk more than 10 mins
Within 20 mins
2.8%

Less than 1 km
17.7%

Walk within
10 mins

Average

3.4 kmTokyo
Metropolitan
Area
96.1%

97.2%

Over 1 km
and less than 3 km
54.6%

Walk
within 10 mins
97.2%

Example: LogiSquare Urawa Misono
The property is located approximately 700 m from Urawa IC (Tohoku Expressway) and approximately 450 m and a six-minute walk from Urawa Misono Station on the Saitama
Rapid Railway Line.
A large-scale community development project is underway in the surrounding area, which will allow a close proximity between work and the home and be a potential
advantage in securing employee.

Urawa IC

700 m

450 m
6 mins walk

Urawa Misono Station

LogiSquare Urawa Misono
Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

26

4. Characteristics of CRE Logistics REIT, Inc.

Features of LogiSquare
LogiSquare is the brand name of high-quality logistics facilities developed by CRE to meet tenant needs.
Semi-flexible pavement is used toinhibit rutting.

Sandwich panels are used on exterior walls to reduceheating and cooling loads and to
give the exterior an attractive appearance.

Facility has roof spraying system that uses well
water to reduce the internal temperature.
The facility has a total of 44 truck berths on
the first and third floors to allow the docking
of up to 44 large trucks simultaneously.

Berth depth 13.5 m

Truck berths are large enough to fit awhole 40ft container truck.

The facility has truck berths on the first and third floors.
To prevent congestion and accidents, the facility is designed to separate traffic flows and equipped withdedicated gates for the first/second floor tenants and the third/fourth floor tenants, respectively.
Note: The logistics facility shown above is an example of the features of LogiSquare. Not all facilities held by CRE-REIT have the features shown above.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Wooden deck

Bicycle parking
0

LogiSquare Urawa Misono

Rest area with wooden deck27

4. Characteristics of CRE Logistics REIT, Inc.

Features of LogiSquare
LogiSquare not only improves the efficiency of warehouse operations, creates a pleasant working environment for tenants
but helps reduce costs in the future for CRE-REIT.
Fireproof partition walls are
made of fire-resistant heatinsulating panels that haveexcellent insulation
properties, seismic resistanceand an aesthetically pleasing
appearance.

LED lighting throughout helps
save energy.

Openings in fire partitions are
as wide as possible.
6.0 m

Pillar span 10.3 m  10.35 m

10.3 m10.35 mFloor loading 1.5 t/m2

LogiSquare Urawa Misono

The facility has an effective
ceiling height of 6.0 m, or
5.5 m if cooling panels are
installed.
Internal signage is designed
to visually communicate
warehouse functions.

Windows

Interior walls between offices and the warehouse
space have windows in them to facilitatecommunication.

The women’s restroom has lockers anddesigned to make female employees feel comfortable.

Note: The logistics facility shown above is an example of the features of LogiSquare. Not all facilities held by CRE-REIT have the features shown above.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

To help reduce costs in the future, the facility already has windows
and ventilation built in to ensure compliance with laws and regulations
in case it is necessary to expand office areas in the future.

28

4. Characteristics of CRE Logistics REIT, Inc.

Sponsor is Real Estate Company Specializing in Logistics Properties
CRE, which sponsors CRE-REIT, has a track record of more than 50 years in the field of logistics real estate in Japan.
Launch of asset management business/Listing of CRE-REIT in February 2018
Participation in development business / Management of large-sized facilities
Small- and medium-sized warehouse asset utilization proposals / Building of relationships with tenants

1964

2005

1980

Established in 1980

Commercial RE

Established in 1964

Tenko Souken

2014

Established in 20092010:
Businesstransfer
2011:
Absorptiontype merger

Established in 20062014:
Acquisition

2018:
Acquisition

Involvement of All Employees in Logistics Properties

Proven Track Record in Providing Services to Other Companies

Number of employees on a consolidated basis (as of July 31, 2019)(Note 1)

CRE-REIT can draw on knowhow gained through management of 4,920,000 m 2

Property Management: 25
Leasing: 24
Construction/Design: 28

159
Property management

11
21
27

Logistics investment
Asset management
Administration

CRE-REIT
5%
Other listed REITs
21%

Management ofproperties held by othercompanies: 3,210,000 m2

Master lease
Area managed
30%
1,581 properties

4,920,000 m2

Private fund, etc.
44%

Total 218
Note 1: Prepared by the Asset Management Company based on Annual Report for Fiscal 2019 of CRE, Inc.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Note 2: As of July 31, 2019. Includes results under property management and master lease agreements forproperties other than logistics-related facilities.

29

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Leasing Capability―Accumulation of Information Through Many Leasing Opportunities
Instantly understands rent trends, including actual rents paid
and rent increases and decreases, through the conclusion ofcontracts directly with diverse tenants not just logistics service
providers.
••

CRE can gain an understanding of rent levels by entering contracts
with tenants directly as master tenant under a master leasearrangement
CRE builds relationships with tenants from a variety of industries not
only logistics operators.

Total Number of Master Lease Tenants(Note)
Other
Transportation
services

Customer services
Corporation services
Total Number ofMaster Lease Tenants

Retail

1,100 companies

Whole sale
Real estate andconstruction

Manufacturing

Around 70% of tenants are
not logistics operators

Mitigation of Vacancy Risk through CRE’s Leasing Capability
Time of Leasing Completion of Properties Held by CRE-REIT
Tenants

BTS

Time of leasing
completion

M-1
LogiSquare Kuki

1

BTS

Before thecompletion of
construction

M-2
LogiSquare Hanyu

1BTS

At the time of landacquisition

M-3
LogiSquare Kuki II

1

BTS

At the time of landacquisition

M-4
LogiSquare Urawa
Misono3―

Six months after
the completion of
construction

M-5
LogiSquare Niiza

1―

Before thecompletion of
construction

M-6
LogiSquare Moriya

2―

Seven months after
the completion of
construction

M-7
LogiSquare Kawagoe

1―

Four months after
the completion of
construction

M-8
LogiSquare Kasukabe

1

BTS

Before thecompletion of
construction

O-1
LogiSquare Tosu

1

BTS

Before thecompletion of
constructionLandacquisition

Completion of
construction

Note: As of July 31, 2019. Includes tenants of properties other than logistics-related facilities.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

30

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Leasing Capability―Information Gathering as a Leading Real Estate Company
Publication of LogiSquare Market Report
Every quarter, CRE publishes a report summarizing market trends in major areas, with afocus on large rental logistics facilities (10,000 m2 or larger). Besides information onlarge logistics facilities, the report also includes information on small and medium-sized
rental logistics facilities (less than 3,300 m 2/only those managed by CRE) based on
CRE’s database of master lease properties.

Publication of LogiSquare Map (map of large logistics facilities)
Map showing major large rental logistics facilities that have been built over the past 10
years or are planned for development. Published once a year.

Holding of CRE ForumThe purpose of the CRE Forum is to share logistics issues facing
companies. Since 2013, CRE has organized a total of 69 meetings,
with a total of 4,081 participants.(Note 1)

Participating Companies (excerpt)(Note 2)• Nittsu Research Institute and Consulting, Inc.
• Hitachi, Ltd.
• Sunstar Group• Tanita Corporation• JD.com Jingdong Japan Co., Ltd.
• Toyota Industries Corporation• Sapporo Group Management Ltd.
• CBcloud Co., Ltd.
• KBS Kubota Corporation• Office FA.com Co., Ltd.
• MUJIN Inc.

Note 1: As of November 30, 2019
Note 2: Prepared by the Asset Management Company based on the LogiSquare logistics facility information site.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

31

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Management Capability―Diverse Customers Including Other Listed REITs
Management of Properties for Other Listed REITs, Private Funds, etc.
Major Customers(Note 1)• LaSalle LOGIPORT REIT
• Star Asia Investment Corporation• Kenedix Retail REIT Corporation• United Urban Investment Corporation• Japan Logistics Fund, Inc.

• FORTRESS INVESTMENT GROUP
JAPAN• Ichigo Estate• Yamato Home Convenience Co. Ltd.
• TAKARA-SANGYO Co., Ltd.

• Industrial & Infrastructure Fund Investment • Tokyu Land Capital Management Inc.
Corporation• UIG Asset Management Co., Ltd.
• Mitsubishi Estate Logistics REIT Investment • UNIVERSE DEVELOPMENT Co., Ltd.
Corporation• CRE REIT Advisers, Inc.
• Daiwa House REIT Investment Corporation • Strategic Partners Co., Ltd..
• CRE Logistics REIT, Inc.

• LaSalle Investment Management

Ranks Second Among Logistics Facilities-centered PM
companies(Note 2)(Note 3)(No particular order)• Takara Asset Management Co., Ltd.

6

5.6

4.9

5

4.3

4

4.0

3

• Diamond Realty Management Inc.
• ESR LTD.
• Kenedix Investment Partners, Inc.
• Kokyo Asset Management Co., Ltd.
• Sumisho Realty Management Co., Ltd.

2

0.9

1

• SUMITOMO CORPORATION• Challenger Limited• Morgan Stanley Capital K.K.
• Daiei Real Estate & Development Co., Ltd.
• LC Partners, Inc.
• Tozai Asset Management Co., Ltd.

0(Million m2)

GLP

Prologis

Daiwa
SG Realty
House
Property
Management• Mitsui & Co., Realty Management Ltd.
• IDERA Capital Management Ltd.
• PGIM Real Estate (Japan) Ltd.
• Mitsubishi Jisho Investment Advisors, Inc

Note 2: “Logistics facilities-centered PM companies” refer to property management companies with 70% or more of their
entrusted areas those of logistics facilities. “Entrusted areas” include the management areas of real estate otherthan logistics facilities.
Note 3: Prepared by the Asset Management Company based on Monthly Property Management magazine (November
2019 edition).
In company names, Co., Ltd., Inc., etc. is omitted.

Note 1: CRE Inc.’s Summary of Financial Statements for the Fiscal Year Ending July 31, 2019.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

32

4. Characteristics of CRE Logistics REIT, Inc.

Development Capability―Development Incorporating Tenant Requirements While Ensuring Versatility
Realization of Long-term Contracts and Mitigation of Tenant Risk by Incorporating Tenant Requirements
While Ensuring Versatility= High-quality logistics facilities developed by CRE to meet tenant needs
Versatility=

Location+

Basic
Specification+

Expandability+

Comfort+Tenant’s unique requirements

Improvement of Convenience Through Full Reflection of Requirements Learned Through Day-to-Day Management andLeasing Activities in Development Plans

Improvement of convenience/
Reduction of future costs

Development / CM teamReflection of requirements and management
status in development plans

Leasing teamProperty management teamCommunication

Tenant companies and potential tenants

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

33

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Development Capability―Development Giving Tenant Convenience Highest Priority
Development based on optimal plan for characteristics of location, giving tenant convenience the highest priority
Low-type

Slope-type

Box-type

For tenants that attach importance to operational
efficiency

For tenants who attach importance to location andoperational efficiency

For tenants who attach importance to storage
function

Facility with one or two floors for more convenient loading
and unloading.
Ideal for both storage and distribution and suited to tenants
who attach importance to operational efficiency.

Facility situated in location with strong tenant demand andhaving three or four floors to utilize the floor-area ratio.
Facility also has a slope, enabling trucks to access thethird floors directly and allowing them to be used in same
way as the first and second floors.
Ideal for both storage and distribution and suited to tenants
who attach importance to both location and operational
efficiency.

Facility in strategic location with strong tenant demand andclose to city center and having three or four floors to utilize
the floor-area ratio.
Ideal for storage, which is standard function for a logistic
facility, and suited to tenants who attach importance tostorage of personal items.

Example: LogiSquare Hanyu

Example: LogiSquare Urawa Misono

Example: LogiSquare Niiza

2 floors
Truck berths on bothsides of first floor

The facility is designed to direct vehicles to move in one direction,with separate entrance and exit gates.

4 floors
Truck berths on one side offirst and third floors

The facility is designed to separate traffic flows and equipped withdedicated gates for the first/second floor tenants and thethird/fourth floor tenants, respectively.

Storage space on three floors
Truck berths on one side of first floor

The facility is designed to direct vehicles to move in one direction,with separate entrance and exit gates.

All facility types are designed to prevent congestion and accidents.
Traffic flow
Truck berths

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

34

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Development Capability

Cumulative total floor area

―Development Since the Start of Real Estate Securitization in Japan

Total floor area of properties developed or to be developed during the period

Properties developed by Commercial RE

Properties developed by CRE

Properties jointly developed by Commercial RE and Kenedix

Properties to be developed by CRE (planned)

Properties held by other REITs

Assets owned by CRE-REIT

Newly acquired assets

Properties with first refusal right

CRE has been developing logistics properties since real estate securitization started in Japan and has built up
knowhow on the development of properties suitable for REITs.
Track record of development of 30 properties and around 570,000 m2
LogiSquare Kobe Nishi

LogiSquare Chiba Kita II

LogiSquare Kuki II

LogiSquare Chitose

LogiSquare Misato

LogiSquare Urawa Misono

LogiSquare Tosu

LogiSquare Ageo

LogiSquare Niiza

LogiSquare Kawagoe

LogiSquare Kawagoe II

LogiSquare Moriya

LogiSquare Kasukabe

Sayama Hidaka IC Development Plan(provisional)

LogiSquare Miyoshi II

LogiSquare Miyoshi

LogiSquare Osaka Katano

900
LogiSquare Mizuho A

LogiSquare Yachiyo

800

717

700

LogiSquare Mizuho B

LogiSquare Kazo II

LogiSquare Tosu II

LogiSquare Kuki

600
LogiSquare Matsuzaki I

LogiSquare Ichikawa-tajiri

LogiSquare Sagamihara

LogiSquare Tosu I

LogiSquare Matsuzaki II

LogiSquare Tokorozawa

LogiSquare Soka

LogiSquare Yashio

LogiSquare Hidaka

477

LogiSquare Hanyu

500
400
300
Yokohama Fukuura Logistics Center

200

118

100

LogiSquare Kazo I

80

FP2006/3(Thousand m2)
Timing of listingof logistics
REITs

Note:

816

167
49

220
53

267
19

65

141

119

358
248
29

576
34

542

99

283
16

75

FP2015/7

FP2016/7

110
FP2007/3

May 2005

FP2008/3

FP2009/3

FP2013/7
Dec. 2012

Listing of first REIT specializing
in logistics facilities

FP2014/7
Feb. 2013

FP2017/7

Feb. 2016 Aug. 2016

FP2018/7
Sep. 2017

FP2019/7
Feb. 2018

Sep. 2018

FP2020/7(Plan)

FP2021/7(Plan)

Dec. 2019

CRE-REIT listed

While the above also includes other assets besides portfolio assets, CRE-REIT has not engaged in specific negotiations with the CRE Group companies on any of the above assets that are not portfolio assets, nor does it have any plan to acquire them at the present
time or guarantee future acquisition. The above also includes properties that have already been sold to third parties. Furthermore, with respect to properties to be developed by CRE (planned), as of February 14, 2020, development is not complete and theconceptional drawing, total floor area and development completion timing are based on plans as of February 14, 2020 and may change in the future. The building completion dates of the above properties are stated as the development completion dates.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

35

5. Market Environment

LogiSquare Yashio

Copyright (C) 2020 EightCRE ofLogistics
REIT, Inc.
All portfolio
Rights Reserved.
the 13 properties
in thelease their roofs and contribute to the creation of natural energy as the lessees install solar panels to generate electricity.

36

5. Market Environment

Summary of Market Trends
Recent Market Trends
Vacancy rate: 1.12%, QoQ: Improved (-1.49%)

Tokyo Metropolitan Area
Pages 38 and 39

High occupancy, with vacancy rate below 3% across entire area
Vacancy rate: 2.55%, QoQ: Improved (-1.17%)

Osaka Area
Page 38

New supply in 2019CY was absorbed. Vacancy rate dipped below 3%.

Rising Demand for Rental Logistics Facilities(1) Reconstruction Demand for
Logistics Facilities

Page 40

Around 30% of logistics facilities in the Tokyo Metropolitan Area are 40 to 50 years old.

3PL Market Size

EC Market Size/EC Ratio

2009(2) Expansion of 3PL Market and EC
Market2018

3.0 trillion yen
1.2 trillion yen
2.4-fold increasein 9 years

Page 41

2010

2018

7.8 trillion yen

18.0 trillion yen

2.8%

6.2%

2.3-fold increasein 8 years(3) Rising Importance of Logistics
Network Strategy

Page 42

The most important cost reduction measure to be implemented is a
restructuring of logistics facilities.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

37

5. Market Environment

Market Trends(1) Tokyo Metropolitan Area and Osaka Area (from LogiSquare Market Report)

Vacancy rate: Less than 5%
Vacancy rate: 5% or more and less than 10%
Vacancy rate: 10% or more

Vacancy rate: 1.12%

Tokyo Metropolitan Area
High occupancy rate below 3% in all areas

QoQ: Improved

The vacancy rate was 1.12%, a decrease of 1.49 points from the previous Q.
The demand in 2019CY4Q exceeded 300,000 tsubo. This figure was the highest since the survey started, and is nearly 1.5 times higher
than the total demand of 195,000 tsubo in Kansai area in 2019CY.
Demand for new supply is high particularly.
94% of the new supplies with 700,000 tsubo in 2019CY were occupied before the end of the year. This occupancy rate was 7.6 points
higher than that of 2018CY.
New supplies with 650,000 tsubo are scheduled in 2020CY, with a current reservation rate reportedly of 40% and therefore, the vacancy
rate may rise temporarily.
1,800

10%

1,600

8%

1,400
1,200

6%

1,000
800

4%

600
400

2%

200
0

(Ten thousand m2)

201606 201609 201612 201703 201706 201709 201712 201803 201806 201809 201812 201903 201906 201909 201912
Total area

Vacant area0%

Vacancy rate

Vacancy rate: 2.55%

Osaka Area
Digestion of new supplies from 2019CY reduced the vacancy rate below 3%.

QoQ: Improved

The vacancy rate has continued to decrease gradually and has been positive since 2018CY2Q, marking a decrease for the seventh
consecutive quarter. There has been ongoing digestion of both new supplies and existing properties during this Q. The new supplies with
110,000 tsubo from 2019CY have been all digested before the end of the year. As a result, the vacancy rate reached 2.55%, the lowest
since the survey started.
New supplies with approx. 250,000 tsubo are scheduled in the remainder of 2020CY, whose current reservation rate is eportedly approx.
30%. As new supplies scheduled in the remainder of 2020CY are concentrated in the Hokusetsu Higashi-Osaka area and the anshin
Kobe Port area that are in high demand, the long-term impact on the vacancy rate is expected to be none unlike 2017CY. However, theareas will be monitored continuously.
600

20%

500

15%

400
300

10%

200

5%

100
0

(Ten thousand m2)

201606 201609 201612 201703 201706 201709 201712 201803 201806 201809 201812 201903 201906 201909 201912
Total area

Vacant area0%

Vacancy rate

Source: “LogiSquare Market Report on Warehouses and Logistics Properties December 2019” of CRE, Inc.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

38

5. Market Environment

Market Trends(2) Individual Areas of Tokyo Metropolitan Area (from LogiSquare Market Report)
Urawa Misono
Soka

Saitama Kan-Etsu and Tohoku Expressway Area

YashioVacancy rate: 0.00% QoQ: Stagnant

Vacancy rate: 2.98% QoQ: Improved

The vacancy rate was 0.00%, remaining at an extremely low level, as in the previous Q.
New supplies with approx. 18,000 tsubo provided in this Q have all been digested. The vacancy
rate has remained at 0.00% for eight consecutive quarters, confirming strong demand.
New supplies with approx. 67,000 tsubo are scheduled in the remainder of 2020CY, whose
current reservation rate is reportedly over 60%.
Currently unfilled new supplies are concentrated in 2H. Therefore, the vacancy rate is expected
to remain at a low level without affecting the immediate vacancy rate.

The vacancy rate was 2.98%, a substantial decrease of 4.46 points from the previous Q.
There is firm demand for both new supplies and existing properties and 80,000 tsubo havebeen digested.
New supplies with approx. 150,000 tsubo are scheduled in the remainder of 2020CY, whose
current reservation rate is reportedly less than 40%.
Moreover, as supplies with approx. 67,000 tsubo are scheduled in 2020CY1Q, the vacancy
rate, which decreased once, may rise.

Total area

Vacant area

Vacancy rate

Total area

Vacant area

201912

201909201906201903201812

201809201806201803201712

201709201706201703

201612

201609(Thousand m2)

2016060%

千02019120%2019090(Thousand m2)

201906

5%

201903

1,000

2018125%201809500

20180610%

2018032,000

20171210%2017091,000

20170615%

2017033,000

20161215%

2016091,500

201606

千Southern Saitama Area

Vacancy rate

Breakdown: Saitama Kan-Etsu and Tohoku Expressway Area

Mizuho A

Mizuho B

Saitama Tohoku Expressway Area

20%

千Kawagoe

Vacancy rate: 0.99%

2,000

Kuki

Hanyu

Kuki II

Kasukabe

Vacancy rate: 4.81%

2,000

20%

Total area

Vacant area

Vacancy rate

Total area

Vacant area

201912

201909201906201903201812

201809201806201803201712

201709201706201703

201612

2016090%(Thousand m2)

20160602019120%2019090(Thousand m2)

201906

5%

201903500

2018125%201809500

20180610%

2018031,000

20171210%2017091,000

20170615%

2017031,500

20161215%

2016091,500

201606

千Saitama Kan-Etsu Expressway Area

Niiza

Vacancy rate

Source: “LogiSquare Market Report on Warehouses and Logistics Properties December 2019” of CRE, Inc.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

39

5. Market Environment

Rising Demand for Rental Logistics Facilities(1) Reconstruction Demand for Logistics Facilities• About 30% of logistics facilities in the Tokyo Metropolitan Area(Note 1) were constructed during the period of high economic growth or the
economic bubble, and they are 40 to 50 years old.
• Given that the useful life of logistics facilities under the tax code is 38 years(Note 2), demand for reconstruction in pursuit of functionality appears to
be increasing.
Percentage of logistics facilities in the Tokyo Metropolitan Area by year of construction (Note 3)100%

To 1969

Distribution of locations by the number of facilities

10%

80%

18%

60%

23%

1970 - 1979

1980 - 1989
1990 - 1999
From 2000

40%

24%

20%

25%
0%

About 30% of logistics
facilities are more than
40 to 50 years old.

These facilities are
20 to 40 years old andwill reach demand forreconstruction in the
future.

Construction from 2000, when
foreign-affiliated developers
began development in Japanand advanced logistics
facilities began being
constructed.

10-29 facilities
30-59 facilities
60 facilities or more
Expressway, etc.

Note 1: Tokyo Metropolitan Area includes Tokyo, Kanagawa, Saitama, Chiba, central and southern Ibaraki, southern Tochigi and southern Gunma
Note 2: Steel-reinforced concrete or reinforced concrete structures
Note 3: Prepared by the Asset Management Company based on data from Tokyo Metropolitan Transportation Planning Association

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

40

5. Market Environment

Rising Demand for Rental Logistics Facilities(2) Expansion of 3PL Market and EC Market• The market for third-party logistics (3PL) is growing as increasingly
companies are tending to comprehensively outsource their logistic
operation.

• The EC market is expanding year by year. However, in Japan, theEC rate is low compared with the U.S. and there is still much roomfor expansion.

3PL (Third-Party Logistics) Market Size

Growth in the BtoC e-commerce market size in Japan

3.5
3.0
2.5
2.0
1.5

1.27

1.46

1.78 1.88

2.04

2.25

2.48 2.59

2.85

20.0

3.03

15.0

10.0

1.0

5.0

0.5
0.0
(Trillion yen)

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: “The monthly Logistics Business” September 2019 issue

2018

0.0
(year)(Trillion yen)

7.8

8.5

9.5

11.2

12.8

6.4%
5.3% 5.8%
4.8%
4.4%

13.8
7.2%

15.1

16.5

18.0
U.S.

8.0%

8.8%

9.6%

2011

2012

2013

2014

E-commerce market size in Japan (left axis)
E-commerce rate in the U.S. (right axis)

2015

18%
16%
14%
12%
10%
8%

5.8% 6.2%
4.8% 5.4%
4.4%
3.9%
Japan
2.8% 3.2% 3.4%
2010

20%

2016

2017

6%
4%
2%
0%

2018 (year)

E-commerce rate in Japan (right axis)

Note 1: Prepared by the Asset Management Company based on data of the Ministry of Economy, Trade and Industry for the
BtoC e-commerce market size and the e-commerce rate in Japan and data of the United States Census Bureau for the
e-commerce rate in the U.S.
Note 2: The ratio of the e-commerce market size to the amount of all commercial transactions (the commercial transaction
market size). The e-commerce rate in BtoC e-commerce refers to the value in the field of product sales.

• In recent years, the floor space of new warehouse construction starts is around half the peak level and there is a shortage of logistics facilities tomeet current logistics needs.
Trends in Floor Space of New Construction Starts
20

RetailWarehouses

15
10
5

(Million m2)01960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 (year)

Note: Prepared by the Asset Management Company based on the Japan Construction Starts Report by the Ministry of Land, Infrastructure, Transport and Tourism and the Statistical Yearbook of Construction by the Ministry of Construction

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

41

5. Market Environment

Rising Demand for Rental Logistics Facilities(3) Rising Importance of Logistics Network Strategy• A majority of companies mention a review of logistics bases as animportant cost-cutting measure that needs to be implemented.

Important Cost-cutting Measures to be Implemented（Note 1）

Warehouse Rents as Percentage of COGs at Major Logistics Companies (Note 2)(Note 3)

29

Review of logistics bases
Reduction of inventories

15

Tie-up in transportation and delivery

14

Improvement of loading ratio

14

Company A

12

Review of delivery frequency
Review of transportation anddelivery channels

10Modal shift

10

Review of outsourcing fees

7

Introduction of logistics information
system7(Number of answers)• Warehouse rents account for less than 10% of the cost of goods sold of major
logistics companies, which is a small percentage compared to other costs suchas labor costs.
• There is perhaps much room to reduce and curb costs from the viewpoint of
employment and transportation, even if warehouse rents do rise, by reviewing
logistics bases.

0

20

40

Note 1: Prepared by the Asset Management Company based on the “Fiscal 2017 Research Report on Logistics
Costs” of JILS

Company B

Warehouse rents as % of COGs

6.8%

10.0%

Labor cost as % of COGs

22.4%

10.7%

Note 2: Listed companies that are not affiliated with electric railway companies are excluded from the 20 largest listed companies interms of revenue that belong to the “land transportation industry” (middle classification) among the sectors in the Appendix of
the Sector Classification Handling Guidelines published by the Securities Identification Code Committee and then information isprovided about two listed companies (i) for which details of non-consolidated COGs figures are stated in their annual reportsand (ii) which the Asset Management Company, upon consideration of their non-consolidated and consolidated COGs figures,
judged to be core companies of the Groups to which they belong. The table shows the trend in relation to two specific leading
logistics companies and the same trend does not necessarily apply to other major logistics companies.
Note 3: Created by the Asset Management Company based on the annual reports of each of the above companies for the fiscal year
ended March 31, 2019.

Network strategy will become increasingly importantdue to driver shortages, difficulties securing warehouse workers and rising fuel prices.
Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

42

6. Appendix

LogiSquare Yashio
The property is in close proximity to centers of production because it is located in an industrial zone, surrounded by many industrial parks. It also enjoys close proximity to Japan’s largest center ofconsumption, being less than 25 km away from central Tokyo.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

43

6. Appendix

Overview of Appraisal

80,000

6th period(2019/6)

7th period(2019/12)

Compared toprevious period

60,00016.0%

50,13047,59350,48047,30650,48047,01940,000Appraisal value

Book value

Unrealized gains
and losses

8.9%

50,480 million yen 57,880 million yen +7,400 million yen
20,00047,019 million yen 53,156 million yen +6,137 million yen

0(Million yen)

5.3%

4th period(2018/6)

Book value

3,460 million yen

57,88053,156

12.0%

8.0%

7.4%

6.7%

4.0%

5th period(2018/12)

6th period(2019/6)

Appraisal value

7th period(2019/12)

0.0%

Ratio of unrealized gains

4,723 million yen +1,262 million yen
150,000

Unrealized gains

7.4%

8.9%

+1.5%

114,936

117,317

118,187

122,212

4th period(2018/6)

5th period(2018/12)

6th period(2019/6)

7th period(2019/12)

100,000

NAV per unit

118,187 yen

122,212 yen+4,024 yen

One characteristic of logistics facilities is that the ratio of building value to land is typically high, and so
depreciation expense tends to be higher than for other asset classes. Since unrealized gains are thedifference between appraisal value at end of period and book value after deduction of depreciation expense,
CRE-REIT, which holds fairly new properties and has minimal capital expenditure, tends to record increasing
unrealized gains because, at the end of each period, the sum of depreciation expense and any increase inappraisal value at the end of the period is added to unrealized gains at the end of the previous period.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

50,0000(Yen)

NAV per unit

44

6. Appendix

Overview of Appraisal

No.

Property nameAt the end of the
At the end of theBook value
7th period(Note)
6th period
Changes
Unrealized
Ratio of
Acquisition Acquisition at the end of(December 31, 2019)(June 30, 2018)
gains and unrealized
month andprice
the 7thAppraisal
DirectAppraisal
DirectAppraisal
Directlossesgains
year(million yen)periodvalue
capitalization
value
capitalization
value
capitalization (million yen)(%)(million yen)(million yen) rate (%) (million yen) rate (%) (million yen) rate (%)

M-1

LogiSquare Kuki

Jul. 2016

9,759

9,353

10,300

4.5

10,300

4.5

―

―

946

10.1

M-2

LogiSquare Hanyu

Jul. 2016

6,830

6,548

7,080

4.7

7,070

4.7

+10

―

531

8.1

M-3

LogiSquare Kuki II

Feb. 2018

2,079

2,052

2,170

4.8

2,170

4.8

―

―

117

5.7

M-4

LogiSquare Urawa MisonoFeb. 201813,06012,95814,3004.3

13,900

4.4

+400

-0.1

1,341

10.4

M-5

LogiSquare Niiza

Feb. 2018

6,960

6,887

7,390

4.5

7,280

4.6

+110

-0.1

502

7.3

M-6

LogiSquare Moriya

Feb. 2018

6,157

6,088

6,640

4.7

6,630

4.7

+10

―

551

9.1

M-7

LogiSquare Kawagoe

Jul. 2019

1,490

1,502

1,570

4.6

―

―

+1,570

―

67

4.5

M-8

LogiSquare Kasukabe

Jul. 2019

4,900

4,921

5,300

4.5

―

―

+5,300

―

378

7.7

O-1

LogiSquare Tosu

Apr. 2018

2,880

2,844

3,130

4.7

3,130

4.7

―

―

285

10.0

End of 7th Period
Total/Average―

54,115

53,15657,880―50,480―+7,400

―

4,723

8.9

Newly acquired
assetsFor Reference: After Acquisition of Newly Acquired Assets(as of February 3, 2020)
M-9

Feb. 2020

8,109

―

8,580

4.2

―

―

―

―

471

5.8

M-10 LogiSquare Yashio

Feb. 2020

5,073

―

5,330

4.2

―

―

―

―

257

5.1

M-11 LogiSquare Mizuho A

Feb. 2020

2,794

―

2,940

4.4

―

―

―

―

146

5.2

M-12 LogiSquare Mizuho B

Feb. 2020

3,584

―

3,760

4.4

―

―

―

―

176

4.9

―

73,675―78,490

―

―

―

―

―

5,773

7.9

LogiSquare Soka

After acquisition of newly
acquired assets
Total/Average

Note: Based on the appraisal report with November 30, 2019 as the date of the value opinion in the case of newly acquired assets

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

45

6. Appendix

Box-type

Newly Acquired Assets M-9 LogiSquare Soka

SingleLogiSquare facility located within the Tokyo Gaikan Expressway, offering excellent
access to central Tokyo

Tokyo
Metropolitan
Area

Location

1-5-35 Aoyagi, Soka-shi, Saitama(Indication of Residential
Address)

AccessApproximately 2.9 km from
Gaikan Misato-nishi IC (Tokyo
Gaikan Expressway) andapproximately 4.5 km from
Yashio-minami IC (Misato Routeof the Metropolitan Expressway)

Structure

RC/S, 4F, alloy plated steel sheet
roof

Total floor area

28,817.59 m2

Total leasable area

29,073.87 m2

Planned acquisition
price8,109 million yen

Appraisal value

8,580 million yen

Appraisal NOI yield

4.6%

Appraisal NOI yield
after depreciation

4.1%

Completion dateJune 2013

Occupancy rate

100.0%
Basic specifications

Property Features• The property has excellent access to expressways, located approximately 2.9
km from Gaikan Misato-nishi IC (Tokyo Gaikan Expressway) andapproximately 4.5 km from Yashio-minami IC (Misato Route of the Metropolitan
Expressway) and also provides access to all major expressways via the Tokyo
Gaikan Expressway

CASBEE
SaitamaPrefecture
A rankingTokyo Gaikan Expressway
Misato Route of Metropolitan Expressway

Berth depth

Effective ceilingheightEaves 10.0 m
6.0 m• The property is located in an exclusive industrial zone inside Soka-Yashio
Industrial Park, surrounded by many warehouses and plants, enabling tenants
to operate 24 hours.

Pillar span

10.5 m x 10.0 m• The property has capacity for 34 large trucks to dock simultaneously and alsooffers 65 car parking spaces and waiting space for large trucks.

Floor loading

1.5 t/m2

Sandwich panels

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

46

6. Appendix

Box-type

Newly Acquired Assets M-10 LogiSquare Yashio

SingleLogiSquare facility located in an industrial zone whithin the Tokyo Gaikan Expressway
loop and within walking distance from a station

Tokyo
Metropolitan
Area

Location

116-2 Tsubuta-Kita, MinamiUshiroya, Yashio-shi, Saitama

AccessApproximately 3.8 km from Soka
IC (Tokyo Gaikan Expressway)
Approximately 4.0 km from
Yashio-minami IC (Misato Routeof the Metropolitan Expressway)
Approximately 1.5 km from Soka
Station (Tobu Isesaki Line)

Structure

RC/S, 4F, alloy plated steel sheet
roof

Total floor area

19,068.60 m2

Total leasable area

18,330.05 m2

Planned acquisition
price5,073 million yen

Appraisal value

5,330 million yen

Appraisal NOI yield

4.6%

Appraisal NOI yield
after depreciation

4.0%

Completion date

January 2014

Occupancy rate

100.0%
Basic specifications

Property Features• The property has excellent access to expressways, located approximately 3.8
km from Soka IC (Tokyo Gaikan Expressway) and approximately 4.0 km from
Yashio-minami IC (Misato Route of the Metropolitan Expressway) and also
provides access to all major expressways via the Tokyo Gaikan Expressway.
• The property also has an excellent location for securing labor as it is withinwalking distance (approximately 1.5 km) of Soka Station (Tobu Isesaki Line).
• The property is in close proximity to centers of production because it is locatedin an industrial region with many industrial parks in the surrounding area. It also
enjoys close proximity to Japan’s largest center of consumption, being lessthan 25 km away from central Tokyo.

Berth depth

10.0 mEffective ceilingheight

6.0 m

Pillar span

11.5 m x 9.8 m

Floor loading

1.5 t/m2

Sandwich panels

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

CASBEE
SaitamaPrefecture
A rankingTokyo Gaikan Expressway
Misato Route of Metropolitan Expressway47

6. Appendix

Low-Type

Newly Acquired Assets M-11/12 LogiSquare Mizuho A/B

BTS-Single

Tokyo
Metropolitan
Area

Mizuho A

Mizuho B

Location

896-4 etc.,
Musashino,
Hakonegasaki,
Mizuho-machi,
Nishi-Tamagun, Tokyo

896-3 etc.,
Musashino,
Hakonegasaki,
Mizuho-machi,
Nishi-Tama-gun,Tokyo

AccessApproximately 2.6 km from theOme IC (Ken-O Expressway) andapproximately 14.6 km from theHachioji IC (Chuo Expressway)

Structure

RC/S, 4F, alloy plated steel sheet
roof

LogiSquare facility suited to small-lot, high-frequency deliveries, with good access to
Ken-O Expressway and National Route 16.

LogiSquare Mizuho B

LogiSquare Mizuho A

Property Features• The property has excellent access to expressways, located approximately 2.6
km from the Ome IC (Ken-O Expressway) and approximately 14.6 km from theHachioji IC (Chuo Expressway), and National Route 16, a major expressway, isalso easily accessible (approximately 1.0 km from the property).
• The property is located in an area that enables the tenant to quickly cover
Tama and core cities in the southern part of Saitama Prefecture and, therefore,
offers an excellent location for shippers and logistics companies that need tomake small-lot, high-frequency deliveries in this area.
• LogiSquare Mizuho A and B are both BTS facilities and have been occupied by
the same tenant continuously since completion.

• The property has an eaves height of more than 10 m, enabling a range ofloading and unloading operations.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Ken-O Expressway
National Route 16
Chuo Expressway

Total floor area

13,755.16 m2

16,016.37 m2

Total leasable area

13,471.04 m2

15,708.00 m2

Planned acquisition
price2,794 million
yen3,584 million
yenAppraisal value

2,940 million
yen

3,760 million
yenAppraisal NOI yield

4.9%

4.8%

Appraisal NOI yield
after depreciation

4.2%

4.1%

Completion dateFebruary 2007

February 2007

Occupancy rate

100.0%

100.0%

Basic specifications
Berth depth
Effective ceilingheightMizuho A

Mizuho B

Eaves 12.5 m

Eaves 11.0 m

5.5 m

5.5 m

Pillar span

10.2 m x 10.2 m

Floor loading

1.5 t/m2

Sandwich panels―48

6. Appendix

High-quality Portfolio (4) Competitive Advantage of Mid-sized Facilities
Many enterprises want to share a mid-sized logistic facility with a small number of other tenants and there is strong tenant demand forthe logistics facilities developed by CRE.
Usage area per logistics base in the Tokyo
Metropolitan Area
Approximately 80% of logistics bases used byconsignors or logistics operators in the Tokyo
Metropolitan Area are less than 16,500 sq.m. in sitearea(Note 1).

1

4% 3%

Less than 3,300 sq.m.

11%
41%
21%

20%

2

3

Desirable tenant mix

Approximately 75% prefer exclusive usage offacilities with up to 2 other tenants if they are to leaselogistics facilities in the future.
Prefer multi-tenant facility(with over 3 other tenants)
25%

Respondents who prefer single-tenant facilities quoted
the flexibility in terms of usage and layout, the necessityof enhanced information management and security
system, and the availability of long-term lease contract.

Prefer exclusive usage(single-tenant facility)
24%

Over 3,300 sq.m. less than
9,900 sq.m.
Over 9,900 sq.m. less than
16,500 sq.m.
Over 16,500 sq.m. less than
33,000 sq.m.
Over 33,000 sq.m. less than
50,000 sq.m.
Over 50,000 sq.m.

Flexibility in terms ofusage and layout

Basically prefer
exclusive
usage, but accept
1 or 2 other tenants
51%

Approximately 80% of logistics bases usedhave site area less than 16,500 sq.m.

73%

Necessity of enhanced
information management
and security system

39%

Availability of long-termlease contract

38%

75% prefer single tenancy
n＝145 companies
Source: Sumitomo Mitsui Trust Research Institute Co., Ltd.

n = 655 buildings
Source: Sumitomo Mitsui Trust Research Institute Co., Ltd.

4

Reason for selecting single-tenant facilityn = 94 companies
Source: Sumitomo Mitsui Trust Research Institute Co., Ltd.

Vacancy rate per facility size in the Tokyo Metropolitan Area
Generally, logistics facilities with an area of less than 50,000 sq.m. have lower vacancy rates than multi-tenant logistics facilities with an area over 50,000 sq.m.(Note 2),
suggesting a high level of demand.
20%

Over 50,000 sq.m. multi tenant type15%

Less than 50,000 sq.m.

10%
5%
0%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: CBRE K.K
Note 1: Figures calculated based on a survey conducted by Sumitomo Mitsui Trust Research Institute Co., Ltd. from August to September 2017 (hereinafter the “Survey”) are presented. In the Survey, a questionnaire was sent to 3,022 shipping andlogistics companies, and the answers obtained from 199 companies are aggregated. Hereinafter the same applies to statements sourced by the surveys of Sumitomo Mitsui Trust Research Institute Co., Ltd. in this material.
Note 2: “Multi tenant-type” in “Vacancy rate per facility size in the Tokyo Metropolitan Area” refers to logistics facilities that were planned and designed on the premise of being used by multiple tenants at the development stage in principle.

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

49

6. Appendix

Status of Investors
Major investors(Note)

Number of investors by type of owner(Note)
Name

Number ofinvestment
units(units)Japan Trustee Services Bank, Ltd. (Trust Account)

53,75020.7

The Master Trust Bank of Japan ,Ltd. (Trust
Account)

30,92011.9

CRE, Inc.

28,790

11.1

Fukuoka Jisho Co., Ltd.

7,500

2.9

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

7,225

2.8

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

5,624

2.2

BNYM SA/NV FOR BNYM FOR BNY GCM CLIENT
ACCOUNTS M LSCB RD

5,426

2.1

Kinkisangyo Shinkumi Bank

4,380

1.7

The Bank of Yokohama, Ltd.
Mitsubishi UFJ Trust and Banking Corporation

Total

3,917

Ratio
(%)

1.5

3,896

1.5

151,42858.4

Note: As of December 31, 2019

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

Other domestic
corporations
135 persons 1.8%

Financial
institutions
42 persons 0.6%

Foreigners
50 persons 0.7%

Securities
companies
18 persons 0.2%

7,515
persons
Individuals/others
7,270 persons
96.7%

Number of investment units by type of owner
Financial institutions
Securities companies

Other domestic corporations

19.1%
49,506

48.7%
126,15419.1%
49,47510.5%
27,227At the end of the
6th period(June 30, 2019)22.0%
50,82142.8%
99,02425.2%
58,3407.7% 2.2%
17,780 5,185

At the end of the
5th period(December 31,
2018)

25.2%
58,21426.1%
60,395

6.0% 1.0%
13,984 2,325

At the end of the
4th period(June 30, 2018)21.3%
49,128At the end of the
7th period(December 31,
2019)

Individuals/others
Foreigners

41.6%
96,232
42.1%
97,21426.4%
61,122

2.7%
6,888

9.7%
0.6%
22,36
1,325
1

50

6. Appendix

IR Activities and Topics
Actively conducted IR activities to expand investor base. IR expenses are borne by the Asset Management Company not by theInvestment Corporation (excluding roadshows).
IR Activities for Institutional Investors

IR Activities for Individual Investors• Roadshow for First Capital Increase by Public Offering• Briefings for Individual Investors

July 2019
Visited 32 Japanese institutional investors• Overseas IR Activities
October 2019

September 27, 2019

Meeting to report operating results (Tokyo)

October 19, 2019

SMBC Nikko J-REIT Fair 2019 (Tokyo)

November 30, 2019

ARES TSE J-REIT Fair (Tokyo)* Unitholders only

Visited a total of 13 companies in Singapore, Hong Kong and South
Korea• Domestic IR Activities
From August to October 2019

• Other
February 2020 Posted video on TSE J-REIT View

Visited a total of 37 companies- 12 companies in Tokyo and 25
companies outside Tokyo• Roadshow for Second Capital Increase by Public Offering
January 2020
Visited 28 Japanese institutional investors

Copyright (C) 2020 CRE Logistics REIT, Inc. All Rights Reserved.

51