Mitsubishi Estate Logistics
REIT Investment Corporation
From September 1, 2023
To February 29, 2024

Independent Auditor’s Report

The Board of Directors
Mitsubishi Estate Logistics REIT Investment Corporation

The Audit of the Financial Statements
OpinionWe have audited the accompanying financial statements of Mitsubishi Estate Logistics REIT
Investment Corporation (the Company), which comprise the balance sheet as at February 29,
2024, and the statements of income, and retained earnings, changes in net assets, and cash flows
for the six month period then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as at February 29, 2024, and its financial performance and its
cash flows for the six month period then ended in accordance with accounting principles
generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company inaccordance with the ethical requirements that are relevant to our audit of the financial statements inJapan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Other Information
The other information comprises the information included in Semi-Annual Report that contains
audited financial statements, but does not include the financial statements and our auditor’sreport thereon. Management is responsible for preparation and disclosure of the otherinformation. The Supervisory Director responsible for overseeing the Company’s reporting
process of the other information.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Ernst & Young ShinNihon LLC

Responsibilities of Management, and the Supervisory Director for the Financial
Statements
Management is responsible for the preparation and fair presentation of these financial statementsin accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of financial statementsthat are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Supervisory Director is responsible for overseeing the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the financial statements is not expressing an opinion on the effectiveness of the Company’s
internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions andevents in a manner that achieves fair presentation in accordance with accounting principles
generally accepted in Japan.

Ernst & Young ShinNihon LLC

・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an opinion on the financial statements.
We are responsible for the direction, supervision and performance of the Company audit. We
remain solely responsible for our audit opinion.
We communicate with the Executive Director regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Executive Director with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements inJapan, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied to reduce threats to an acceptable level.

Fee-related Information
The fees for the audits of the financial statements of Mitsubishi Estate Logistics REIT
Investment Corporation and other services provided by us and other EY member firms for theperiod ended February 29, 2024 are 13 million yen and 2 million yen, respectively.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company whichis required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Ernst & Young ShinNihon LLC
Tokyo, JapanMay 24, 2024

柳井 浩一
Koichi Yanai
Designated Engagement Partner
Certified Public Accountant

竹之内 和徳Kazunori Takenouchi
Designated Engagement Partner
Certified Public Accountant

Ernst & Young ShinNihon LLC

BALANCE SHEET
Thousands of yen
As ofAugust 31, 2023

February 29, 2024

ASSETS
Current assets:
Cash and deposits (Notes 3, 5)
Cash and deposits in trust (Notes 3, 5)¥

4,493,995
9,263,118¥

4,328,182
9,679,179

Operating accounts receivable
Prepaid expenses

79,28430,93257,22034,470Consumption taxes receivable
Other current assets-

293,726940

13,867,331

14,393,719

Property and equipment (Notes 4, 6)
Buildings in trust (Note 12)

106,604,781

111,528,899

Less: accumulated depreciation

Total current assets
Fixed assets:(8,921,658)(10,218,655)

Buildings in trust, net

97,683,123

101,310,243

Structures in trust (Note 12)3,722,070

3,866,916(259,417)(300,683)

Less: accumulated depreciation
Structures in trust, net

3,462,653

3,566,232

Machinery and equipment in trust

218,241

224,871

Less: accumulated depreciation(71,609)(83,867)

Machinery and equipment in trust, net

146,631141,00373,298(20,833)

92,750(28,214)52,46564,535Land in trust

156,048,941

161,437,977

Total property and equipment

257,393,814

266,519,993

Other intangible assets

391

341

Total intangible assets

391

341

Tools, furniture and fixtures in trust
Less: accumulated depreciation
Tools, furniture and fixtures in trust, net

Intangible assets (Note 4)

Investments and other assets
Deferred tax assets (Note 13)14

7Long-term prepaid expenses
Security deposit

86,072
10,00079,903
10,000Total investments and other assets
Total fixed assets
Total assets¥

The accompanying notes are an integral part of these financial statements.

1

96,086

89,910257,490,292

266,610,245

271,357,624¥

281,003,965

BALANCE SHEET, continued
Thousands of yen
As ofAugust 31, 2023

February 29, 2024

LIABILITIESCurrent liabilities:
Operating accounts payable¥

Short-term loans payable (Notes 5, 11)Long-term loans payable due within one year
(Notes 5, 11)
Accounts payable

415,959¥

508,051-

5,500,000

4,780,000

4,550,000

9,979

8,000

Distributions payable
Accrued expenses

4,398
970,677

4,991
1,011,896

Income taxes payable
Consumption taxes payable

889
473,644743-

Advances received
Other current liabilities

1,323,550
2

1,379,019-

Total current liabilities

7,979,100

12,962,703

Non-current liabilities
Investment corporation bonds (Notes 5, 11)Long-term loans payable (Notes 5, 11)
Tenant leasehold and security deposits in trust(Note 5)
Total non-current liabilities
Total liabilities

4,500,000

4,500,000

93,904,000

98,499,000

5,105,246

5,397,299

103,509,246

108,396,299

111,488,347

121,359,003

NET ASSETS
Unitholders’ equity
Unitholders’ capital
Units authorized:
10,000,000 units as of August 31, 2023 andFebruary 29, 2024
Units issued and outstanding:503,485 units as of August 31, 2023 and February
29, 2024
Unitholders’ capital, gross

158,791,538

158,791,538

Deduction from unitholders’ capital(2,429,373)(2,865,895)

Unitholders’ capital, net

156,362,164

155,925,642

SurplusRetained earnings

3,507,112

3,719,319

Total surplus

3,507,112

3,719,319

Total unitholders’ equity

159,869,277

159,644,961

Total net assets (Note 10)

159,869,277

159,644,961

Total liabilities and net assets¥

The accompanying notes are an integral part of these financial statements.

2

271,357,624¥

281,003,965

STATEMENT OF INCOME AND RETAINED EARNINGS
Thousands of yen
For the fiscal period ended
August 31, 2023
February 29, 2024
Operating revenues:
Operating rental revenues (Note 7)
Other rental revenues (Note 7)
Total operating revenues
Operating expenses:
Expenses related to property rental business (Note 7)
Asset management fee
Asset custody fee
Administrative service fee
Directors’ compensation
Commission paid
Other operating expenses
Total operating expenses
Operating income
Non-operating income:Interest income
Reversal of cash distribution payable
Subsidy income
Total non-operating income
Non-operating expenses:
Interest expenses
Interest expenses on Investment corporation bonds
Borrowing related expenses
Investment corporation bond issuance expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes-current (Note 13)
Income taxes-deferred (Note 13)
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings¥¥

7,131,183
379,7937,510,976¥

7,404,991
341,045
7,746,036

2,782,852
694,940
2,170
22,675
3,200
155,166
49,6063,710,612
3,800,364

2,748,735
725,357
2,274
22,9743,600
151,227
57,1683,711,337
4,034,699

66
299
366

64
423
940
1,427

259,356
9,380
6,242
18,025
293,006
3,507,724
3,507,724
899
4
903
3,506,820
292
3,507,112

291,601
18,101
6,684
316,387
3,719,740
3,719,740
753
6
760
3,718,979
339
3,719,319¥

Yen
For the fiscal period ended
August 31, 2023
February 29, 2024
¥
6,965
¥
7,386

Net income per unit (Note 14)

The accompanying notes are an integral part of these financial statements.

3

STATEMENT OF CHANGES IN NET ASSETSFor the fiscal period ended August 31, 2023
Thousands of yen
Unitholders' equity
Surplus

Unitholders' capital
Deduction
Unitholders’fromUnitholders’capital,unitholders’capital, net
grosscapitalBalance as of March
1, 2023(Note 10)
Change during the
fiscal period
Distributions inexcess of retained
earnings
Surplus cash
distributions
Net income
Total change during
the fiscal period
Balance as of August
31, 2023(Note 10)

¥158,791,538

Unappropriatedretainedearnings¥(2,021,047) ¥156,770,490

Total unitholders' Total net assets
equityTotal
surplus¥3,432,549 ¥3,432,549¥160,203,040-(408,326)(408,326)-(408,326)(408,326)---(3,432,257)(3,432,257)(3,432,257)(3,432,257)

-

-

-

3,506,820

3,506,820

3,506,820

3,506,820-(408,326)(408,326)

74,56374,563(333,763)(333,763)¥(2,429,373) ¥156,362,164¥3,507,112¥3,507,112¥159,869,277¥159,869,277¥158,791,538-¥160,203,040

For the fiscal period ended February 29, 2024
Thousands of yen
Unitholders' equity
Surplus

Unitholders' capital
Deduction
Unitholders’fromUnitholders’capital,unitholders’capital, net
grosscapitalBalance as of
September 1, 2023
(Note 10)
Change during the
fiscal period
Distributions inexcess of retained
earnings
Surplus cash
distributions
Net income
Total change during
the fiscal period
Balance as ofFebruary 29, 2024
(Note 10)

¥158,791,538

Unappropriatedretainedearnings¥(2,429,373) ¥156,362,164

Total unitholders' Total net assets
equityTotal
surplus¥3,507,112 ¥3,507,112¥159,869,277-(436,521)(436,521)-(436,521)(436,521)---(3,506,773)(3,506,773)(3,506,773)(3,506,773)

-

-

-

3,718,979

3,718,979

3,718,979

3,718,979-(436,521)(436,521)

212,206

212,206(224,315)(224,315)¥(2,865,895) ¥155,925,642¥3,719,319¥3,719,319¥159,644,961¥159,644,961¥158,791,538

The accompanying notes are an integral part of these financial statements.

4-¥159,869,277

STATEMENT OF CASH FLOWS

Thousands of yen
For the fiscal period ended
August 31, 2023
February 29, 2024
Cash flows from operating activities:
Income before income taxes
Depreciation
Investment corporation bond issuance expenses
Interest income
Interest expenses
Interest expenses on investment corporation bonds
Reversal of cash distribution payable
Loss on retirement of fixed assets
Decrease (Increase) in accounts receivable
Decrease (Increase) in operating accounts receivable
Decrease (Increase) in consumption taxes receivable
Decrease (Increase) in prepaid expenses
Decrease (Increase) in long-term prepaid expenses
Increase (Decrease) in operating accounts payable
Increase (Decrease) in accounts payable
Increase (Decrease) in accrued expenses
Increase (Decrease) in consumption taxes payable
Increase (Decrease) in advances received
OthersSubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchases of property and equipment in trust
Proceeds from tenant leasehold and security deposits intrust
Repayments from tenant leasehold and security deposits
in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment corporation bonds
Payment of distributions of retained earnings
Payment of distributions in excess of retained earnings
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the fiscal
periodCash and cash equivalents at the end of the fiscal period(Note 3)¥¥

The accompanying notes are an integral part of these financial statements.

53,507,724
1,317,431
18,025(66)
259,356
9,380(299)(6,807)
1,427,954
2,125
13,21829,620(4,715)78,815473,6447,636(7)7,133,037
66(262,502)(983)
6,869,617¥

3,719,740
1,359,625(64)
291,601
18,101
(423)
2,401
(940)
22,064(293,726)(3,538)6,168
137,894(1,978)37,589(473,644)
55,468(2)
4,876,337
64(306,072)(899)
4,569,430(106,577)(10,533,958)

56,957304,342(5,508)(12,288)(55,128)(10,241,904)

700,000(5,130,000)
1,500,000(1,760,000)
2,481,974(3,432,007)(408,174)(6,048,207)
766,2815,500,000
9,145,000(4,780,000)(3,505,965)(436,312)
5,922,721
250,247

12,990,832

13,757,114

13,757,114¥

14,007,361

NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATIONa)

Organization
Mitsubishi Estate Logistics REIT Investment Corporation (hereinafter “MEL”) was established on July 14, 2016 under the “Acton Investment Trust and Investment Corporation” (hereinafter the “Investment Trust Law”), and acquired 1 property worth
5,400 million yen on September 29, 2016, and was listed on the REIT Securities Market of the Tokyo Stock Exchange on
September 14, 2017, with Mitsubishi Estate Co., Ltd. (hereinafter “MEC”), one of the largest comprehensive developers in Japan,
acting as a sponsor. MEL focuses on investing in logistics facilities primarily in the Tokyo Metropolitan Area. MEL is externallymanaged by a licensed asset management company, Mitsubishi Jisho Investment Advisors, Inc. (hereinafter the “Asset Manager”
or “MJIA”). As of February 29, 2024, MEL held in the form of trust beneficiary interest in 34 properties (aggregate acquisition
price: 271,082 million yen), and an occupancy rate remained 99.9% at a high level as of the end of the reporting fiscal period.

b)Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust
Law, the Japanese Financial Instruments and Exchange Act and their related accounting regulations, and in conformity withaccounting principles generally accepted in Japan (hereinafter the “Japanese GAAP”), which are different in certain respects as toapplication and disclosure requirements from International Financial Reporting Standards. The accompanying financial
statements have been reformatted and translated into English from the financial statements of MEL prepared in accordance withJapanese GAAP, and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial
Instruments and Exchange Act. In preparing these financial statements, certain reclassifications and modifications have been
made to the financial statements issued domestically in order to present them in a format which is more familiar to readers
outside Japan. As permitted by the regulations under the Financial Instruments and Exchange Act of Japan, amounts of less than
one thousand yen have been omitted. As a result, the totals shown in the accompanying financial statements do not necessarily
agree with the sums of the individual amounts. MEL’s fiscal period is a six-month period that ends at the end of February andAugust of each year. MEL does not prepare consolidated financial statements as it has no subsidiaries.

2.
a)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and cash in trust, floating deposits, deposits in trust and short-term
investments that are very liquid and realizable with a maturity of three months or less when purchased and that are subject toinsignificant risks of changes in value.
b)

Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment, including property and equipment in trust,is calculated by the straight-line method over the estimated useful lives as follows:
Buildings
2-72 yearsc)

Structures
Machinery and equipment

10-59 years
8-12 years

Tools, furniture and fixtures

3-15 years

Intangible Assets
Amortization of intangible assets, including intangible assets in trust, is calculated by the straight-line method over theestimated useful lives.
d)e)Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
Revenue Recognition

Details of the main performance obligations related to revenues arising from contracts with customers of MEL and the normal
timing at which such performance obligations are satisfied (the normal timing for recognizing revenue) are as follows.
(1) Sale of Real Estate
Revenue from sales of real estate is recognized once a buyer, who is a customer, acquires control of a relevant real estate byfulfilling an obligation of delivery stipulated in a contract for sales of real estate.
(2) Utilities Charge
Revenue from utilities charge is recognized by supplying electricity, water, etc. to lessee who is a customer based on a lease
contract for real estate, etc. and an agreement incidental thereto.
6With respect to revenue from utilities charge, in case MEL is determined as an agent, revenue is recognized at net amount by
deducting an amount to be paid to another party from an amount received as electricity and gas charges supplied from thesame other party.
f)Trust Beneficiary Interests of Real Estate
As to trust beneficiary Interests of real estate, all accounts of assets and liabilities for assets in trust as well as the related
income generated and expenses incurred from assets in trust, are recorded in the relevant balance sheet and statement ofincome and retained earnings accounts. Important line items included in accounting for financial assets and liabilities in the
MEL’s balance sheet are cash and deposits in trust, buildings in trust, structures in trust, machinery and equipment in trust,
tools, furniture and fixtures in trust, land in trust and tenant leasehold and security deposits in trust.

g)Taxes on Property and Equipment
With respect to property taxes and other taxes including city planning taxes and depreciable asset tax, of a tax amountassessed and determined, the amount corresponding to the relevant fiscal period is accounted for as rental expenses.
Of the amounts paid for the acquisitions of real estate properties or trust beneficiary interests of real estate, an amountequivalent to property taxes is capitalized as part of the acquisition costs of the relevant property instead of being charged as
an expense.

3.

CASH AND CASH EQUIVALENTS
Relationship between cash and cash equivalents in statement of cash flows and accounts and amounts in the accompanying
balance sheet are as follows:
Thousands of yen
As ofAugust 31, 2023
Cash and deposits¥

4,493,995¥

13,757,114

Cash and deposits in trust
Cash and cash equivalents

February 29, 2024¥

4,328,182¥

14,007,361

9,263,118

7

9,679,179

4.

PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment and intangible assets as of February 29, 2024 are as follows:
Thousands of yen

Type of assets

Balance as of
September 1,
2023

Increaseduring the
fiscal period

Buildings in¥106,604,781 ¥ 4,928,191
trust
Structures in
3,722,070
144,845
trust
Machinery andProperty andequipment in
218,241
6,630
equipment
trust
Tools, furnitureand fixtures in
73,29819,451
trust
Land in trust
156,048,941
5,389,036
Total property and equipment ¥266,667,333 ¥ 10,488,155
Intangible Other intangible
1,000
assetsassetsTotal intangible assets
¥
1,000
¥
-

Depreciation
Decrease Balance as of
Net balance as
Depreciation
during the February 29, Accumulatedof February Remarks
for the fiscal
fiscal period2024
29, 2024
depreciation
period
¥¥4,074 ¥ 111,528,899 ¥ 10,218,655 ¥1,298,669 ¥ 101,310,243 (Note)-

3,866,916

300,683

41,265-

224,871

83,867

12,258141,003--92,75028,214

7,381

64,535-- 161,437,977
4,074 ¥277,151,414-¥-¥10,631,421 ¥1,359,575

1,000
¥

1,000

658
¥

658

3,566,232 (Note)

161,437,977 (Note)¥266,519,993
-

50
¥

50

¥

341

-

341

-

(Note) The amount of increase during the fiscal period is primarily attributable to the acquisition of 2 properties.

5.
a)

FINANCIAL INSTRUMENTS
Overview(1) Policy for financial instruments
MEL procures funds for the acquisition of assets and repayment of debt mainly through bank loans, issuance of investment
corporation bonds or the issuance of new investment units.
In borrowing funds or issuance of investment corporation bonds, MEL takes consideration in interest rate trend, debt cost,
floating or fixed interest rate, borrowing or issuance period and repayment or redemption date.
In the case of borrowing, the lender shall be limited to qualified institutional investors as stipulated in Article 2, Paragraph
3, Item of the Financial Instruments and Exchange Act of Japan (limited to institutional investors prescribed in Article 67-15 of
the Taxation Special Measures Law), with in principle no collateral / no guarantee. However, MEL may provide assets as
collateral in consideration of financing environment and economic conditions. In addition, in order to flexibly procure thenecessary funds related to MEL's operation such as property acquisition and repayment debt financing, MEL may enter into
the overdraft agreements, commitment line agreements or conclude the reserved agreements.
In addition, aiming for long-term and stable growth, MEL will issue additional investment units while paying due regard to
the dilution of investment units, comprehensively taking into account the financial environment, MEL’s capital structure andthe impact on existing unitholders.
MEL also may invest surplus funds in bank deposits etc. for the purpose of efficiency of fund operations. MEL enters into
derivative transactions solely for the purposes of reducing risks of rising interest rates related to financings and other types ofrisks. There was no derivative transactions during the reporting period.
(2) Type of financial instruments, related risks and risk management system
Bank loans and investment corporation bonds are mainly made to procure funds for acquisition of properties, repayment
of interest bearing debt. Although MEL is exposed to liquidity risks upon repayment, by diversifying the maturities andlending institutions, securing liquidity of cash in hand and managing such liquidity risks by preparing and monitoring cash
flows projection, such risks are maintained under control. In addition, some loans bear floating interest rates and are exposed
to potential risks of rising interest rates. MEL attempts to mitigate such risks on its operations by maintaining a conservative
loan to value ratio and increasing the ratio of long-term fixed interest rate loans.
The security deposits which MEL has received from the tenants are exposed to liquidity risk due to cancelation of leaseagreement before the maturity date. In the case of trust beneficiary interest in real estate, MEL secures safety by
8

accumulating a portion in the trust account, and in the case of real estate, leasehold rights of real estate, and superficies, MEL
secures safety by accumulating a portion in bank savings account or bank time deposit account. Moreover, MEL ensuressafety by accurately tracking the timing of the tenant move-ins and outs and anticipating the fund demand utilizing historicaldata.
(3) Supplemental explanation regarding the estimated fair values of financial instruments
The fair value of financial instruments is calculated based on certain assumptions. Accordingly, the fair value of financial
instruments may differ if different assumptions are used.
b)

Estimated fair value of financial instruments
The book value, fair value and differences between the values as of August 31, 2023 are as follows: Financial instruments for“Cash and deposits”,” Cash and deposits in trust” and “Short-term loans payable” are excluded from the following table dueto the short maturities and the book value of these instruments which is deemed a reasonable approximation of the fairvalue. “Tenant leasehold and security deposits in trust” is also excluded from the following table since it is immaterial.
Thousands of yen
Book value¥

Difference

¥

¥

(1)

Long-term loans payable due within one year(2)

Investment corporation bonds

4,500,000

4,299,550(200,450)(3)Long-term loans payable

93,904,000

94,136,965

232,965

Total liabilities

4,780,000

Fair value (Note 1)¥

4,781,582¥

103,184,000

103,218,098

1,582

¥

34,098(Note1) Methods to determine fair values of financial instruments(1) Long-term loans payable due within one year and (3) Long-term loans payable
The fair value of long-term loans payable is determined based on the present value of contractual cash flows which would be applicable to
new loans payable under the same terms. In terms of floating interest rate loans payable, since it reflects the market interest rate in a shortperiod of time, the fair value is approximately equal to the book value. Thus, the book value is used
(2) Investment corporation bonds
The fair value is determined based on the reference values published by the Japan Securities Dealers Association .
(Note2) Repayment schedule for debt after August 31, 2023
Thousands of yen
As of August 31, 2023
Due within one Due after one to Due after two to Due after three Due after fouryear
two years
three years
to four years
to five years
Long-term loans payable due
within one year
Investment corporationbonds
Long-term loans payable
Total¥ 4,780,000

¥

-

-

¥

-

-

¥

-

-

¥

-

-

-

Due after fiveyears¥

4,500,000-

5,900,000

7,970,000

11,790,000

13,690,000

54,554,000¥ 4,780,000¥ 5,900,000¥ 7,970,000¥ 11,790,000¥13,690,000¥59,054,000

The book value, fair value, and differences between the values as of February 29, 2024 are as follows: Financial instruments for“Cash and deposits”,” Cash and deposits in trust”, and “Short-term loans payable” are excluded from the following table due tothe short maturities and the book value of these instruments which is deemed a reasonable approximation of the fair value.
“Tenant leasehold and security deposits in trust” is also excluded from the following table since it is immaterial.
Thousands of yen
Book value(1)Long-term loans payable due within one year(2)

Investment corporation bonds(3)Long-term loans payable
Total liabilities¥

4,550,000

Fair value (Note 1)¥

4,500,000
107,549,000

Difference¥

4,295,950

98,499,000¥

4,552,807(204,050)

98,736,848¥

107,585,605

2,807
237,848¥

36,605(Note 1) Methods to determine fair values of financial instruments(1) Long-term loans payable due within one year and (3) Long-term loans payable
The fair value of long-term loans payable is determined based on the present value of contractual cash flows which would be applicable9

to new loans payable under the same terms. In terms of floating interest rate loans payable, since it reflects the market interest rate in ashort period of time, the fair value is approximately equal to the book value. Thus, the book value is used.
(2) Investment corporation bonds
The fair value is determined based on the reference values published by the Japan Securities Dealers Association.
(Note 2) Repayment schedule for debt after February 29, 2024
Thousands of yen
As of February 29, 2024
Due within one Due after one to Due after two to Due after three Due after fouryear
two years
three years
to four years
to five years
Long-term loans payable due
within one year

¥ 4,550,000

Investment corporation
Long-term loans payable

6.

-

-

bonds
Total

¥

-

¥

-

¥

-

-

¥

-

-

Due after fiveyears¥

4,500,000-

8,320,000

9,890,000

13,590,000

10,963,000

55,736,000¥ 4,550,000¥ 8,320,000¥ 9,890,000¥ 13,590,000¥10,963,000¥60,236,000

INVESTMENT AND RENTAL PROPERTIESMEL owns logistics facilities for leasing for the purpose of earning rental income. The book value, changes during the reporting

period, and fair value of the properties are as follows:
Thousands of yen
For the fiscal period ended
August 31, 2023
February 29, 2024
Book value (Note 1)
Balance at the beginning of the fiscal period¥

258,429,311

Balance at the end of the fiscal period¥

Fair value at the end of the fiscal period (Note 3)¥

Changes during the fiscal period (Note 2)¥

257,393,814

257,393,814¥

266,519,993

300,755,000¥

311,142,500(1,035,497)

9,126,178(Note 1) Book value is measured at deducting accumulated depreciation from acquisition cost.
(Note 2) The increase for the fiscal period ended August 31, 2023 was primarily a result of capital expenditure, which amounted
to 281,884 thousand yen. The decrease was primarily a result of the recognition of depreciation, which amounted to1,317,381 thousand yen. The increase for the fiscal period ended February 29, 2024 was primarily a result of acquiring
Real estate trust beneficiary interests for a total of 9,842,379 thousand yen. The decrease was primarily a result of therecognition of depreciation, which amounted to 1,359,575 thousand yen.
(Note 3) The fair value at the end of each fiscal period is determined based on appraised value provided by independent realestate appraisers.
Income and loss in connection with investment and rental properties are disclosed in “7. PROPERTY-RELATED REVENUES AND
EXPENSES.”

10

7.

PROPERTY-RELATED REVENUES AND EXPENSES
The following table summarizes the revenues and expenses generated from property leasing activities for the fiscal periods

ended August 31, 2023 and February 29, 2024 .
Thousands of yen
For the fiscal period ended
August 31, 2023
February 29, 2024
A. Property-related revenues
Operating rental revenues
Rental revenues
Common area charges
Total
Other rental revenues
Received utilities cost
Others
Total
Total property-related revenues
B. Property-related expenses
Rental expenses
Facility management fee
Property and other taxes
Insurance
Repair and maintenanceUtilities cost
Depreciation
Custodian fee

¥
¥
¥
¥
¥

¥

6,871,518
259,665
7,131,183¥

256,208
123,584
379,7937,510,976¥

330,761
725,760
9,070
120,710249,183
1,317,381
5,772¥

Othersa)¥

220,481
120,564
341,045
7,746,036¥¥

284,571725,410
9,237
118,512
216,693
1,359,575
6,308

24,211

Total rental expenses
C. Operating income from property leasing (A-B)
8.

7,148,465
256,525
7,404,991¥¥

2,782,852
4,728,123

28,425¥¥2,748,735
4,997,300

REVENUE RECOGNITION
Breakdown information on revenue from contracts with customers
The previous period (the fiscal period from March 1, 2023 to August 31, 2023)
Thousands of yen
Revenue from contracts withcustomers
Revenue from utilities charge¥

Net sales to external customers

256,208

Others

¥

Total

¥

256,208
7,254,767

256,208¥

7,510,976(Note1) Rental business revenue, etc. subject to ASBJ Statement No. 13, "Accounting Standard for Lease Transactions," and transfersof real estate, etc. subject to ASBJ Statement No. 15, "Practical Guidance on Accounting Practical Guidelines for Real Estate
Securitization Utilizing Special Purpose Companies," are not included in the above amounts because they are exempt fromthe revenue recognition accounting standard. Revenues from contracts with major customers consist of revenues from utilities.
(Note2) Received utilities cost is the amount recorded as revenues based on the supply of electricity, water, etc. to lessees who are
customers, based on the lease agreements for real estate, etc. and associated agreements.
The reporting fiscal period (the fiscal period from September 1, 2023 to February 29, 2024)
Thousands of yen
Revenue from contracts withcustomers
Revenue from utilities charge

Net sales to external customers¥

220,481¥

220,481

Others¥Total

220,481
7,525,555¥

7,746,036(Note1) Rental business revenue, etc. subject to ASBJ Statement No. 13, "Accounting Standard for Lease Transactions," and transfersof real estate, etc. subject to ASBJ Statement No. 15, "Practical Guidance on Accounting Practical Guidelines for Real Estate11Securitization Utilizing Special Purpose Companies," are not included in the above amounts because they are exempt fromthe revenue recognition accounting standard. Revenues from contracts with major customers consist of revenues from utilities.
(Note2) Received utilities cost is the amount recorded as revenues based on the supply of electricity, water, etc. to lessees who are
customers, based on the lease agreements for real estate, etc. and associated agreements.
b)

Basic information for understanding revenue from contracts with customers
As stated in “2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES”.

c)

Information on relationship between fulfillment of performance obligations based on contracts with customers and cash
flow generated from said contracts, and on amount and fiscal period of revenues expected to be recognized in thefollowing fiscal period or thereafter from contracts with customers existing at the end of the current fiscal period.
(1) Balance of contract assets and contract liabilities, etc.
Thousands of yen
For the fiscal period from For the fiscal period fromMarch 1, 2023 to
September 1, 2023 toAugust 31, 2023
February 29, 2024
Claims generated from contracts with customers(balance at beginning of the fiscal period)¥

61,050Claims generated from contracts with customers(balance at end of the fiscal period)¥

65,07565,07546,941

Contract assets (balance at beginning of the fiscal period)--

Contract assets (balance at end of the fiscal period)--

Contract liabilities (balance at beginning of the fiscal period)--

Contract liabilities (balance at end of the fiscal period)

¥

-

¥

-

(2) Transaction price allocated to the remaining performance obligations
Not applicable.
Received utilities cost is recognized at the amount that MEL has the right to claim in accordance with Paragraph 19 of the“Accounting Standard Guidance for Revenue Recognition”, as MEL is entitled to receive from the customers the amount ofconsideration that directly corresponds to the value to the tenants who are the customers for the portion of performancecompleted by the end of the period. Accordingly, MEL has applied the provisions of paragraph 80-22(2) of the "AccountingStandard for Revenue Recognition" and has not included them in the notes to the transaction price allocated to its remaining
performance obligations.
9.

LEASES
The future minimum rental revenues from tenants subsequent to each fiscal period end under the non-cancelable operatingleases of properties are as follows:
Thousands of yen
As of
Due within one year
Due after one year¥

August 31, 2023
12,807,530
76,560,192

Total

¥

89,367,723

12February 29, 2024¥
13,669,072
89,024,393¥

102,693,465

10. NET ASSETSa) Stated Capital
MEL issues only non-par value units in accordance with the Investment Trust Law. The entire amount of the issue price of newunits is designated as stated capital. The Investment Corporation is required to maintain net assets of at least 50,000 thousand
yen as required by the Investment Trust Law.
b)Distributions
Yen
For the fiscal period ended
August 31, 2023

I. Unappropriated retained earnings

February 29, 2024

¥ 3,507,112,901

II. Distributions in excess of retained earnings
Deduction from unitholders’ capital
III. Distributions(Distributions per unit)
Of which, distributions of retained earnings(Of which, distributions in retained earnings
per unit)
Of which, distributions in excess of retained
earnings(Of which, distributions in excess of retained
earnings per unit)
IV. Retained earnings carried forward¥¥ 3,719,319,242

436,521,495

350,425,560

3,943,294,520(7,832)

4,069,669,255(8,083)3,506,773,025

3,719,243,695(6,965)(7,387)436,521,495

350,425,560

(867)

(696)

339,876¥

75,547

Pursuant to the “Policy on the Distribution of Funds” as defined in Article 35, Paragraph 1 of the Articles of Incorporation, theamount of distributions shall be the amount which does not exceed the amount of profits but exceeds 90% of the distributableprofit as defined in Article 67-15 of the Special Taxation Measures Act. Based on the policy, MEL declared distribution amount of
3,719,243,695 yen. This amount was equivalent to the maximum integral multiples of number of investment units issued andoutstanding (503,485 units) as of the end of fiscal period. Based on the distribution policy as defined in Article 35, Paragraph 2 of
the Articles of Incorporation, MEL shall make Surplus Cash Distributions (SCD) aiming for 30% depreciation expenses, defined as
distributions in excess of retained earnings, as a return of unitholders’ capital, each fiscal period on a continuous basis.
Accordingly, MEL declared SCD of 350,425,560 yen as a return of unitholders’ capital, which was the amount equivalent toapproximately 25.8% of depreciation expense for the purpose of maintaining the stability of its distributions from temporaldecrease in property related expenses.

1311. INTEREST-BEARING DEBTa) Short term loans and Long-term loans payable
Short-term and long-term loans payable consisted of bank borrowings under loan agreements. The following tablesummarizes the short-term loans payable and long-term loans payable as of August 31, 2023 and February 29, 2024.
Thousands of yen
As ofClassification

Short-term loans payable

Repayment date
September 19,
2024
September 30,
2024

Weightedaverage
August 31, 2023
interest rate
0.1286%-¥ 2,100,000

0.1301%-3,400,000

September 2, 2023
September 14,
2023

0.2500%¥¥ 3,000,000¥ 5,500,000¥-

0.3913%

1,330,000-

September 1, 2024
September 14,
2024
October 9, 2024

0.2000%450,000-

1,150,000

0.4288%-900,000

0.1800%0.2000%¥ 4,780,000¥ 1,150,000

1,250,000
1,250,000¥ 4,550,000¥-

0.4288%900,000-

0.1800%0.2663%

1,250,000
1,250,000
1,350,000
1,500,000
300,000
800,000

1,350,000
1,500,000
300,000
800,000

0.4675%620,000

620,000

October 25, 2025

0.3950%0.2160%0.2413%0.2217%800,000
200,000
750,000
2,000,000

800,000
200,000
750,000
2,000,000

March 1, 2026

0.2200%

September 1, 2026

0.3125%0.2500%1,000,000
500,000
500,000

0.5075%710,000

710,000

October 9, 2026

0.4538%0.2600%

October 25, 2026

0.3300%500,000
2,400,000
400,000
1,000,000
2,880,000

500,000
2,400,000
400,000
1,000,000
2,880,000

March 1, 2027

0.2500%March 9, 2027
September 14,
2027

0.3663%2,000,000
900,000

0.5500%1,340,000

1,340,000

1,340,000
880,000
880,000

1,340,000
880,000
880,000

Total short-term loans payable

Long-term loans payable due within one year

Total Long-term loans payable due within one year
September 1, 2024
September 14,
2024
October 9, 2024
March 9, 2025
September 1, 2025

September 14,
2025
October 9, 2025

Long-term loans payable
September 14,
2026

14

0.2100%0.2000%¥February 29,
2024

1,000,000
500,000
500,000

2,000,000
900,000

Classification

October 9, 2027
October 25, 2027

0.2400%0.5563%

March 1, 2028
March 9, 2028

0.4575%0.4313%

March 19, 2028
September 1, 2028

0.3963%0.4238%

Repayment date
September 14,
2028

September 29,
2028

Weightedaverage August 31, 2023
interest rate
830,000

830,000

0.3738%807,000
1,256,000
720,000

807,000
1,256,000
720,000

0.7638%-300,000

750,000
1,000,000
500,000
500,000

300,000
300,000
300,000
750,000
1,000,000
500,000
500,000

0.4200%0.6575%0.5263%1,000,000
1,000,000
500,000
500,000
Long-term loans payable

February 29,
2024

0.5750%0.2858%October 10, 2028
October 25, 2028
March 1, 2029

1,250,000
1,250,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
500,000
500,000
900,000
900,000
800,000
800,000
800,000
800,000
900,000
900,000
500,000
500,000
Thousands of yen
As of

1,000,000
1,000,000
500,000
500,000
1,000,000

March 9, 2029

0.5013%

March 19, 2029
September 1, 2029
September 14,
2029
September 30,
2029
October 25, 2029

0.4663%0.4182%

1,000,000
500,000
500,000
500,000
1,000,000
1,750,000

0.4400%1,491,000

1,491,000

0.4900%4,000,000

4,000,000

0.7625%1,000,000

1,000,000

March 1, 2030

0.5662%

March 9, 2030
August 30, 2030

0.5549%0.4683%0.5000%1,000,000
1,050,000
2,000,000
500,000
500,000

0.9825%-1,330,000

0.8375%1,000,000

1,000,000

September 14,
2030
December 1, 2030
March 1, 2031

150.6340%1,000,000
500,000

500,000
500,000
500,000
1,000,000
1,750,000

1,000,000
1,050,000
2,000,000
500,000
500,000

1,000,000
500,000

March 7, 2031
September 4, 2031
September 29,
2031
October 25, 2031

0.6176%1.0400%1,000,000-

1,000,000
3,000,000

1.1275%-500,000

0.9513%

December 1, 2031

0.9379%3,000,000
1,000,000
2,000,000
2,000,000

3,000,000
1,000,000
2,000,000
2,000,000

March 1, 2032

0.7025%2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000

0.5000%0.6975%1,000,000

2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000

September 1, 2032
September 14,
2032
September 29,
2032

0.3817%2,000,000
1,500,000

1.2075%-450,000

1.2213%-500,000

October 25, 2032
December 1, 2032

1.0438%1.0238%1,000,000
1,000,000

300,000
1,000,000
1,000,000

1,500,000

Thousands of yen
As ofClassification

Repayment date
December 1, 2032
March 9, 2033
September 29, 2033

Weighted-averageinterest rate
1.0238%0.6500%1.3213%

Total long-term loans payable

August 31, 2023

¥
¥

Total

February 29, 2024

1,000,000
1,000,000
93,904,000
98,684,000¥¥

1,000,000
1,000,000
865,000
1,000,000
98,499,000
108,549,000

The stated interest rate is the weighted average interest rate during each fiscal period. The redemption schedules for longterm loans payable subsequent to August 31, 2023 and February 29, 2024 are disclosed in “5. FINANCIAL INSTRUMENTS”.
b)

Short-term investment corporation bonds and Long-term investment corporation bonds
The following table summarizes the Short-term investment corporation bonds and Long-term investment corporation bonds

as of August 31, 2023 and February 29, 2024 .

Maturity
Classification
Total Short-term investment corporation bonds
Series 1

Interest rate

April 14, 2036

0.7000%

Series 2

July 25, 2033
Total Long-term investment corporation bonds

Thousands of yen
As ofAugust 31, 2023
February 29, 2024
¥

-

¥

-

¥

2,000,000¥

2,000,000

0.9000%2,500,000¥

16

4,500,000

2,500,000¥

4,500,000

12. REDUCTION ENTRY
The amount of reduction entry of property and equipment as of August 31, 2023 and February 29, 2024 are as follows:
Thousands of yen
As of
Buildings in trust
Structures in trust

August 31, 2023¥¥

17

31,22022,166

February 29, 2024¥
31,220¥22,166

13. INCOME TAXESMEL is subject to Japanese corporate income taxes on its taxable income. The tax effects of temporary differences that give rise
to a significant portion of the deferred tax assets and liabilities as of August 31, 2023 and February 29, 2024 are as follows:
Thousands of yen
As ofEnterprise tax payable
Total deferred tax assets
Net deferred tax assets

August 31, 2023
¥

14
14
14

¥

February 29, 2024
¥

7
7
7

¥

Reconciliations of major items that caused differences between the statutory tax rate and effective tax rate with respect to pretax income reflected in the accompanying statements of income for the fiscal periods ended August 31, 2023 and February 29,
2024 are as follows:
For the fiscal period ended
August 31, 2023
February 29, 2024
31.46%
31.46%

Statutory tax rate
Adjustments:
Deductible cash distributions
Other
Actual effective income tax rate

(31.45%)
0.02%
0.03%

(31.46%)
0.02%
0.02%

MEL has a policy of making cash distributions of earnings in excess of 90% of distributable income as defined in the Special
Taxation Measures Act for the fiscal period to qualify for conditions, as set forth in the Special Taxation Measures Act, to achieve a
deduction of cash distributions for income tax purposes. Based on this policy, MEL treated the cash distributions of earnings as atax deductible distribution as defined in the Special Taxation Measures Act.
14. PER UNIT INFORMATION
The following table summarizes per unit information for the fiscal periods ended August 31, 2023 and February 29, 2024.
Yen
For the fiscal period ended
August 31, 2023
February 29, 2024
Net income per unit
Basic net income per unit¥

Weighted average number of units outstanding

6,965
503,485¥7,386
503,485

Net assets per unit¥
317,525¥
317,079(Note) Basic net income per unit is based on the weighted average number of units issued and outstanding during the
fiscal period. Diluted earnings per unit and related information are not disclosed as no dilutive units were
outstanding.
15. TRANSACTION WITH RELATED PARTIESa)

Transactions and account balances with the parent company and major unitholders
There were no transactions and account balances for the fiscal periods ended August 31, 2023 and February 29, 2024.

b)Transactions and account balances with affiliates
There were no transactions and account balances for the fiscal periods ended August 31, 2023 and February 29, 2024.

c)Transactions and account balances with companies under common control
There were no transactions and account balances for the fiscal periods ended August 31, 2023 and February 29, 2024.

d)Transactions and account balances with board of directors and individual unitholders
There were no transactions and account balances for the fiscal periods ended August 31, 2023 and February 29, 2024.
18

16. SEGMENT AND RELATED INFORMATION(For the fiscal periods ended August 31, 2023 and February 29, 2024)a)

Segment information
Disclosure is omitted because the real estate leasing business is MEL’s sole business and it has no reportable segment subject

to disclosure.
b) Related information(1) Information by geographic region(i) Operating revenues
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues
on the statement of income and retained earnings.
(ii) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounts for over 90% of theamount of property and equipment on the balance sheet.
(2) Information by each major customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenues
on the statement of income and retained earnings.
17. SIGNIFICANT SUBSEQUENT EVENTS
Disposition of the property
MEL has decided to dispose the following property on March 29, 2024.
Property Name

MJ Logipark Sendai 1

Category

Logistics Facilities

Location

Tagajo, Miyagi(Anticipated) Disposition Dates(Note 1)（51.0% of co-beneficiary interest）(Anticipated) Disposition Prices(Note 2)

①5,100 million yen

Estimated Book Values(Note 3)
Estimated Gain/Loss on
Disposition (Note 4)①April 10, 2024

②September 3, 2024
（49.0% of co-beneficiary interest）

10,000 million yen②4,900 million yen

7,094 million yen①3,630 million yen②3,463 million yen

2,754 million yen①1,392 million yen②1,361 million yen

Appraisal Value (Note 5)

7,850 million yen

Buyer

Not disclosed (Note 6)

Date of Sale and Purchase
Agreement

March 29, 2024

(Note 1) “(Anticipated) Disposition Dates” indicates an anticipated disposition date described in sale and purchase agreement pertaining to theProperty to be disposed (the “Sale and Purchase Agreement”). Note that the Anticipated Disposition Date is subject to change as agreed upon
between MEL and the buyer.
(Note 2) “(Anticipated) Disposition Prices” indicates the sale prices of the Property to be disposed stated in the Sale and Purchase Agreement,rounded down to the nearest million yen and does not include national or local consumption taxes or expenses which will be incurred in connection
with the disposition.
(Note 3) “Estimated Book Values” shows the estimated book values of the co-beneficiary interest in the Property to be disposed on each (Anticipated)
Disposition Date and the total amount. It may fluctuate.
(Note 4) “Estimated Gain/Loss on Disposition” calculated by deducting Estimated Book Values and estimated expenses related to the sale from
(Anticipated) Disposition Prices on each (Anticipated) Disposition Date and the total amount. It may fluctuate.
(Note 5) “Appraisal Value” shows the appraisal value stated on the real estate appraisal report with the price as of February 29, 2024. The appraisal
was conducted by Japan Real Estate Institute.
(Note 6) Not disclosed as consent has not been obtained.

19Remuneration Policy for the Asset Manager’s Directors, Corporate Auditors and Employeesi) Remuneration for the Asset Manager’s Directors• Remuneration decision process. Remuneration for directors is determined by the representative director
upon consultation with the Board of Directors within the total remuneration limit for directors approvedat the General Meeting of Shareholders.
• Remuneration amount. Remuneration of each director is determined by the representative director basedon the remuneration table, which assigns responsibilities and position to each director. The
responsibilities and position of each director are determined by the representative director throughcomprehensive assessment that includes each individual’s abilities and experience.
• Bonus. Depending on corporate performance, bonuses may be paid to directors upon resolution of theBoard of Directors.

ii) Remuneration for the Asset Manager’s Corporate Auditors• Remuneration decision process. Remuneration for corporate auditors is determined at the General Meetingof Shareholders.
• Remuneration amount. Remuneration of each corporate auditor is determined through comprehensive
assessment that includes each individual’s abilities and experience.
• Bonus. No bonus will be paid to corporate auditors.

iii) Remuneration for the Asset Manager’s Employees• Remuneration system based on skill development. The Asset Manager’s salary system is based on thelevel of each employee’s professional skills. In order to motivate employees to improve theirperformance and develop their professional skills, the Asset Manager has (i) a performance-based bonus
system that rewards the employee based on the performance of the Asset Manager as well as theemployee’s performance taking into account the employee’s contribution to the performance of the AssetManager and the employee’s work ethic, and (ii) a performance evaluation and promotion system that
evaluates once a year whether to increase the employee’s remuneration and/or to promote the employee,in each case based on the employee’s performance and work ethic.

• Evaluation of employees based on ESG criteria. All employees are evaluated once a year on their ESG
awareness, including compliance and risk management awareness, and the results of this evaluation aretaken into consideration when determining salary increases.

• Retirement allowance program. The Asset Manager offers a defined contribution pension plan as well
as a retirement plan, with an aim to create a comfortable workplace where employees will want to work
for a long period of time.

• Executive officer’s remuneration. Remuneration for executive officers is determined by the
representative director in accordance with the policy for executive officers.

Remuneration for the Asset Manager’s Directors and Corporate Auditors
April 1, 2023 to March 31, 2024
Directors

Remuneration basedon resolutions of theGeneral Meeting of
Shareholders

Corporate auditors

Total

Number of
person(s)remunerated

Remuneration

Number of
person(s)remunerated

Remuneration

Number of
person(s)remunerated

Remuneration

4¥71,550,000

2¥1,200,000

6¥72,750,000

Notes: 1. Remuneration for directors is as per the Companies Act of Japan, Article 361, Paragraph 1, Item 1.
2. The Asset Manager had four directors (one director served as a part-time role) and two corporate auditors (part-time) as of February 29, 2024.

Remuneration for the Asset Manager’s Employees
April 1, 2023 to March 31, 2024

All employees (Note 1)
Remuneration
Number of employees

Remuneration based oncompensation rules

127

Total

Fixed

Variable (Note 2)¥1,298,248,333¥869,958,468¥428,289,865

Note: 1. Total number of employees of the Asset Manager who received remuneration during the fiscal year, excluding 20 employees dispatched fromseveral companies, to which the Asset Manager paid ¥228,670,916 in total for their services for the fiscal year.
2. Variable remuneration refers to bonuses paid to employees, as described in “iii) Remuneration for Asset Manager’s Employees” above.

There are potential conflicts of interest between Mitsubishi Estate Logistics REIT Investment Corporation (“MEL”) and theAsset Manager with respect to remuneration for the Asset Manager’s directors, corporate auditors and employees. We
believe that the above remuneration policy mitigates such potential conflicts. In addition, the Asset Manager has adopted aninternal set of rules that apply to all related-party transactions, such as transactions between MEL and the Asset Manager.
These rules require strict compliance by the Asset Manager with laws and regulations regarding related-party transactions.
They also contain specific procedures to be followed in the event of a transaction that involves a related party, in order toimplement arm’s length terms.

Information Required under Article 22(2)(d) of the EU Alternative Investment FundManagers Directive (AIFMD)• Material Changes in Information Listed in Article 23 of AIFMD during the Financial Period Coveredby the Report (Fiscal period ended February 29, 2024 (September 1, 2023 to February 29, 2024))
None.

Risk Factors
An investment in the units of MEL involves significant risks. The principal risks with respect to investment in MEL
are as follows.
The principal risks with respect to investment in MEL are as follows:

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Any adverse conditions in the Japanese economy and the rest of the world could adversely affect MEL’s
business and results of operations;
MEL’s strategy of mainly investing in logistics facilities may entail risks uncommon to other J-REITs thatinvest in a broader range of real estate or real estate-related assets;
Tightening monetary policies by the United States and other major countries, including recently announced
switch to tightening monetary policy by Japan, may result in increased market interest rates in Japan andreduced cash distributions;
MEL may not close any or all of MEL’s anticipated acquisitions or dispositions of properties in connection
with acquisitions or dispositions MEL plans to make;
Increases in prevailing market interest rates could increase MEL’s interest expense and may result in a decline
in the market price of MEL’s units;
MEL faces significant and increasing competition in attracting tenants and it may be difficult to retain existing
tenants or find replacement tenants without reducing rents or incurring additional costs;
MEL may not be able to acquire properties to execute MEL’s growth and investment strategy in a manner thatis accretive to earnings;
MEL’s reliance on Mitsubishi Estate Co., Ltd. and the Mitsubishi Estate Group companies could have amaterial adverse effect on its business;
MEL expects to rely on certain properties for a significant portion of its rental revenues;
The past experience of the Mitsubishi Estate Group in the Japanese real estate market is not an indicator or
guarantee of MEL’s future results;
The Asset Manager manages multiple REITs and property funds and there are potential conflicts of interest
between MEL and other property funds managed by the Asset Manager;
There are potential conflicts of interest between MEL and certain Mitsubishi Estate Group companies,
including the Asset Manager;
Any inability to obtain financing for future acquisitions or refinance MEL’s existing debt could adversely
affect the growth of MEL’s portfolio or financial condition;
MEL may suffer large losses if any of its properties incurs damage from a natural or man-made disaster, acts ofviolence or war, or ancillary economic restrictions;
Most of the properties in MEL’s portfolio are concentrated in the Tokyo metropolitan area and the Osaka
metropolitan area;
Security breaches and other disruptions could compromise MEL’s information and expose us to liability, which
could cause its business and reputation to suffer;
MEL’s portfolio contains certain properties located on reclaimed land, which is subject to unique risks,
including land liquefaction;
Most of the logistics facilities in MEL’s current portfolio and anticipated portfolio cater to a single tenant or asmall number of tenants and are typically designed for a specific use, which may make it difficult to findsubstitute tenants;
Illiquidity in the real estate market may limit MEL’s ability to grow or adjust MEL’s portfolio;
MEL’s policy to make distributions to its unitholders in excess of its retained earnings is subject touncertainties;
A high loan-to-value ratio, or LTV, may increase MEL’s exposure to changes in interest rates and have amaterial adverse effect on its results of operations;
A downgrading of MEL’s credit rating may affect its ability to refinance or newly issue investment corporation
bonds;
MEL relies on expert appraisals and engineering, environmental and seismic reports, which are subject tosignificant uncertainties;
MEL’s performance depends on the efforts of key personnel of the Asset Manager;
MEL’s failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify
it from certain taxation benefits and significantly reduce its distributions to its unitholders;
MEL’s properties for which third parties hold leasehold interests in the land and own the buildings thereupon
may subject it to various risks;••Some of the properties MEL owns or that it may acquire in the future may be held in the form of a property ortrust beneficiary co-ownership interest, and its rights relating to such properties may be affected by theintentions of other owners; andMEL is subject to increasing scrutiny from certain investors and regulations with respect to environmental,social and governance matters, which may adversely affect its ability to market its units and increase its
compliance costs.

In addition, MEL is subject to the following risks:

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risks related to liquidity and other limitations on MEL’s activities under debt financing agreements;
risks related to unforeseen loss, damage or injury suffered by a third party at MEL’s properties;risks related to investment in Japanese anonymous association (tokumei kumiai);
risks related to interests in some properties through preferred shares of Japanese special companies (tokutei
mokuteki kaisha);risks related to entering into forward commitment contracts to acquire properties;risks related to any future borrowings or issuances of investment corporation bonds;
risks related to impairment loses in connection with MEL’s properties;risks related to decreases in tenant leasehold deposits and/or security deposits;risks related to MEL’s lack of control over operating costs;
risks related to loss of rental revenues in certain events;
risks related to certain lease agreements at multi-tenant properties;risks related to MEL’s cost of complying with regulations applicable to the properties MEL owns or intends toacquire;risks related to any property defect or non-conformity;risks related to reliance on industry and market data;risks related to violation of earthquake resistance standards or other building codes;
risks related to the environmental assessments of MEL’s properties made prior to MEL’s ownership;
risks related to climate change;risks related to no legal, regulatory or market definition of, or standardizes criteria for, what constitutes a“green,” “sustainable” or other equivalently labeled asset or framework;
risks related to unitholders’ limited control over changes in MEL’s investment policies;
risks related to MEL’s dependence on the performance of service providers;risks related to investment in properties with rooftop solar panels;risks related to the Asset Manager’s limited experience in investing in and operating industrial properties andland with leasehold interests for existing industrial facilities;risks related to properties outside of Japan;
risks related to tight supervision by the regulatory authorities against J-REITs and their asset managers;
risks related to disagreement by the Japanese tax authorities with the interpretations MEL used to determine
MEL’s taxable income for prior periods;
risks related to not being able to benefit from reductions in certain real estate taxes enjoyed by qualified JREITs;
risks related to changes in Japanese tax laws;
risks related to the treatment as a “passive foreign investment company” for U.S. federal income tax purposes;
risks related to the unitholders’ being subject to U.S. Foreign Account Tax Compliance Act withholding;risks related to the possibility of being declared invalid or limited of MEL’s ownership rights in some of its
properties;risks related to loss of MEL’s rights in a property it owns or intends to acquire;risks related to holding properties through trust beneficiary interests;
risks related to important differences regarding the rights of unitholders in a J-REIT compared to those ofshareholders in a corporation;risks related to AIFMD, UK AIFMD and ERISA;
risks related to future sales of units by MEL’s major unitholders;risks related to daily price range limitations imposed by Tokyo Stock Exchange;risks related to the Bank of Japan’s policy to buy J-REIT units;risks related to appraisal NAV of MEL’s units;risks related to geopolitical instability;
risks related to sharp rise in oil, electricity, water and other commodity prices;••

risks related to instability in the global financial system; andrisks related to uncertainty in the Bank of Japan’s policy as well as the effects of its policy on prevailing market
interest rates.

Periodic disclosure for financial products referred to in Article 8, paragraphs 1, 2 and 2a, of Regulation (EU)2019/2088 and Article 6, first paragraph, of Regulation (EU) 2020/852
Product name: Mitsubishi Estate Logistics REIT Investment Corporation
Legal entity identifier: 353800YYSGZU31ICQK38
Mitsubishi Estate Logistics REIT Investment Corporation (“MEL”) promotes environmental and social
characteristics, but does not have as its objective a sustainable investment within the meaning of Article 9(1)of Regulation (EU) 2019/2088. MEL has no employees in accordance with the prohibition on having
employees under the Act on Investment Trusts and Investment Corporations of Japan and relies on.
Mitsubishi Jisho Investment Advisors, Inc. (the “Asset Manager”), to manage and operate the properties in
MEL’s portfolio. The Asset Manager and MEL are hereinafter referred to collectively as “we,” “us” or“our” unless noted otherwise. In addition, any “fiscal year” or “FY” hereinafter refers to the fiscal year
beginning on April 1 of such year and ending on March 31 of the following year.
Environmental and/or social characteristics
Did this financial product have a sustainable investment objective?
☐ Yes

☒ No

☐ It made sustainable investments with ☐ It promoted Environmental/Social (E/S)
characteristics andan environmental objective: ___%
while it did not have as its objective a sustainable
investment, it had a proportion of ____% of sustainable☐ in economic activities that qualify
investments
as environmentally sustainable
under the EU Taxonomy☐ with an environmental objective in economic
activities that qualify as environmentally sustainable☐ in economic activities that do notunder the EU Taxonomy
qualify as environmentally
sustainable under the EU☐ with an environmental objective in economic
Taxonomy
activities that do not qualify as environmentally
sustainable under the EU Taxonomy☐ with a social objective☐ It made sustainable investments with ☒ It promoted E/S characteristics, but did notmake any
a social objective: ____%
sustainable investments

To what extent were the environmental and/or social characteristics promoted by MEL met?
Headed by our sponsor, Mitsubishi Estate Co., Ltd. (“Mitsubishi Estate” and collectively with its
consolidated subsidiaries and affiliates, the “Mitsubishi Estate Group”), the Mitsubishi Estate Group, towhich we belong, implements initiatives on the four key themes of Environment, Diversity & Inclusion,
Innovation and Resilience. Pursuant to the Mitsubishi Estate Group’s long-term management vision,
Mitsubishi Estate Group Sustainable Development Goals 2030, the Mitsubishi Estate Group is working tocontribute to achieving a sustainable society by addressing environmental, social and governance, or ESG,
issues while providing significant and growing value to a wider range of stakeholders.
We follow the Mitsubishi Estate Group’s ESG management principles, and we proactively
implement ESG initiatives. Following its establishment of an ESG policy in February 2019, the AssetManager, in collaboration with the Mitsubishi Estate Group, has implemented the following ESG initiatives.
Our ESG policy includes our basic policy on how we can contribute to the environment, improve our work
environment, ensure effective compliance and governance, achieve transparent ESG disclosure andcollaborate with each stakeholder on ESG matters.

MEL does not have a specific index designated as a reference benchmark to determine whether
MEL is aligned with the environmental and/or social characteristics that it promotes.

●•

Environmental initiatives – climate change response. We implement energy-saving measuresand take steps to reduce greenhouse gas emissions in MEL’s portfolio. Towards these ends, wehave installed LED lighting and rooftop solar panels in MEL’s properties along with
implementation of renewable energy. We also track energy consumption, solar power
generation and greenhouse gas (“GHG”) emission levels in MEL’s portfolio. Furthermore, we
display posters that raise awareness on energy-saving measures in common areas of MEL’s
properties.

•

Environmental initiatives – water and waste management. We seek to reduce water
consumption by installing devices and appliances such as water meters, water-efficient toilets
and smart irrigation systems. We also track water consumption and the recycling rate in MEL’s
properties. Moreover, we strive to reduce waste in cooperation with tenants by promoting 3R(reduce, reuse and recycle) waste programs.

•

Environmental initiatives – environmental certification of MEL’s properties. To track theenvironmental performance of MEL’s properties, we rely on certifications issued by third-party
organizations, such as the Development Bank of Japan’s (“DBJ”) Green Building certification,
the Comprehensive Assessment System for Built Environment Efficiency (“CASBEE”)
certification, the Building Energy-efficiency Labeling System (“BELS”) certification, and otherequivalent certifications.

•Social initiatives – tenants. We endeavor to improve tenant health, safety and comfort byundertaking renovation work in response to varying needs, and by expanding tenant support
services to help serve such needs. We have established restaurants and convenience stores on
our premises and installed amenities such as shower rooms and multipurpose restrooms. MEL’s
properties are also equipped with disaster-relief vending machines, secure reserves containing
food and beverage in case of emergency, and automated external defibrillators (”AED”).

•

Social initiatives - local communities. We build and maintain good relations with local residents,
governments and other community members by providing and ensuring a pleasant and safe
environment. We support local communities in the event of disasters by providing MEL’s
properties as municipality-designated disaster evacuation sites. We also participate incommunity service activities such as community clean-up events with local residents.

•

Social initiatives – employee satisfaction. We are committed to respecting the fundamental
rights and diversity of our employees, and we endeavor to establish an environment that
supports a healthy work-life balance. To help achieve these goals, we have introduced flexible
working hours, a defined contribution pension plan and various leave programs that are tailoredto varying needs and circumstances.

•

Social initiatives – human resources development. The Asset Manager develops humanresources with extensive expertise and know-how by offering various training programs, on
topics such as compliance, human rights, risk management and sustainability. We also
encourage employees to pursue professional qualifications that assist them in honing their skills
as real estate asset management professionals, and we subsidize the costs required to obtain andmaintain such qualifications.

How did the sustainability indicators perform?
We use the following indicators to measure the attainment of the E/S characteristics we promote:•Environmental initiatives – reduction of GHG emissions. We aim to reduce GHG emissions
by 42% by FY2030 and to achieve net zero by FY2050 from a base year of FY2021. Weclassify our annual GHG emissions into three categories: scope 1, scope 2 and scope 3. Inthe fiscal period ended February 29, 2024, as a part of our ongoing implementation ofenvironmental initiatives, we installed LED lighting to properties in MEL’s portfolio as
needed. As a part of these initiatives, we have introduced RE100, meaning 100% ofelectricity used is generated from renewable energy, at MJ Logipark Sendai 1.
•

Environmental initiatives – reduction of energy consumption intensity. We aim to reduceenergy consumption intensity by 15% by FY2030 from a base year of FY2017. We classify
our annual energy consumption into two categories: gas and fuel consumption, andelectricity consumption. In addition to tracking our energy consumption levels, we also
track our renewable energy production, as well as our energy consumption intensity, thelatter of which decreased by 15.0% from FY2020 to FY2021 and by 1.4% from FY2021 to
FY2022. In the fiscal period ended February 29, 2024, as a part of our ongoing
implementation of environmental initiatives, we installed LED lighting to the properties in
MEL’s portfolio as needed.

•

Environmental initiatives – water management. We have set a target not increasing ourwater consumption level until FY2030 from a base year FY2017. In addition to tracking
our water supply usage, we also track our water consumption intensity, the latter of which
decreased by 10.8% from FY2020 to FY2021 and by 5.2% from FY2021 to FY2022. In
the fiscal period ended February 29, 2024, as a part of our ongoing water management
initiative, we engaged in reducing our water consumption by introducing automated water
meter reader, water-saving toilets and smart irrigation equipment.

•

Environmental initiatives – waste management. We aim to achieve a recycling rate of 70%
or higher by FY2030. The recycling rate was 62.3% in FY2021 and 70.2% in FY2022,
respectively. In addition to tracking our recycling rate, we also track the amount of waste
discharged by weight. In the fiscal period ended February 29, 2024, as a part of our ongoing
waste management initiative, we continued to install our thorough waste recycling
management system at each property in MEL’s portfolio.

•

Environmental initiatives – environmental certification of MEL’s properties. We have set
a target of achieving a portfolio of which 100% constitutes “Green Buildings” by FY2030.
We consider a property to be a Green Building if it receives a CASBEE certification, a
BELS certification or a DBJ Green Building certification. As of August 31, 2023 andFebruary 29, 2024, 91.4% and 96.5% of MEL’s properties, respectively, were Green
Buildings based on gross floor area. In the fiscal period ended February 29, 2024, as a partof our ongoing environmental initiatives, we continued improving environmental
performance of MEL’s properties and obtaining environmental certificates at MEL’s
properties by enhancing energy efficiency and utilizing renewable energy.

•

Social initiatives – tenants. We conduct surveys on a regular basis to measure satisfaction
among MEL’s tenants. These surveys are conducted either in person or in the form of aquestionnaire. These surveys help formulate future measures that will help improve tenant
health, safety and comfort, and inform our decision-making on a day-to-day basis. For
example, as a result of these surveys, we have introduced thermal cameras and AEDs in
Logicross Nagoya Kasadera and LOGIPORT Sagamihara, as well as measures to prevent
damage to property caused by birds in Logicross Nagoya Kasadera, MJ Logipark Fukuoka
1 and some others. In addition, we consider and integrate the tenants’ needs and feedbacks
in renovations of MEL’s properties. We conducted a separate survey among the tenants in
MJ Logipark Fukuoka 1 before renovating the lounge. Based on the results of this survey,
we installed amenities such as large TVs, microwave ovens and free Wi-Fi in the lounge
area, and we also redesigned the layout of the lounge area to facilitate individual use. We
conducted tenant satisfaction surveys during the fiscal periods ended February 28, 2024, of
which results showed 92.3% of MEL’s tenants were satisfied or moderately satisfied with
its facilities. Moreover, we have continuously improved MEL’s properties in order toenhance tenants’ satisfaction. In the fiscal period ended August 31, 2023, we implemented
the following measures.
Property Name
MJ Logipark Fukuoka 1

MeasureDistribution of food and beverages to tenants’
employees in an attempt to reduce food waste

In the fiscal period ended February 29, 2024, we implemented the following measures.
Property Name
Logicross Nagoya Kasadera●

MeasureInstallment of wind speed curtain in the smoking
room•

Social initiatives - local communities. We assess our performance in this area by looking at
the frequency with which we implement community service programs and activities suchas community clean-up events around MEL’s properties with local residents and aroundour office with local workers, and the designation by municipalities of MEL’s properties
as disaster evacuation sites such as disaster cooperation building and tsunami evacuationbuilding. In the fiscal period ended February 29, 2024, the Asset Manager participated in
the “LOOP Marunouchi” craft beer project (for which Mitsubishi Estate was the sponsor),
serving craft beer which was made with food that had been stockpiled for natural disasters
and was about to expire and be discarded.

•

Social initiatives – employee satisfaction. We conduct a survey to measure employee
satisfaction on an annual basis and strive to increase our ratio of female managers, which
stands at 16.7% as of April 1, 2023. Furthermore, we set a goal to increase the proportionof female managers to at least 30% by FY 2030. From January 2024 to February 2024, we
hired a third party survey agency and conducted an employee satisfaction survey on an
anonymous basis, of which results showed 77% of our employees were satisfied ormoderately satisfied with overall working conditions at the Asset Manager. As a part of ourongoing initiatives to improve employee satisfaction and communications with us, we
encourage one-on-one check-ins between employees and their managers and conduct
monthly survey on employee conditions, which we call condition pulse survey, and annualinterview with the human resources department. As a measure to combat and eliminate
workplace harassment, we provide annual training on harassment prevention to promotebetter understanding of workplace harassment and reporting policies among ourmanagement and employees, and to help create workplace environment where everyone
can feel safe and comfortable while performing their job. In FY2022, we held our annual
training on harassment prevention in August 2022. Furthermore, we continuously work tokeep our employees informed and up-to-date on the Asset Manager’s code of conduct
guidelines, the “interpretation about code of conducts to implementing MJIA values,”
which contributes to forming common enterprise value among our employees. We held atraining on this code of conduct guidelines in August 2022. Moreover, we have set anannual target of 90% of paid leave to be taken by our employees. In addition to tracking
the rate of employees taking paid leave, we also track our employee turnover rate and ourrate of employees returning to work after taking childcare leave, the latter of which standat 5.9% and 80.0% for FY2022, respectively.

…and compared to previous periods?
See above.

●

What were the objectives of the sustainable investments that the financial product partially madeand how did the sustainable investment contribute to suchobjectives?

Not applicable.
●

How did the sustainable investments that the financial product partially made notcause significant
harm to any environmental or social sustainable investment objective?
Not applicable.

How did this financial product consider principal adverse impacts on sustainability factors?
We consider principal adverse impacts of our investment decisions on sustainability factors. To thisend, we collect on an ongoing basis select information on our existing portfolio regarding the principal
adverse impact indicators, including exposure to fossil fuels through real estate assets, exposure to energyinefficient real estate assets and energy consumption intensity. We aim to manage the risk connected toprincipal adverse impacts from our investment decisions in several ways, including general screening criteria
and due diligence.
•

Exposure to fossil fuels through real estate assets. MEL does not invest in real estate assets
involved in the extraction, storage, transport or manufacture of fossil fuels.

•

Exposure to energy-inefficient real estate assets. We consider properties other than those that
we consider to be Green Buildings to be energy-inefficient. As of February 29, 2024, 3.5% of
MEL’s properties were not Green Buildings based on gross floor area, as compared to 8.6% asof August 31, 2023. We implement as appropriate measures to reduce their environmental
impact following acquisition, including by obtaining environmental certifications such as DBJ
Green Building, BELS or CASBEE. We are steadily working toward acquiring suchcertifications so that 100% of MEL’s logistics properties will be Green Buildings.

•

Energy consumption intensity. Energy consumption intensity of the properties in MEL’s
portfolio was 38.49 kWh/m2 in FY2021 and 37.95 kWh/ m2 in FY2022.

We believe that investment decisions that negatively affect climate or other environment-relatedresources, or have negative implications for society, can have a significant impact on and present risks tounitholder value. To this end, we consider the principal adverse impacts of our investment decisions on theabove sustainability factors to be a key factor in making a comprehensive investment decision and in the
management process throughout the lifecycle of the properties in MEL’s portfolio.
We consider, both at the entity-level (i.e., the Asset Manager) and at the fund-level (i.e., MEL),
principal adverse impacts of our investment decisions on sustainability factors. Under the Investment Trust
Act of Japan, we are prohibited from having any employees and are required to outsource the asset
management function to a third party. Accordingly, as discussed in detail elsewhere, any consideration at
the fund-level of principal adverse impacts of our investment decisions on sustainability is principally
conducted by the Asset Manager, subject to approval of our Board of Directors. In addition to the AssetManager’s contractual obligations to us under the asset management agreement, the Financial Instruments
and Exchange Act of Japan provides that the Asset Manager owes us a fiduciary duty in conducting its
activities, including making investment decisions informed by sustainability considerations.
What were the top investments of this financial product?
Largest investments

Sector

Logistics facilities
OthersReal estate
Real estate% Assets(based on acquisition price)
93.9%
6.1%

Country
Japan
Japan

What was the proportion of sustainability-related investments?
As of August 31, 2023, 91.4% of the properties in the portfolio were Green Buildings, and 8.6%
were nonqualified assets based on gross floor area. As of February 29, 2024, 96.5% of the properties in theportfolio were Green Buildings, and 3.5% were nonqualified assets based on gross floor area. In the fiscal
period ended February 29, 2024, we continued improving environmental performance of MEL’s properties
and obtaining environmental certificates at MEL’s properties by enhancing energy efficiency and utilizing
renewable energy. Our target is to achieve a portfolio of which 100% (excluding properties where MEL
owns only the underlying land) constitutes Green Buildings by FY2030, and we plan to further increase thenumber of such assets by continuing to acquire Green Building certifications for the buildings in MEL’s
properties.
●

What was the asset allocation?

96.5% is #1 Aligned with E/Scharacteristics#1B Other E/S characteristics

Investments of MEL
3.5% qualifies as #2 Other●

In which economic sectors were the investments made?

We aim to build a stable and long-lasting portfolio through selective investments in highly
competitive logistics facilities that meet tenant needs. It is our policy for logistics facilities to make up atleast 80% of MEL’s portfolio, and for other types of properties related to or compatible with logistics
facilities to make up no more than 20% of MEL’s portfolio based on acquisition price. It is also our policy
for properties located in the Tokyo metropolitan area (which consists of Tokyo, Kanagawa, Saitama, Chiba
and Ibaraki prefectures) to make up at least 50% of MEL’s portfolio, and for properties located elsewhere in
Japan to make up no more than 50% of MEL’s portfolio based on acquisition price.
To what extent were the sustainable investments with an environmental objective aligned with the EU
Taxonomy?
Not applicable.
●

Did the financial product invest in fossil gas and/or nuclear energy related activities complying
with the EU Taxonomy?
No. MEL does not invest in real estate assets involved in fossil gas and/or nuclear energy-related
activities.

● What was the share of investments made in transitional and enabling activities?
Not applicable.
●

How did the percentage of investments that were aligned with the EU Taxonomy compare withprevious reference periods?
Not applicable.

What was the share of sustainable investments with an environmental objective not aligned with the EU
Taxonomy?
Not applicable.
What was the share of socially sustainable investments?

Not applicable.
What investments were included under “other,” what was their purpose and were there any minimum
environmental or social safeguards?
As of August 31, 2023, 8.6% of MEL’s properties were not Green Buildings based on gross floor
area. As of February 29, 2024, 3.5% of MEL’s properties were not Green Buildings based on gross floor
area. The Asset Manager’s investment decision-making process involves assessment of material ESG-relatedrisks and opportunities to ensure that our sustainable investment strategy is implemented. ESG-related risks
that are assessed include risks pertaining to earthquakes, flooding, soil contamination and hazardous
substances. With each acquisition opportunity, the Asset Manager and we review ESG-related due diligence
findings and take into account the acquisition of environmental certifications or future potential to obtainthem and energy efficiency assessment.
As we invest by comprehensively taking into account various factors including E/S, we may acquire
properties that are not Green Buildings in exceptional cases. However, with respect to logistics properties,
we have confirmed through due diligence that such properties are still ESG-conscious because we regularly
acquire properties from the Mitsubishi Estate Group, which emphasizes ESG considerations in its investment
strategy. When we acquire a logistics property that is not a Green Building, we implement appropriate
measures to reduce the environmental impact following acquisition.
What actions have been taken to meet the environmental and/or social characteristics during thereference period?
As described in greater detail above, we implement various environmental initiatives at MEL’s
properties including the following:••••

Reduction of GHG emissions;
Reduction of energy consumption intensity;
Water and waste management; andEnvironmental certification of MEL’s properties.

As described in greater detail above and our website, we implement various social initiatives at
MEL’s properties including the following:
•
•
•
•
•
•

Tenant satisfaction;
Contribution to local communities;
Employee satisfaction;
Human resource development;
Diversity and inclusion; andHuman rights.

How did this financial product perform compared to the reference benchmark?
Not applicable. No specific index has been designated as reference benchmark to determine whether
MEL is aligned with the environmental and/or social characteristics that it promotes●

How does the reference benchmark differ from a broad market index?
Not applicable.

●

How did this financial product perform with regard to the sustainability indicatorsto determine thealignment of the reference benchmark with the environmental or social characteristics
promoted?
Not applicable.

●How did this financial product perform compared with the reference benchmark?
Not applicable.

●

How did this financial product perform compared with the broad market index?
Not applicable.

Note Regarding the EU Taxonomy Regulation
As set out above, we promote certain environmental characteristics.
The Asset Manager is required, under Regulation (EU) 2020/852 (the “EU Taxonomy Regulation”),
to disclose whether its assets are aligned with the environmental objectives formulated in the EU Taxonomy
regulation. The EU Taxonomy Regulation is to be complemented by technical standards and screening
criteria. The technical screening criteria for the first two environmental objectives (climate change mitigationand climate change adaptation) were adopted in December 2021 and amended in June 2023. The amended
criteria apply as of January 1, 2024. The technical screening criteria for the other four environmental
objectives (sustainable use and protection of water and marine resources, transition to a circular economy,
pollution prevention and control, and protection and restoration of biodiversity and ecosystems) wereadopted in June 2023. They apply as of January 1, 2024.
MEL invests in economic activities that are eligible under the EU Taxonomy Regulation in respectof climate change mitigation and/or climate change adaptation. This means that screening criteria for theseinvestments have been or will be developed. The Asset Manager expressly states that in view of the fact thatthe regulations are still under development or have only recently been adopted and/or amended and the fact
that, as a result thereof, data on alignment of our investments with these environmental objectives and climate
related goals in line with EU Taxonomy Regulation are not sufficiently available, the Asset Manager is not
currently in a position to disclose on an accurate and reliable basis to what extent our investments technicallyqualify as Taxonomy-aligned or “environmentally sustainable” within the specific meaning of the EU
Taxonomy Regulation. MEL’s investments may have a positive contribution to these environmental
objectives and may therefore eventually be considered Taxonomy-aligned, but at this stage, the AssetManager is required to state that there is no minimum proportion of our investments that qualify as such.
The Asset Manager further states that the “do no significant harm” principle applies only to thoseinvestments underlying the financial product that takes into account the EU criteria for environmentally
sustainable economic activities. The investments underlying the other portion of this financial product do
not take into account the EU criteria for environmentally sustainable economic activities.