SEMIANNUAL REPORTFiscal Period Ended February 29, 2020

Financial Highlights
for the Fiscal Period Ended February 29, 2020

Distributions Per Unit
(JPY)

Operating Revenues(JPY millions)

5,907

3,200

Net Income(JPY millions)Credit Rating

1,632

JCR AA(Stable)

Portfolio Size
(JPY millions)Average Occupancy

113,787

99.9%

Loan-to-Value Ratio(Forecasted 2020/8)

Average Debt Cost(Long-term Debt)

29.4%

0.39%

SEMIANNUAL REPORT

1

Message from the Management

Dear Fellow Unitholders,
We are pleased to present our Seventh Fiscal Period Semiannual Report of Mitsubishi Estate Logistics REIT Investment Corporation (MEL).
We would like to take this opportunity to express our heartfelt appreciation to all of our unitholders for supporting MEL.
On February 29, 2020, we concluded our seventh fiscal period. With the solid operational performance, MEL reported sound financial results for the fiscal period. Ouroperating revenues of 3,200 million yen and net income of 1,632 million yen were both in line with our original forecast. Accordingly, our distributions per unit, including
the surplus cash distributions (SCD), was 5,907 yen, which exceeded the forecast by 1.2 percent. These results were attributable to stable portfolio management.
During the reporting fiscal period, we completed our second follow-on offering and successfully raised 20.1 billion yen of capital including overallotment. With theproceeds and debt financing, we acquired one sponsor-developed property, LOGIPORT Osaka Taisho, and four properties (MJ Logipark Tsuchiura 1, MJ Logipark
Nishinomiya 1, MJ Logipark Kasugai 1 and MJ Industrial Park Sakai (Land)) that were sourced by the asset management company, Mitsubishi Jisho Investment Advisors, Inc.
(MJIA), totaling 30.5 billion yen. These acquisitions embody our HYBRID external growth. With this offering and disciplined acquisition, we achieved accretion on both
distributions per unit (DPU) and net asset value (NAV) per unit. As a result, as of the end of the reporting fiscal period, our portfolio size has grown to 113.7 billion yen.
We maintained an extremely high average occupancy of 99.9 percent and our rents continued to grow. For the 19,000 square meters of leases that were renewed orre-tenanted during the fiscal period under review, we achieved upward rent revision in 88 percent, and achieved strong 2.5 percent rent growth in such rent revisions, withweighted average rent growth of 2.2 percent on a nominal weighted average basis. This marks the fourth consecutive period of growth since our listing. Also, for the leaseagreements expiring in the fiscal period ending August 2020, we expect to achieve upward rent revision for 93% of the total 21,000 square meters, with a rent growth of
10.4% for the increasing portion, and 9.5% growth on a weighted average nominal basis. Despite the current COVID-19 situation, for the leases expiring in the fiscal
period ending February 2021, we have already signed leases for 69% of lease agreements and all tenants agreed to increase rents. We feel the impact of COVID-19 will
have both positive and negative impact depending on the industries. As the expression “nesting consumption” shows, demand is shifting from dining out and shopping at
retail stores to online shopping at home. We believe B2C needs for consumer goods are increasing. We believe strong needs for logistics will continue but will closely
monitor the trends and needs going forward.
As for the debt side, 94.4 percent of our debt is long-term fixed interest rate debt with diversified maturities against the increasing uncertainties in the market. This means we have hedged against the interest rate volatility risks.
Also, our remaining debt duration is 5.7 years with the debt cost of 39 basis point. Our loan-to-value (“LTV”) ratio is forecasted to be 29.4% at the end of the fiscal period ending August 31, 2020. We will continue to maintainthe LTV ratio at a conservative level and preserve a stable financial structure going forward.
As for ESG, MEL is committed to endeavoring to enhance consideration towards the environment, social contributions and corporate governance to improve the sustainability of society. We recognize that this is an importantsocial responsibility for a listed enterprise to assume, and also believe that it is essential for maximizing our unitholder value. MEL continues to proactively pursue green building certifications where possible. We are proud that
our ESG efforts have been recognized by a third-party assessment provider. For example, we have participated in the 2019 GRESB Real Estate for the first time and have been awarded the high “4-star” rating and theprestigious “Green Star” rating. Also, in March 2020, MJIA has become a signatory to the Principles for Responsible Investment. Furthermore, our sponsor, Mitsubishi Estate Co., Ltd. (“MEC”), announced the “Sustainable
Development Goals 2030” in January 2020. To put our commitment into practice based on the above recognition MEL strives to invest in environmentally friendly logistics facilities, and will continue to focus on maximizing theenergy efficiency of our properties, as well as contribution actions to the local communities.
Looking forward, we will endeavor to maximize our unitholder value by growing both externally and internally through HYBRID model and follow our management policy, “Three Pillars.” We will also fully take advantage of thegood relationships the MEC has cultivated with corporate customers over many years through office and commercial facilities businesses. Furthermore, we will utilize the strength of MJIA, which boasts an extensive track recordthat dates back to our founding in 2001. MJIA has a proven track record in structuring and managing various types of real estate funds including the largest private REIT in Japan. By combining the strengths of MEC and MJIA,
we will continue to pursue both internal and external growth opportunities with the expansion in e-commerce and the third-party logistics (3PL) market, as the need for logistics facilities continues to grow in Japan.
We sincerely appreciate your continued support of MEL and the Mitsubishi Estate Group and look forward to reporting our further progress in the months and years ahead.

Masaki Sakagawa
Executive Director
Mitsubishi Estate Logistics REIT Investment Corporation
Executive Vice President, General Manager,
Logistics REIT Management Department of Mitsubishi Jisho Investment Advisors, Inc.

S E M I A N N U A L

R E P O RT

2

Our Strength“HYBRID” Style and Focus on Sponsor’s Pipeline

Development / Facilities Management

Investment / Asset Management

SponsorOverview

Asset Management Company

Dedicated to city development in the Marunouchi
area (Tokyo) for over 120 years

Established in 2001, when the scheme of realestate securitization was emerging in Japan

Contributing to society through a variety ofbusiness activities as a comprehensive real estatedeveloper

Its track record includes structuring and managing
various types of real estate funds, such as thelargest private REIT in Japan

Overview

Promoting the logistics facility business as a
growth area

Proven track records in a variety of asset types ininvestment and asset management

Constant supply of pipeline properties through development /operation of advanced logistics facilities

SupportUnique property sourcing capacity with discerning
judgement

Utilization of MEC group’s know-how and corporate customer
relations in the leasing activities

SupportFormulation of capital market-oriented long-term management
plan to promote recycling business in domestic asset businessand to expand AUM consistently in non-asset businesses

S E M I A N N U A L

R E P O RT

Flexible and diverse acquisition strategy using a wide
range of schemes, including bridge funds
Competitive real estate fund management capability
backed by a diverse deal track record3Our Portfolio

Logicross Fukuoka Hisayama

Logicross Atsugi

Acquisition price JPY 5,770 million DBJ Green Building ★★★★

Acquisition price JPY 8,440 million BELS★★★★★

Acquisition price JPY 1,272 million BELS

Occupancy rate

Occupancy rate

S Rank for Real Estate

Occupancy rate

100.0%

100.0%

MJ Logipark Kazo 1
CASBEE

MJ Logipark Osaka 1★★★★★

Acquisition price JPY 6,090 million

Occupancy rate

100.0%

100.0%

Newly Acquired Property

Logicross Kobe Sanda

LOGIPORT Sagamihara (49% beneficiary interest ratio)

MJ Logipark Fukuoka 1
Acquisition price JPY 6,130 million

Acquisition price JPY 3,900 million BELS★★★★

Acquisition price JPY 21,364 million CASBEE

Occupancy rate

A Rank for Real Estate

Occupancy rate

100.0%CASBEES Rank for Real Estate

Acquisition price JPY 18,200 million BELS★★

Occupancy rate

S Rank for Real Estate

99.9%

CASBEE

100.0%

Acquisition price JPY 3,133 million

Occupancy rate

100.0%

99.7%

Newly Acquired Property

LOGIPORT Hashimoto (45% beneficiary interest ratio)

Occupancy rate

MJ Logipark Tsuchiura 1

Newly Acquired Property

LOGIPORT Osaka Taisho (20% beneficiary interest ratio)

MJ Logipark Nishinomiya 1

Acquisition price JPY 5,682 million

Acquisition price JPY 2,483 million

Occupancy rate

99.9%

Occupancy rate

Newly Acquired Property

MJ Logipark Kasugai 1
100.0%

Acquisition price JPY 13,670 million CASBEE A Rank for New Construction Aichi
Occupancy rate

100.0%

Newly Acquired Property

MJ Logipark Funabashi 1
Acquisition price JPY 5,400 million

Occupancy rate

MJ Logipark Atsugi 1
100.0%

Acquisition price JPY 6,653 million

Occupancy rate

15 properties worth
113.7 billion yen

MJ Industrial Park Sakai (Land)100.0%S E M I A N N U A L

Acquisition price JPY 5,600 million

R E P O RT

4

Occupancy rate

100.0%HYBRID External Growth■ Capability to develop logistics facilities
independently based on extensive land
information■ Capability to co-develop facilities backed by
MEC’s development ability and credibility

Logicross

MJ Logipark

Brand of logistics facilities that MEC
develops throughout Japan

Properties which MEL acquired or intends toacquire from 3rd parties

Sponsor-developed properties with expected
preferential negotiation right■ Capability to assess properties backed by experience incontinuously acquiring properties from 2001
■ Flexible and diversified property acquisition strategy byleveraging the capability to manage real estate funds

MJIA-sourced and operated properties withexpected preferential negotiation right

MEC Group

Bridge Fund・3rd Party Bridge
Newly Added Properties

Occupancy
100%

Occupancy
100%

Occupancy
100%

Occupancy
100%

Occupancy
100%

Logicross Yokohama Kohoku

Logicross Atsugi II

Logicross Hasuda (tentative name)

Logicross Osaka

Logicross Nagoya Kasadera

LOGIPORT Kawasaki Bay(16,000 m2)
Completed in FY 2019 (Independently)(35,000 m2)
Completed in FY2019 (Independently)(79,000 m2)
To be completed in FY2020(36,000 m2)
Completed in FY2018 (Jointly)(72,000 m2)
Completed in FY2018 (Independently)(296,000 m2)
Completed in FY2019 (Jointly)

Occupancy
100%

Saitomoegi Logistics Facilities Project B Saitomoegi Logistics Facilities Project A(tentative name)(tentative name)(31,000 m2)
To be completed in FY2021(123,000 m2)
To be completed in FY2021

Occupancy
99.9%

CRE/
Newly Announced

Occupancy
100%

Logicross Kasukabe (tentative name)

Logicross Narashino

LOGIPORT Osaka Taisho

MJ Logipark Kazo 2 (tentative name)(38,000 m2)
To be completed in FY2021(39,000 m2)
Completed in FY2017 (Independently)(117,000 m2)
Completed in FY2017 (Jointly)(7,000 m2)
Completed in FY1998

Occupancy
100%

15 properties 1,137,000 ㎡

Other multiple projects

Logicross Funabashi (tentative name)

Logicross Zama (tentative name)

MJ Logipark Sendai 1(23,000 m2)
To be completed in FY2021(183,000 m2)
To be completed in FY2023(36,000 m2)
Completed in FY2008

Note: As of Apr. 17, 2020

S E M I A N N U A L

R E P O RT

5

Our Portfolio and Acquisition Pipelines

Tokyo Metropolitan Area
Property Acquired in the 7th FP
SapporoCurrent Assets

Gunma

TochigiTohoku Expressway

Pipeline Assets

Joban Expressway

Head Office / Branches of the Sponsor
MJ Logipark Kazo2*

Kan-etsu Expressway

MJ Logipark Sendai 1

MJ Logipark Tsuchiura 1
Ibaraki

MJ Logipark Kazo 1

Sendai

Logicross Hasuda*

MJ Logipark Kasugai 1
Logicross Nagoya Kasadera

SaitamaTokyo

Logicross Kasukabe*

Logicross Fukuoka Hisayama

Ken-o Expressway

MJ Logipark Fukuoka 1

NagoyaOsaka

Hiroshima

Fukuoka

Tokyo-Gaikan
Expressway

Yokohama

Tokyo

Osaka Metropolitan Area
Chugoku Expressway

Logicross Funabashi*

Logicross Kobe Sanda

Sanyo Expressway

Chuo Expressway

Saitomoegi Logistics Facilities Project*

LOGIPORT Hashimoto
LOGIPORT Sagamihara

Osaka International Airport
Daini Keihan Expressway

Meishin Expressway
Kobe Port

Logicross Zama*

Osaka Port
Kobe Airport

MJ Logipark Atsugi 1

Osaka
Kinki Expressway

Logicross Atsugi

LOGIPORT Osaka Taisho
MJ Logipark Osaka 1

Kanagawa

MJ Industrial Park Sakai (Land)

Hanshin Expressway

Nara

Kansai International Airport* Tentative nameNote: As of Apr. 17, 2020

S E M I A N N U A L

R E P O RT

6

Tomei
Expressway

Metropolitan Expressway
Bayshore Route

Logicross Narashino

Tokyo Ryutsu CenterTokyo International Airport(Haneda Airport)

Logicross Yokohama Kohoku

Logicross Atsugi II

Logicross Osaka

Osaka Branch

MJ Logipark Funabashi 1

Tokyo Port

Shin-Meishin Expressway

MJ Logipark Nishinomiya 1

Hyogo

Head Office

LOGIPORT Kawasaki Bay
Kawasaki Port
Yokohama Port

Yokohama Branch

Chiba

NaritaInternational
AirportHYBRID Internal Growth Strategy

Rent Revision (Based on leased area)■ Upward rent revision■ Rent unchanged

FP 2018/8(4th FP)

43%

57%

FP 2019/2(5th FP)■ Undecided

11,000 m 2

4%

96%

62,000 m 2

Average Rent
GrowthAverage Rent Growthof Increased Portion

+1.8%

+3.2%

+0.2%

Average occupancy rate

99.9

+3.4%

%

Fixed-term lease rate
FP 2019/8(6th FP)40%

FP 2020/2(7th FP)88%

FP 2020/8(8th FP)(Forecasted)

12% 19,000 m 2

7% 21,000 m 2

93%

FP 2021/2(9th FP)(Forecasted)

40,000 m 2

60%

69%

6%

0

25%

+3.1%

+6.8%

+2.2%

+2.5%

100.0

+9.5%

+10.4%

Weighted averagelease expiry

6.5

22,000 m 2

15,000%years

65,000 (m 2)40,00069% contracted

Tenant Data
Tenant Diversification (Based on leased area)

Type of Cargo (Based on leased area) (Note)
0.6%

Daily Necessities

63.7%

6.4%

15.9%

■ IHI Infrastructure Systems

7.4%■ Sankyu

7.1%
38.5%

■ Kimura Unity■ MITAKA SOKO

5.7%
5.4%
3.4%
4.3%
4.8%

5.1%
5.0%
4.9%

■ Mitsubishi Estate■ S.V.D.

83.0 %

17.0%■ Household Goods■ BtoC■ Food and Drink■ BtoB■ Pharmaceuticals and Medical Devices

12.0%■ Home Appliances and Precision Equipment■ Fukuoka Logistic System■ KDDI

BtoC

32.9%

9.9%

■ Sun City Building■ Honda Logicom

Delivery Destination (Based on leased area) (Note)■ Raw / Component Materials

3.6%

27.2%

■ Others■ Clothing■ Furniture and Home Goods■ Others

Note: Excludes land

S E M I A N N U A L

R E P O RT

7

83.0%

Financial Strategy

Financial Highlights

Our Lenders
1.1%

Long-term Debt Ratio

94.4

%

Fixed Interest
Rate Ratio

94.4

4.1 3.4
4.8 % %%

Average Remaining
Debt Duration(Long-term Debt)

%

29.1%

5.5%

5.7

5.6%

years

Total Debt Balance
JPY

8.0%

36.47
billion

19.9%

18.5%

Average Debt Cost(Long-term Debt)

0.39%

Credit Rating

JCR:

AA-

(Stable)Debt Capacity (up to 40%)

Debt Capacity (up to 50%)

Approx.

Approx.

21.0

JPY

JPY

billionLoan-to-Value Ratio(Forecasted 2020/8)

29.4%■ MUFG Bank, Ltd.

■ Shinkin Central Bank

■ Mizuho Bank, Ltd.

■ Shinsei Bank Limited■ Sumitomo Mitsui Banking Corporation■ Development Bank of Japan■ The Bank of Fukuoka, Ltd.

■ The Shinkumi Federation Bank

■ The Norinchukin Bank

■ The 77 Bank, Ltd.

Debt Maturity Schedule

50.0(mn yen)

10,0008,000

billion

6,000

Preparation for Bond Issuance

4,000

MEL filed the shelf registration for issuance of Investment corporation bonds.

• Diversification of financing method• Further expansion of investor base
• Reinforcement of credit

2,000

0

S E M I A N N U A L

R E P O RT

8

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

(year)

ESG Initiatives

Sustainability Policy
MEL promotes initiatives for ESG, in collaboration with the Asset Management Company and theSponsor, following the basic policies as below:

Signing of PRI
Asset Management Company became a signatory of PRI, the Principles
for Reasonable Investment, in March 2020.

1

Pursue energy efficiency and low carbon

2

Improve water resource management and waste management

GRESB Assessment

3

Enhance tenant safety, security and satisfaction

4

Empower our people

MEL participated in the 2019 GRESB Real Estate Assessment for the firsttime and was awarded the prestigious “Green Star” rating and received“4 Star” rating.

5

Collaborate with external stakeholders

6

Disclose ESG information and obtain environmental certifications

7

Ensure compliance and risk management

Participate in United Nations Global Compact (UNGC)
Mitsubishi Estate became a signatory of the UNGC and the Mitsubishi
Estate Group was registered as a participant in April 2018. Along with
this, the Asset Management Companry has participated in this initiative
as a member of the Mitsubishi Estate Group.

Mitsubishi Estate Group’s Initiatives for ESG
Mitsubishi Estate Group’s Sustainable Development Goals 2030

External Evaluations of Mitsubishi Estate Group(Long-term Business Plan)

1. Environment
Sustainable urban development thatproactively addresses climate change andenvironmental issues

2. Diversity & Inclusion
Urban development that responds to lifestyleand human resources trends and facilitates
active participation for all

3. Innovation
Innovative urban development that continuously renews society

4. Resilience
Dynamic, flexible urban development that builds disaster-resilient
communities and prioritizes safety and security

S E M I A N N U A L

R E P O RT

9

ESG Initiatives

Environment

SocialSustainable Building Certifications

Proactive Participation in CSR Activities

Ratio of Green Properties in Portfolio (GFA basis)

Certification System

No. of Properties

Building-Housing Energy-Efficiency
Labeling System (BELS)

Comprehensive Assessment System
for Built Environment Efficiency(CASBEE) for Real Estate

DBJ Green Building Certification

4

5

1

64.4

%

Property Name

Evaluation

Logicross Atsugi

BELS: ★★★★★
CASBEE for Real Estate (S Rank)

Logicross Kobe Sanda

BELS: ★★★★
CASBEE for Real Estate (A Rank)

MJ Logipark Kazo 1

BELS: ★★★★★

LOGIPORT Sagamihara

CASBEE for Real Estate (S Rank)

LOGIPORT Hashimoto

BELS: ★★
CASBEE for Real Estate (S Rank)

MJ Logipark Kasugai 1

CASBEE for New Construction Aichi(A Rank)

Logicross Fukuoka Hisayama

DBJ Green
Building Certification: ★★★★

Cleanup volunteer activity after
Atsugi Ayu Firework Festival
near MJ Logipark Atsugi 1

Free beverage service for tenants at
LOGIPORT Sagamihara

Lawn-mowing at greenery areas
in MJ Logipark Atsugi 1

Collaboration with Local Educational Institute and Improvement in
Tenant Satisfaction
Local universities and vocation schools in the region were involved as part of the redesigning of theemployee lounge at MJ Logipark Fukuoka 1

BeforeEnergy Saving Initiatives

After

Governance

MEL’s Asset Management Fee Structure
MEL introduced an asset management fee structure reflecting the performance of DPU and investment
unit price for the purpose of aligning with unitholders’ interest.
Insulated sandwich panels
for exterior walls

Installation of
motion-detection sensors

Reuse of OA floor panels of
office buildings in
Marunouchi

Asset Management Fee Ⅰ(AUM-linked)

Total assets as of the end of previous period × 0.2% (upper limit)

Asset Management Fee Ⅱ(Real estate profit-linked)

Adjusted NOI x 5.0% (upper limit)

Asset Management Fee Ⅲ(Unitholder interest-linked)

Adjusted net income before tax × net income before tax per unit ×
0.001% (upper limit)
A First for J-REITs“Fee linked to Investment Unit Price”
Performance against TSE REIT Index ((a) - (b)) × market capitalization(for fiscal period of each term) × 0.1% (upper limit)(a): Fluctuations in MEL’s investment unit price (incl. dividends)(b): Fluctuations in the TSE REIT Index (incl. dividends)

Renovation with LED
installed based on
green lease contract

Use of Renewable Energy / BCP Initiatives

Installation of private power
generators

Seismic isolators

Insulated solar panels

Measures against infectious
diseases(with hand sanitizers)

S E M I A N N U A L

Same-boat investment by Mitsubishi Estate as of Feb. 29, 2020

R E P O RT

10

4.1%

Unitholder Information (as of Feb. 29, 2020)

Breakdown by Units

Major Unitholders
1.7%■ Domestic individuals and others: 33,522 units

Number ofInvestment Units

Share ofInvestment Units (%)

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

46,91915.34

Japan Trustee Services Bank, Ltd. (Trust Account)

41,591

13.60

The Nomura Trust and Banking Company, Ltd. (Trust Account)

14,382

4.70

Mitsubishi Estate Co., Ltd.

12,450

4.07

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

11,045

3.61

The Chugoku Bank, Limited

6,226

2.03

Tokyo Century Corporation

6,069

1.98

The Shinkumi Federation Bank

5,748

1.87

S S BT C C L IE N T OMN IBU S A C C OU N T

4,440

1.45

The Hokkoku Bank, Ltd.

4,260

1.39

153,130

50.07■ Financial institutions: 186,254 units■ Other domestic entities: 25,706 units

11.0%

18.0%

■ Foreign entities: 55,127 units■ Securities companies: 5,206 units

8.4%

305,815
Units Issued
andOutstanding

60.9%

Total

Breakdown by Unitholders■ Domestic individuals and others: 8,878 unitholders■ Financial institutions: 155 unitholders■ Other domestic entities: 238 unitholders

1.2%
2.5%
1.7%

0.2%

Continuous same-boat investment in MEL by the sponsor■ Foreign entities: 115 unitholders■ Securities companies: 18 unitholders

9,404

Investment in MEL

94.4%

by MEC

Unitholders

S E M I A N N U A L

R E P O RT

11

12,450(4.1%)

units

Financial Section
BALANCE SHEETBALANCE SHEET, continued
Thousands of yen

Thousands of yen

As of

As of
August 31, 2019ASSETS
Current assets:
Cash and deposits (Notes 3, 5)¥

Cash and deposits in trust (Notes 3, 5)
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable

February 29, 2020

2,627,266¥

3,003,699

3,196,426
22,102
10,300-4,283,495
21,44815,967
1,005,408

Other current assets

753

1,010

Total current assets

5,856,848

8,331,030

Fixed assets:
Property and equipment (Notes 4, 6)
Buildings in trust (Notes 11)
Less: accumulated depreciation

37,535,830(1,839,363)

48,149,573(2,402,658)

Buildings in trust, net

35,696,466

45,746,915

1,286,857(48,050)

1,759,218(64,520)

1,238,807

1,694,698

7,372
(51)

26,039
(599)

7,320

25,440

4,806
(252)

5,697
(676)

4,554

5,020

Structures in trust (Notes 11)
Less: accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Less: accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Less: accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust

45,603,368

65,551,550

Total property and equipment

82,550,517

113,023,624

Intangible assets (Notes 4)
Software

5,835

4,885

Other intangible assets

791

741

Total intangible assets

6,626

5,626

Investments and other assets
Deferred tax assets (Notes 12)13

16

Long-term prepaid expenses
Security deposit

11,48410,00038,695
10,000Total investments and other assets

21,49848,712

82,578,642

113,077,964

22,175

16,127

Total fixed assets
Deferred assets:
Organization expenses
Total deferred assets
Total assets

22,175¥88,457,666

August 31, 2019

February 29, 2020¥¥

LIABILITIESCurrent liabilities:
Operating accounts payable
Short-term loans payable (Notes 5, 10)Long-term loans payable due within one year (Notes 5, 10)

97,5234,000,000

89,8912,050,000-

Accounts payable
Distributions payable
Accrued expenses
Income taxes payable

11,5366,549
286,273
881

9,754
6,394
355,054944

Consumption taxes payable
Advances received
Deposits received

138,971405,806-

558,49216

4,947,542

3,070,548

19,924,000
1,541,562

34,424,000
2,129,916

21,465,562

36,553,916

26,413,105

39,624,465

61,262,651

80,744,051

61,262,651(430,007)

80,744,051(576,021)

60,832,644

80,168,030

1,211,916

1,632,627

Total current liabilities
Non-current liabilities
Long-term loans payable (Notes 5, 10)
Tenant leasehold and security deposits in trust
Total non-current liabilities
Total liabilities
NET ASSETS
Unitholders’ equity
Unitholders’ capital
Units authorized: 10,000,000 units
Units issued and outstanding:
305,815 units as of February 29, 2020, and245,815 units as of August 31, 2019
Unitholders’ capital, gross
Deduction from unitholders’ capital
Unitholders’ capital, net
SurplusRetained earnings
Total surplus
Total unitholders’ equity
Total net assets (Notes 9)
Total liabilities and net assets

1,211,916

1,632,627

62,044,560

81,800,657

62,044,560¥

88,457,666

81,800,657¥

121,425,122

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

16,127¥

121,425,122

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

12

SEMIANNUAL REPORTSEMIANNUAL REPORT

13

Financial Section
STATEMENT OF INCOME AND RETAINED EARNINGSSTATEMENT OF CHANGES IN NET ASSETS
Thousands of yen
For the period ended
August 31, 2019
February 29, 2020

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
Interest on refund
Insurance income
Refund of property taxes
Total non-operating income
Non-operating expenses:
Interest expenses
Borrowing related expenses
Amortization of organization expenses
Amortization of investment unit issuance
expensesLosses due to disaster
Reduction entry of tangible fixed assets
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes-current (Note 12)
Income taxes-deferred (Note 12)
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings¥¥

2,399,157
131,2292,530,386¥

3,046,460
154,419
3,200,880

959,140
209,632850
19,2782,400
57,01428,147
1,276,463
1,253,922

1,076,349
251,817
1,099
18,6242,400
66,301
34,562
1,451,155
1,749,725

25
788
41,561
12,88055,25533
15,442
5,279
20,75549,662
8,915
6,047

65,512
3,055
6,047

-

47,254

1,075
30,72596,427
1,212,751
1,212,751
885
(2)
883
1,211,868
47
1,211,916

11,885
3,200
136,956
1,633,525
1,633,525
949
(3)
946
1,632,579
48
1,632,627¥

Yen

Net income per unit (Note 13)

For the fiscal period ended
August 31, 2019
February 29, 2020
¥
4,930
¥
5,563

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

For the period ended February 29, 2020
Thousands of yen
Unitholders’ equity
Surplus

Unitholders’ capital
Deduction ofUnitholders’
Unitholders’unitholders’capital, grosscapital, net
capitalBalance as of
September 1, 2019
(Note 9)Total
unitholders’
UnappropriatedTotal surplus
equityretained earnings

Total net
assets61,262,651(430,007)

60,832,644

1,211,916

1,211,916

62,044,560

62,044,560

Issuance of new
investment units

19,481,400-

19,481,400--

19,481,400

19,481,400

Distributions inexcess ofretained earnings-(146,014)(146,014)--(146,014)(146,014)

Surplus cash
distributions

-

-

-

(1,211,867) (1,211,867)(1,211,867) (1,211,867)

Net income

Change during theperiod

---1,632,579

1,632,579

1,632,579

1,632,579

Total change during
the period

19,481,400(146,014)

19,335,385

420,711420,71119,756,096

19,756,096

Balance as ofFebruary 29, 2020
(Note 9)80,744,051(576,021)

80,168,030

1,632,627

1,632,627

81,800,657

81,800,657

Total
unitholders’
UnappropriatedTotal surplus
equityretained earnings

Total net
assetsFor the period ended August 31, 2019
Thousands of yen
Unitholders’ equity
Surplus

Unitholders’ capital
Deduction ofUnitholders’
Unitholders’unitholders’capital, net
capital, grosscapitalBalance as of March
1, 2019 (Note 9)61,262,651(250,808)

61,011,843

1,170,864

1,170,864

62,182,708

62,182,708

Distributions inexcess ofretained earnings-(179,199)(179,199)--(179,199)(179,199)

Surplus cash
distributions

-

-

-

(1,170,816) (1,170,816)(1,170,816) (1,170,816)

Net income

-

-

-

1,211,868

1,211,868

1,211,868

1,211,868

Total change during
the period-(179,199)(179,199)

41,05141,051(138,147)(138,147)

Balance as of August
31, 2019 (Note 9)61,262,651(430,007)

60,832,644

1,211,916

1,211,916

62,044,560

62,044,560

Change during theperiodThe accompanying notes are an integral part of these financial statements.

14

SEMIANNUAL REPORTSEMIANNUAL REPORT

15

Financial Section
STATEMENT OF CASH FLOWS
Thousands of yen
For the period ended
August 31, 2019
February 29, 2020
Cash flows from operating activities:
Income before income taxes
Depreciation
Amortization of investment unit issuanceInterest income
Interest expenses
Insurance income
Loss on reduction entry of tangible fixed assets
Losses due to disaster
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
Insurance income due to disaster
Payments due to disaster
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 new investment units
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 period
Cash and cash equivalents at the end of period (Notes 3)
The accompanying notes are an integral part of these financial statements.

¥¥

1,212,751
488,054(25)
49,662(41,561)
30,725
1,075(3,427)
312,168
10,337
2,676(26,588)
4,461
21,024
138,971(1,639)5,294
2,203,961
25(48,861)
41,561(1,075)(841)
2,194,769¥

1,633,525
581,736
47,254(33)
65,512(15,442)
3,200
11,885653(1,005,408)(5,667)(27,211)(10,476)(1,782)
66,326(138,971)
152,685
5,806
1,363,593
33(63,058)
15,442(2,249)(886)
1,312,875(76,924)(31,063,835)

16,923615,973(4,637)(27,619)(64,637)(30,475,481)(1,169,608)(178,842)(1,348,450)
781,6815,042,011
5,823,693

2,950,000(900,000)
14,500,000(4,000,000)
19,434,145(1,212,050)(145,986)
30,626,108
1,463,502
5,823,693
7,287,195¥

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”). On September 13, 2017, MEL issued 198,000 new units through a public offering and raised approximately 49,678
million yen. Those units are listed on the J-REIT section of the Tokyo Stock Exchange. MEL acquired 7 properties (aggregateacquisition price: 65,479 million yen) on September 14, 2017 following its listing and acquired 2 properties (aggregate acquisition
price: 12,340 million yen) on September 3, 2018. Furthermore, MEL acquired one additional property on September 2, 2019,
and additional four properties on October 9, 2019, total of five properties worth aggregate acquisition price of 30,568 million
yen during the reporting fiscal period. As of February 29, 2020, MEL held in the form of beneficiary right in trust in 15 properties(aggregate acquisition price: 113,787 million yen), and the occupancy rate remained high at 99.9% 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
2-63 years
Structures
Machinery and equipment
Tools, furniture and fixturesc)

Intangible Assets
Intangible assets are stated at cost. Amortization of intangible assets, including intangible assets in trust, is calculated by thestraight-line method over the estimated useful lives.

d)Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.

e)Organization Expenses
All organization expenses are amortized over five years using straight-line method.

f)
16

SEMIANNUAL REPORT

10-58 years
12 years
4-10 years

Investment Unit Issuance Expenses
SEMIANNUAL REPORT

17

Financial Section
5.
a)

The full amount of investment unit issuance expenses is recorded as expense when incurred.
g)(1) Policy for Financial Instruments
MEL procures funds for the acquisition of assets and repayment of debt mainly through bank loans or the issuance of new
investment units.
In borrowing funds, MEL takes consideration in interest rate trend, debt cost, floating or fixed interest rate, borrowing

Beneficiary Rights in Trust

As to beneficiary rights in trust, all accounts of assets and liabilities for assets in trust as well as the related income generated
and expenses incurred are recorded in the relevant balance sheet and statement of income 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 intrust, 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.
h)period and repayment 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.
MEL generally invests surplus funds in bank deposits, considering the safety and liquidity of the investment and also
reflecting the market environment and cash positions of MEL itself. MEL enters into derivative transactions solely for the
purposes of reducing risks of rising interest rates related to financings and other types of risks. MEL does not use derivativetransactions for speculative purposes. Not applicable for the reporting period.

Taxes on Property and Equipment
With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessed and determined, theamount corresponding to the relevant fiscal period is accounted for as rental expenses.
Of the amounts paid for the acquisitions of real estate properties or beneficiary right in trust of real estate, the amountequivalent to property taxes is capitalized as part of the acquisition cost of the relevant property instead of being charged as an
expense. Not applicable for the reporting period.
i)Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

(2) Type of Financial Instruments, related Risks and Risk Management System
Bank loans are mainly made to procure funds for acquisition of properties, repayment of bank loans. Although MEL is
exposed to liquidity risks upon repayment, by diversifying the maturities and lending institutions, securing liquidity of cash inhand and managing such liquidity risks by preparing and monitoring cash flows projection, such risks are maintained undercontrol. 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 byaccumulating 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 historical
data.

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:

August 31, 2019
Cash and deposits¥

2,627,266

Cash and deposits in trust

February 29, 2020¥

3,196,426

Cash and cash equivalents

4.

Thousands of yen
As of

¥

5,823,693

3,003,699
4,283,495¥

7,287,195(3) Supplemental Explanation Regarding the Estimated Fair Values of Financial Instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market
price available, fair value is based on a price that is reasonably estimated. Since various assumptions and factors are reflectedin estimating the fair value, different assumptions and factors could result in a different value.

PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment and intangible assets as of February 29, 2020 are as follows:
Thousands of yen

Type of assets

Balance as of Increase
September 1, during the2019
periodDecreaseduring theperiodBuildings in¥ 37,535,830 ¥10,616,943 ¥trust
Structures in
1,286,857
472,361
trust
Property Machinery andequipment in
7,372
18,667andequipment trust
Tools, furnitureand fixtures in
4,806
890
trust
Land in trust
45,603,368 19,948,181
Total property and equipment 84,438,235 31,057,044
Software¥9,500 ¥
－ ¥Intangible Other
assetsintangible
1,000－
assetsTotal intangible assets
10,500－3,200

Depreciation
Net balance
Balance as of
as of
Depreciation
Remarks
February 29, Accumulated
February 29,
for the2020
depreciation
2019
period¥48,149,573 ¥ 2,402,658 ¥ 563,294¥ 45,746,915(Note)－

1,759,218

64,52016,4691,694,698(Note)－

26,039599

548

25,440

－

5,697

676

424

5,020

(Note)

65,551,550－－
115,492,079 2,468,454
580,736¥9,500 ¥
4,615 ¥
950

65,551,550
113,023,624
¥
4,885

－
－
－

－
－
3,200
－

FINANCIAL INSTRUMENTS
Overviewb)

Estimated Fair Value of Financial Instruments
The book value, fair value and differences between the values as of February 29, 2020 and August 31, 2019 are as follows:
Financial instruments for which the fair value is extremely difficult to estimate are excluded from the following table (see Note 2
below).
Thousands of yen
As of February 29, 2020
Book value

－

1,000

258

50

741

－

－

10,500

4,873

1,000

5,626

－

(1) Cash and deposits¥(2) Cash and deposits in trust
Total assets

3,003,699¥

4,283,495¥(3) Short -term loans payable(4) Long-term loans payable due within one year
(5) Long-term loans payable
Total liabilities

Fair value¥

7,287,195

Difference

3,003,699¥

4,283,495¥

7,287,195-¥-

2,050,000

2,050,000

-

-

-

-

34,424,000

34,909,833

485,833

36,474,000¥

36,959,833¥

485,833(Note) The amount of increase during the period is primarily attributable to the acquisition of 5 properties.
18

SEMIANNUAL REPORTSEMIANNUAL REPORT

19

Financial Section
Thousands of yen
As of August 31, 2019

Thousands of yen

Fair value

As of February 29, 2020
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears¥ 2,050,000
2,211,000
3,310,000
6,540,000
3,400,000 18,963,000¥ 2,050,000 ¥ 2,211,000 ¥ 3,310,000 ¥ 6,540,000 ¥ 3,400,000 ¥18,963,000Book value(1) Cash and deposits¥(2) Cash and deposits in trust

2,627,266¥

5,823,693(3) Short -term loans payable(4) Long-term loans payable due within
one year(5) Long-term loans payable
Total liabilities¥¥

Difference

2,627,266

3,196,426

Total assets(Note 4) Repayment schedule for debt after February 29, 2020¥-

3,196,426¥-

5,823,693

¥

-

-

-

-

4,000,000

4,000,000-

19,924,000

20,381,283

457,283

23,924,000¥

24,381,283¥

Short-term loans payable
Long-term loans payable
Total

Repayment schedule for debt after August 31, 2019
Thousands of yen

457,283

As of August 31, 2019
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one year
years(Note 1) Methods to estimate fair values of financial instruments(1) Cash and deposits and (2) Cash and deposits in trust (3) Short-term loans payable
Due to the short maturities, the book value of these instruments is deemed a reasonable approximation of thefair value, and therefore, the book value is used as the fair value.
(4) Long-term loans payable due within one year and (5) 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 short period of time, the fair value is approximately equal tothe book value. Thus, the book value is used.
(Note 2) Financial instruments for which the fair value is extremely difficult to estimate
As tenant leasehold and security deposits in trust has no available quoted market price, and it is impracticable toreasonably estimate their future cash flows, their fair value is not disclosed.
Thousands of yen

Tenant leasehold and security deposits in trust¥

1,541,562

February 29, 2020¥

2,129,916(Note 3) Redemption schedule for monetary claims after February 29, 2020
Thousands of yen

Cash and deposits
Cash and deposits in trust
Total

As of February 29, 2020
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears¥ 3,003,699
¥
¥
¥
¥
¥
4,283,495¥ 7,287,195
¥
¥
¥
¥
¥
-

Redemption schedule for monetary claims after August 31, 2019
Thousands of yen

Cash and deposits
Cash and deposits in trust
Total

20

SEMIANNUAL REPORT¥ 4,000,000 ¥

-

¥

- ¥

- ¥

- ¥

-

¥ 4,000,000 ¥-

2,211,000
3,310,000
3,540,000 10,863,000¥ 2,211,000 ¥ 3,310,000 ¥ 3,540,000 ¥10,863,000

6.

INVESTMENT AND RENTAL PROPERTIESMEL owns logistics facilities for leasing for the purpose of earning rental income. The book value, changes during the reporting
fiscal period and fair value of the properties are as follows:
Thousands of yen
For the fiscal period ended
August 31, 2019
February 29, 2020
Book value (Note 1)

As ofAugust 31, 2019

Long-term loans payable
due within one year
Long-term loans payable
Total

Balance at the beginning of the period¥

Changes during the period (Note 2)
Balance at the end of the period

83,007,836¥(457,319)¥

82,550,517

82,550,517
30,473,107¥

113,023,624

Fair value at the end of the period (Note 3)¥
89,375,000¥
122,500,000(Note 1) Book value is calculated by deducting accumulated depreciation from acquisition cost.
(Note 2) The increase for the fiscal period ended Aug. 31, 2019 was primarily a result of the recognition of CAPEX whichamounted 60,460 thousand yen. The decrease was primarily a result of the recognition of depreciation, whichamounted to 487,054 thousand yen. The increase for the fiscal period ended Feb. 29, 2020 was primarily a result of
acquiring five new properties for a total of 31,015,705 thousand yen. The decrease was primarily a result of therecognition of depreciation, which amounted to 580,736 thousand yen.
(Note 3) The fair value at the end of the period is determined based on appraised value provided by independent real estateappraisers.
Income and loss in connection with investment and rental properties are disclosed in “7. PROPERTY-RELATED REVENUES AND
EXPENSES.”

As of August 31, 2019
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears¥ 2,627,266 ¥
- ¥
- ¥
- ¥
- ¥
3,196,426¥ 5,823,693 ¥
- ¥
- ¥
- ¥
- ¥
-

SEMIANNUAL REPORT

21

Financial Section
7.

PROPERTY-RELATED REVENUES AND EXPENSES
The following table summarizes the revenues and expenses generated from property leasing activities for the fiscal periods
ended February 29, 2020 and August 31, 2019.
Thousands of yen
For the fiscal period ended
August 31, 2019
February 29, 2020
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

¥
¥
¥
¥
¥

¥

2,294,240
104,916
2,399,157¥

87,52343,705
131,2292,530,386¥

85,207
216,031
4,026
49,452
92,165
487,054
1,682

¥

¥
¥

¥

23,519Total rental expenses
C. Operating income from property leasing (A-B)

b)

¥
¥

959,140
1,571,245

2,910,265
136,194
3,046,460
104,384
50,035
154,419
3,200,880

135,358
215,768
5,435
21,59699,216
580,736
2,301
15,935¥¥

1,076,349
2,124,531

8.

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, 2019¥
4,913,567
18,800,951

February 29, 2020¥
6,432,330
38,098,308

Total

¥

¥

SEMIANNUAL REPORTNET ASSETSStated Capital
MEL issues only non-par value units in accordance with the Investment Trust Act. 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 million yen as
required by the Investment Trust Act.
Distributions
Yen

Others229.
a)23,714,518

For the fiscal period ended
August 31, 2019
I. Unappropriated retained earnings
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

February 29, 2020

1,211,916,552

1,632,627,605

146,014,110
1,357,882,060(5,524)
1,211,867,950

174,008,735
1,806,449,205(5,907)
1,632,440,470(4,930)(5,338)146,014,110

174,008,735

(594)

(569)

48,602

187,135

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 amounts of
1,632,440,470 yen and 1,211,867,950 yen for the fiscal periods ended February 29, 2020 and August 31, 2019, respectively.
These amounts were equivalent to the maximum integral multiples of number of investment units issued and outstanding as ofthe end of each fiscal period. Based on the distribution policy as defined in Article 35, Paragraph 2 of the Articles ofIncorporation, MEL shall make Surplus Cash Distributions (SCD), defined as distributions in excess of retained earnings, as a returnof unitholders’ capital, each fiscal period on a continuous basis.
Accordingly, for the fiscal period ended February 29, 2020, MEL declared SCD of 174,008,735yen, as a return of unitholders’capital, which was the amount equivalent to approximately 30.0% of depreciation expense. For the fiscal period ended August
31,2019, MEL declared SCD of 146,014,110 yen, as a return of unitholders’ capital, which was the amount equivalent toapproximately 30.0% of depreciation expense.

44,530,639

SEMIANNUAL REPORT

23

Financial Section
10. SHORT-TERM 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 and long-term loans payable as of February 29, 2020 and August 31, 2019.

Classification
Short-term loans payable

Repayment date

Weighted-averageinterest rate

October 9, 2020

0.1426%

Total short-term loans payable
Long-term loans payable
due within one year

September 29, 2019

Total long-term loans payable due within one year
Long-term loans payable September 14, 2021

0.2414%0.3263%September 14, 2022

0.3575%September 14, 2022
September 2, 2023
September 14, 2023

0.2400%0.2500%0.3913%September 14, 2024
October 9, 2024

0.4288%0.1800%

September 14, 2025
September 14, 2025
October 9, 2025
September 14, 2026
September 14, 2026
October 9, 2026

0.4675%0.3950%0.2160%0.5075%0.4538%0.2600%

September 14, 2027

0.5500%

October 9, 2027
September 14, 2028

0.2400%0.5750%

October 10, 2028
September 30,2029
Total long-term loans payable
Total

0.4200%0.4900%12. 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 February 29, 2020 and August 31, 2019 are as follows:

Thousands of yen
As ofAugust 31, 2019
¥

¥
¥

¥
¥

¥
¥

Thousands of yen
As ofFebruary 29, 2020

1,400,000
1,200,000
1,400,000
4,000,000
720,000
1,491,000
430,000
2,050,000
830,000
1,760,000
1,330,000
450,000
900,000
620,000
800,000
710,000
500,000
1,340,000
1,340,000
880,000
880,000
830,000
807,000
1,256,000
19,924,000
23,924,000

¥

¥
¥

¥
¥

¥
¥

200,000
750,000
1,100,000
2,050,000
720,000
1,491,000
430,000
2,050,000
830,000
3,000,000
1,760,000
1,330,000
450,000
900,000
1,250,000
1,250,000
620,000
800,000
200,000
710,000
500,000
2,400,000
400,000
1,340,000
1,340,000
880,000
880,000
1,250,000
830,000
807,000
1,256,000
750,000
4,000,000
34,424,000
36,474,000

The stated interest rate is the weighted average interest rate during each fiscal period. The redemption schedules for longterm loans subsequent to February 29, 2020 and August 31, 2019 are disclosed in “5. FINANCIAL INSTRUMENTS.”Enterprise tax payable
Total deferred tax assets
Net deferred tax assets

Buildings in trust
Structures in trust
24

SEMIANNUAL REPORT

August 31, 2019¥¥28,0207,008

February 29, 2020¥
31,220
¥
7,008

13
13
13

¥

February 29, 2020
¥

16
16
16

¥

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 February 29, 2020 and August 31,
2019 are as follows:

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

For the fiscal period ended
August 31, 2019
February 29, 2020
31.51%
31.51%(31.49%)
0.05%
0.07%

(31.49%)
0.04%
0.06%

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.

13. PER UNIT INFORMATION
The following table summarizes per unit information for the fiscal periods ended February 29, 2020 and August 31, 2019.

Net income per unit
Basic net income per unit
Weighted average number of units outstanding

Yen
For the fiscal period ended
August 31, 2019
February 29, 2020¥

4,930
245,815¥

5,563
293,461

Net assets per unit
¥ 252,403¥ 267,484(Note) Basic net income per unit is based on the weighted average number of units issued and outstanding during theperiod. Diluted earnings per unit and related information are not disclosed as no dilutive units were outstanding.

14. 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 February 29, 2020 and August 31, 2019.
b)

Transactions and Account Balances with Affiliates
There were no transactions and account balances for the fiscal periods ended February 29, 2020 and August 31, 2019.

c)

Transactions and Account Balances with Companies under Common Control
There were no transactions and account balances for the fiscal periods ended February 29, 2020 and August 31, 2019.

d)

Transactions and Account Balances with Board of Directors and Individual Unitholders
There were no transactions and account balances for the fiscal periods ended February 29, 2020 and August 31, 2019.

11. REDUCTION ENTRY
The amount of reduction entry of property and equipment as of February 29, 2020 and August 31, 2019 are as follows:
Thousands of yen
As ofAugust 31, 2019¥

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25

Financial Section
15. SEGMENT AND RELATED INFORMATION(For the fiscal periods ended February 29, 2020 and August 31, 2019)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.

16. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable

26

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