SEMIANNUAL REPORTFiscal Period Ended February 28, 2022

Overview

Hybrid Model

Distributions Per Unit

Distributions Per Unit

Distributions Per Unit

(FP Ended Feb. 2022 Actual)(FP Ending Aug. 2022 Forecast)(FP Ending Feb. 2023 Forecast)

7,174

yen

7,307

yen

7,628

CONTENTS
To Our Unitholders………………………… 2
Q & A………………………………………… 4
Operating Highlights… …………………… 6yen

HYBRID External Growth… ……………… 8
HYBRID Internal Growth… ……………… 10

Operating Revenues

Net Income(FP Ended Feb. 2022 Actual)(FP Ended Feb. 2022 Actual)

5,028

2,540

mn yenmn yenLoan-to-Value Ratio

Average Debt Cost

(Forecasted Feb. 2023)(As of Apr. 15, 2022)

35.4

%

0.44

%

ESG Initiatives… …………………………… 11
Development / Facilities Management

Investment / Asset Management

SponsorAsset Management Company

Portfolio……………………………………… 12
Unitholder Information… ………………… 13
Financial Section… ………………………… 14
Other Information… ……………………… 40

Credit Rating

No. of Properties

JCR AA-(As of Mar. 1, 2022)(Positive)

24

properties

Asset Size
(As of Mar. 1, 2022)

216.2

bn yenAverage Occupancy(As of Mar. 31, 2022)

99.7

%

Basic Policy
MEL mainly invests in logistics facilities for the ultimate purpose of maximizing unitholder value
through management utilizing the comprehensive strengths of the MEC Group and also in order tocontribute to the realization of an affluent society through development of logistics functions that
support the lives of people.
Growth Strategy

1. Building a Long-term Stable Portfolio in order to Maximize Unitholder Value
2. HYBRID External Growth Utilizing the Strength of Both MEC
and Asset Management Company

3. HYBRID Internal Growth Supporting Stable Growth of MEL
4. Long-term Stable Financial Management with Emphasis on Soundness
5. Development of a Solid Governance Structure Focusing on
Improving Unitholder Value

Logicross Atsugi II

Mitsubishi Estate Logistics REIT Investment Corporation1

To Our Unitholders

We would like to express heartfelt appreciation to all ourunitholders for continued support to MEL.
As a result of solid operational performance and stableportfolio management, MEL sounds financial results for the
fiscal period with DPU of 7,174 yen that is highest since the
IPO and enables MEL to achieve DPU growth for sevenconsecutive periods. In March 2022, MEL successfullycompleted its first global offering to acquire two newproperties. As a result, the asset size has expanded to 24
properties (total acquisition price: 216.2 billion yen). Forinternal growth, the occupancy rate after the acquisition of
the properties was 99.7%, maintaining extremely highoccupancy rate despite the global pandemic, and alsoachieved rent growth for the eighth consecutive period on
the background of strong market conditions driven byaccelerating growth of EC market and steady operation.
Furthermore, MEL announced its management policy basedon the “Three Pillars” in April 2019, as a management plan
designed to maximize unitholder value in the medium-tolong term. The management policy is intended to gather
the entire MEC Group to work together in order to improve
unitholder value of MEL, focusing on the following threepillars: Alignment (align interest with unitholders), Discipline(disciplined growth) and Hybrid (enhance MEL’s uniquestrategy, the hybrid model). We will continue to endeavor
maximizing our unitholder value by growing throughdialogues with our unitholders following our management
policy, “Three Pillars.”2

Ken Takanashi

Tetsuya Masuda

Executive Director of Mitsubishi Estate Logistics
REIT Investment Corporation
Executive Officer, General Manager of Logistics
REIT Management Department, Mitsubishi Jisho
Investment Advisors, Inc.

President & CEO of Mitsubishi Jisho Investment
Advisors, Inc.

We are pleased to present our Semiannual Report forthe 11th fiscal period ended February 28, 2022
successfully and would like to express our sincere
gratitude for supports of our unitholders andstakeholders.
I am Tetsuya Masuda, appointed as a President andCEO of MJIA, in April 2022. I used to be a member of
MJIA, especially involved in private fund management
department, for eight and a half years since its
establishment in 2001, in that time, the real estate
securitization was still emerging in Japan. I could learnmuch through dialogues with the investors, especially
how the asset managers should be as an "honest
professional groups."
Fortunately, I could gain an opportunity to work forour investors again, so I intend to utilize all knowledge
I have learned through our business operations and to
pursue the enhancement of unitholder value throughstable and steady growth, which is the mission of MEL.
Tetsuya Masuda

We sincerely appreciate your continued support to MEL and
MEC Group and look forward to reporting our further
progress in the months and years ahead.
Ken Takanashi

Mitsubishi Estate Logistics REIT Investment Corporation

3

Q&A

Q 1 What are your latest ESG initiatives?
A 1 We are also promoting ESG initiatives from a variety of angles. The latest

information is available on the ESG Special Site on page 11 of this report onwhich you can find our policies and past initiatives. Please refer to it.

Q 2 Please tell us about the public offering announced in February 2022.
A 2 The fifth public offering in a form of global offering was the largest ever for MEL.
The asset size expanded to 216.2 billion yen for 24 properties■■

Support for the recommendation by TCFD and Joining TCFD Consortium.

MEL acquired two sponsor-developed properties for 45.8 billion yen through this offering. We achieved
7.0% growth in distributions per unit on a cruising basis through the largest property acquisition. After
this public offering, our LTV ratio is expected to be 35.4%, which is still lowest level among all J-REITS,
leaving us room for moreacquisitions. We willcontinue to leverage our low
LTV and abundant pipeline
properties (please refer topage 8-9) to increase
unitholder value throughcontinued disciplined
property acquisitions.
LOGIPORT Kawasaki Bay
Logicross Atsugi 2

Recently, Task Force on Climate-Related Financial Disclosures “TCFD," aframework for corporate disclosures on climate-related financial
information, has attracted investors attention. In December 2021, MJIA
expressed its support for the recommendation by TCFD and joined TCFD
Consortium.
■

Materiality Identification and KPIs/Targets Setting
In December 2021, MEL identified materiality related to ESG that need to be addressed in sustaining its
business model in order to achieve sustainable growth and increase corporate value over the mid-to-longterm and established policies, targets, and KPIs for each materiality. The main KPIs, targets and theirprogress are described below.
Main KPIs

FY2017 (based)

FY2020 (latest)

FY2030 (Target)

CO2 Emission Intensity(t-CO2/m2)

0.025

0.019
(21.3% Reduction)

30% Reduction

Energy Consumption Intensity(kWh/m2)

50.20

45.30
(9.7% Reduction)

15% Reduction

Achieved 7.0% DPU Growth on a Stabilized Basis

Effects of public offering
Asset size

Tax-stabilized DPU(bn yen)
250

(yen)
7,500

+45.8 bn yen

216.2 bn yen
7,000

54.9%

63.4%

LTV
7,392 yen

6,910 yen

70% or more

6,500

150

LTV (forecast)
Feb. 2023 (13th FP)

6,000

Water Consumption Intensity(m3/m2)

0.114

0.092
(18.9% Reduction)

No Increase

Ratio of Green Building Certification

−

87.6%

100%

0

■

Aug. 2021(10th FP)

LTV
Aug. 2021 (10th FP)

32.7%

200

170.4 bn yen

Waste Recycling Rate

+7.0 %

Post-5th
Follow-on Offering0

Post-4th
Follow-on Offering

Post-5th
Follow-on Offering

35.4%

Utilizing Green Financing
In this offering, MEL utilized green financing to fund the acquisition of properties that acquired Green
Building Certification over a certain level for both equity and a part of the borrowings. We believe that we
could broadly appeal to investors the high environmental performance of two new properties and our ESG
initiatives.

4

Mitsubishi Estate Logistics REIT Investment Corporation

5

Operating Highlights
Balance Sheet (summary)

Statement of Income (summary)(Millions of yen)

Item

AssetsCurrent assets
Of which, cash and deposits(including cash and deposits in trust)
Fixed assets
Of which, property and equipment

Item

FP Ended Feb.
2022

Operating revenues

5,028

12,280Operating expenses

2,388

12,217

Operating income

2,640

168,123
168,078

Of which, intangible assets

1

Of which, investments and other assets

43

Total assets(Millions of yen)

FP Ended Feb.
2022

180,403

Non operating profit and loss

2

(99)

Ordinary income

2,541

Net income

2,540

Current liabilities
POINT

1

Loans and Investment
Corporation Bonds

MEL prepaid short-term loan of 900
million yen with cash on hand including
consumption tax refund for theproperties acquired during fiscal period
ended Aug. 31, 2021. As a result, thebalance of interest-bearing debt at theend of the reporting fiscal period (Feb.
28, 2022) was approximately 58.3 billion
yen, and LTV ratio was 32.4%.

6

Of which, long-term loans payable due
within one year
Non-current liabilities

5,322

Distributions per unit (excluding SCD)

6,495

Surplus cash distributions (SCD) per unit

679

Net Income

Due to the loss of investment unit
issuance expenses and investment
corporation bond issuance expenses in
the previous fiscal period, non-operating
profit and loss increased by 74 million
yen and net income increased by 158
million yen from the previous fiscal
period.

3,310
58,776

Of which, investment corporation bonds

2,000

Of which, long-term loans payable

53,064

Total liabilities

64,098Unitholders' capital, net

113,764

Surplus

7,174

Increased by approx. 75 million yen
from the previous fiscal period due tothe contribution of rental revenues
from the five properties acquired infiscal period ended Aug. 31, 2021.

3

Distributions

Distributions per unit (including SCD)

Operating Revenues

POINT

(yen)

Liabilities and net assets

POINT

2,540

Total net assets

116,305

Total liabilities and net assets

180,403
Mitsubishi Estate Logistics REIT Investment Corporation

7

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

Sponsor-developed properties with expected
preferential negotiation right

Logicross

MJ Logipark

Brand of logistics facilities that MEC
develops throughout Japan

Properties which MEL acquired orintends to acquire from 3rd parties

Mitsubishi Estate
Occupancy
100%

Logicross Hasuda

Occupancy
100%

Logista·Logicross Ibaraki Saito (B)(31,000 m2) Completed in 2021

MJIA-sourced and operated properties with expected
preferential negotiation rightBridge Fund / 3rd Party Bridge
Occupancy
100%

New Bridge

SponsorDeveloped

Newly Added Pipeline

Occupancy
100%(79,000 m2) Completed in 2021

■ Capability to assess properties backed by experience in continuously
acquiring properties from 2001
■ Flexible and diversified property acquisition strategy by leveraging
the capability to manage real estate funds

Logicross Yokohama Kohoku

Logista·Logicross Ibaraki Saito (A)(16,000 m2) Completed in 2019

(116,000 m2) Completed in 2021

Occupancy
100%

PDP
Occupancy
100%

CRE

PDP

Occupancy
100%

Occupancy
100%

MJ Logipark Higashi Osaka1*(10,000 m2) Completed in 1991

MJ Logipark Takatsuki 1*(19,000 m2) Completed in 2021

PDP (Partnership Development Program)● Development bridge scheme in which MJIA takes the initiative● MJIA leads the project in a manner that compensates the needs of partnercompanies such as developers, construction companies and real estate brokers
each other

Logicross Kasukabe(39,000 m ) Completed in 2021
2

Logicross Funabashi(23,000 m ) Completed in 2021
2

Logicross Zama Komatsubara(44,000 m ) Completed in 2022

Logicross Osaka Katano

Logicross Zama*(183,000 m2) To be completed in 2023

Sagamihara Chuo Fuchinobe Project*

8

Other multiple

PDP

PDP

PDP

Occupancy
100%

Pre-leased
100%

Pre-leased100%

MJ Logipark Aisai 1*(173,000 m2) To be completed in 2024

16 properties* Tentative nameNote: As of Apr. 15, 2022

leased up(22,000 m ) Completed in 20212

Pre-leased
100%(20,000 m2) To be completed in 2023

● MEL can preferentially consider acquisition after the building is completed and

MJ Logipark Inzai 1*

2(10,000 m2) Completed in 2022

MJ Logipark Kakogawa 1*(33,000 m2) To be completed in 2022

MJ Logipark Daito 1*(11,000 m2) To be completed in 2022

835,000m

2

projects
Mitsubishi Estate Logistics REIT Investment Corporation

9

HYBRID Internal Growth▶

▶

ESG Initiatives

Portfolio Summary▶

Average occupancy
since IPO

Fixed-term lease

Weighted average leaseremaining expiry

99% or more

100.0%

6.4 years

Rent Revision Track Record▶

Average rent
growthAverage rent
growth ofincreased portion

FP 2018/8

+1.8%

+3.0%

FP 2019/2

+0.2%

+3.4%

FP 2019/8

+3.1%

+6.8%

FP 2020/2

+2.2%

+2.5%

FP 2020/8+9.5%+10.4%

FP 2021/2

+8.7%

+9.2%

FP 2021/8+13.9%+14.9%

FP 2022/2

+6.5%

+6.5%

Launch of website dedicated to ESG and publication of the Sustainability Report
We launched a website dedicated to ESG and published the Sustainability Report to explain to all stakeholders
our approach to ESG and related initiatives
Dedicated ESG website

Sustainability Report

Cumulative internal growth■ Since being listed, we have achieved steady internal

growth and expect income derived from that growth tocontinue going forward(mn yen)120

Rent revision
Initiatives other than rent revision
One-time income, etc.

9060

Initiatives

30

0Proactive Participation in CSR Activities

Initiatives for Climate Change

FP 2019/2 FP 2019/8 FP 2020/2 FP 2020/8 FP 2021/2 FP 2021/8 FP 2022/2

Participation in flower bed
maintenance activities ofcommunity near Logicross Atsugi

Register for Disaster Cooperation Building(LOGIPORT Sagamihara, LOGIPORT Hashimoto,
Logicross Nagoya Kasadera)

Energy Saving Initiatives

Financial Strategy▶

F inancial Highlights(As of Apr. 15, 2022)

10

LOGIPORT Hashimoto

Long-term Debt Ratio

Fixed Interest Rate Ratio

Average Remaining
Debt Duration

96.7%

96.7%

5.8 years

Average Debt Cost

Credit Rating (JCR)

Forecasted LTV(FP 2023/2)

0.44%

AA- (Positive)

35.4%

Cleanup activities aroundour office

Logicross Nagoya Kasadera

Installing insulated sandwich panels

Renovation of cafeteria(LOGIPORT Sagamihara)

Deploying motion sensors

Use of Renewable Energy

Installing solar panels

Introducing RE100

Mitsubishi Estate Logistics REIT Investment Corporation

11

Portfolio▶

▶

Portfolio Summary▶

No. of Properties

Total Acquisition Price

Total Appraisal Value

24 properties

216.2 bn yen 242.3 bn yen

Average Property Age

Appraisal NOI Yield

7.1 years

4.7%

Diversification Summary

Change in Investment Unit Price(yen)

Area Diversification(Based on acquisition price)
IHI Infrastructure Systems 9.2%
Nippon Express Company 5.2%
Not Disclosed
5.0%
Nihon Realest
4.1%
Sankyu4.1%
ORIX Auto
3.3%
Kimura Unity
3.3%
MITAKA SOKO
3.1%
KOHNAN SHOJI
3.1%
Fukuoka Logistics System
3.1%
Others56.4%

66,500(As of Feb. 28, 2022)

35,000500,000

Main Portfolio

Sponsor-developed Properties /■Asset Management
Company-sourced Properties(Based on acquisition price)

30,00025,000400,000
20,000350,000

8.9%

15,000

13.0%

30.6%

300,000

10,000

58.1%
20.0%

69.4%

250,000
200,000■ Tokyo Metropolitan Area
■ Osaka Metropolitan Area
■ Nagoya Metropolitan Area
■ Others■ Sponsor-developed Properties■ Asset Management Company-sourced
Properties▶

Sponsor-Developed Properties

5,000

Sept. 14,2017

Feb. 28,
2018

Aug. 31,2018

Feb. 28,
2019

Logicross Osaka

Acquisition price 14,424 million yen
Occupancy rate 100.0%
BELS ★★★★★
CASBEE S Rank for Real Estate

Acquisition price 9,743 million yen
Occupancy rate 100.0%
BELS ★★★★★
CASBEE S Rank for Real Estate

Breakdown by Units

Domestic entities
231 unitholders(2.5%)
Financial institutions
164 unitholders(1.8%)

Securities companies
10,496 unitholders(2.7%)

Foreign entities
206 unitholders (2.3%)
Securities companies
21 unitholders(0.2%)LOGIPORT Kawasaki Bay(co-beneficiary interests 45%)
Acquisition price 36,000 million yen
Occupancy rate 99.9%
CASBEE A Rank for New Construction

Asset Management Company-Sourced Properties▶

Domestic individuals
and others
8,478 unitholders(93.2%)IR Calendar
11th fiscal periodFeb.
MJ Logipark Sendai 1

MJ Lojipark Fukuoka 1

Acquisition price 7,388 million yen
Occupancy rate 100.0%

Acquisition price 6,130 million yen
Occupancy rate 100.0%
BELS ★★★★★(ZEB Ready)
CASBEE S Rank for Real EstateFeb. 28,
2021

Aug.

Domestic individuals
and others
31,647 unitholders(8.1%)

Aug. 31,2021

Feb. 28,2022

0

Investment
in MEL by MEC(As of Apr. 15, 2022)

391,135

Domestic entities
27,018 unitholders(6.9%)

18,350 units (4.1%)

unitsFinancial institutions
238,360 unitholders(60.9%)

12th fiscal period

Closing of the period ending February

Acquisition price 13,670 million yen
Occupancy rate 100.0%
CASBEE S Rank for Real EstateAug. 31,2020

Foreign entities
83,614 unitholders(21.4%)

Fiscal period ended February 2022
(September 1, 2021 to February 28, 2022)
Announcement of results: April 15, 2022
Commencement of dividends payments: May 20, 2022

MJ Logipark Kasugai 1

Feb. 28,
2020

Breakdown by Unitholders

9,100
Logicross Nagoya Kasadera

Aug. 30,2019U nitholders Composition (As of Feb. 28, 2022)

unitholders

12(unit)

426,500 yen

Trading Volume (Right)

Investment Unit Price (Left)

550,000

450,000

Tenant Diversification(Based on leased area)▶

Unitholder Information(As of Feb. 28, 2022. However, the properties acquired on Mar. 1, 2022. are included)

Mar.

Apr.

Sept.

Oct.

Closing of the period ending AugustFiscal period ending August 2022
(March 1, 2022 to August 31, 2022)
Announcement of results: middle of October 2022 (to be announced)
Commencement of dividends payments: late November 2022 (to be announced)
Announcement of
results for the period
ending February
Commencement of dividends payments for the period ending February

May
Nov.
Announcement of
results for the period
ending August

Jun.

Jul.

Dec.

Jan.

Commencement of dividends payments for the period ending August
Mitsubishi Estate Logistics REIT Investment Corporation

13

Financial Section
BALANCE SHEET, continued

BALANCE SHEETASSETS
Current assets:
Cash and deposits (Note 5)
Cash and deposits in trust (Note 5)
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other current assets
Total current assets
Fixed assets:
Property and equipment (Notes 6, 8)
Buildings in trust (Note 14)
Less: accumulated depreciation
Buildings in trust, net
Structures in trust (Note 14)
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
Total property and equipment
Intangible assets (Note 6)
Software
Other intangible assets
Total intangible assets
Investments and other assets
Deferred tax assets (Note 15)
Long-term prepaid expenses
Security deposit
Total investments and other assets
Total fixed assets
Total assets
The accompanying notes are an integral part of these financial statements.

14

Thousands of yen
As ofAugust 31, 2021
February 28, 2022¥¥

4,669,730
6,973,856
43,411
21,978594,077
12,303,054¥

5,380,624
6,836,890
38,45722,284
1,890
12,280,146

69,323,806(4,572,054)
64,751,752
2,413,488(126,726)
2,286,761
202,323(24,328)
177,994
28,674(4,392)
24,281
101,608,148
168,848,938

69,433,894(5,420,209)
64,013,685
2,415,040(150,817)
2,264,223
202,323(35,872)
166,450
33,200(7,116)26,083
101,608,148
168,078,592

2,035
591
2,626

1,085
541
1,626

11
41,711
10,00051,722
168,903,287
181,206,341

14
33,33910,00043,354
168,123,573
180,403,720¥

LIABILITIESCurrent liabilities:
Operating accounts payable
Short-term loans payable (Notes 7,13)
Long-term loans payable due within one year
Accounts payable
Distributions payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
OthersTotal current liabilities
Non-current liabilities
Investment corporation bonds (Notes 7,13)
Long-term loans payable (Notes 7, 13)
Tenant leasehold and security deposits in trust (Note 7)
Total non-current liabilities
Total liabilities
NET ASSETS
Unitholders’ equity
Unitholders’ capital
Units authorized:
10,000,000 units as of February 28, 2022 and August 31,
2021
Units issued and outstanding:
391,135 units as of February 28, 2022 and August 31, 2021
Unitholders’ capital, gross
Deduction from unitholders’ capital
Unitholders’ capital, net
SurplusRetained earnings
Total surplus
Total unitholders’ equity
Total net assets (Note 12)
Total liabilities and net assets

Thousands of yen
As ofAugust 31, 2021
February 28, 2022¥¥

306,660
1,400,000
2,211,000
11,1594,808
566,362826
877,391
63,77196
5,442,075¥

189,127
3,310,000
12,754
4,632
647,119904
281,822876,14383
5,322,587

2,000,000
53,663,000
3,691,040
59,354,040
64,796,116

2,000,000
53,064,000
3,712,060
58,776,060
64,098,648

115,191,501(1,162,998)
114,028,503

115,191,501(1,427,014)
113,764,487

2,381,722
2,381,722
116,410,225
116,410,225
181,206,341

2,540,583
2,540,583
116,305,071
116,305,071
180,403,720¥

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

Mitsubishi Estate Logistics REIT Investment Corporation

15

Financial Section
STATEMENT OF INCOME AND RETAINED EARNINGS

Operating revenues:
Operating rental revenues (Note 9)
Other rental revenues (Note 9)
Total operating revenues
Operating expenses:
Expenses related to property rental business (Note 9)
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
Compensation income for damage or loss
Refund of property taxes
Reversal of cash distribution payable
Total non-operating income
Non-operating expenses:
Interest expenses
Interest expenses on Investment corporation bonds
Borrowing related expenses
Amortization of organization expenses
Investment unit issuance expenses
Investment corporation bond issuance expenses
Loss on reduction of tangible fixed assets
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes-current (Note 15)
Income taxes-deferred (Note 15)
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings

16

Thousands of yen
For the period ended
August 31, 2021
February 28, 2022¥

4,720,745
232,341
4,953,086

¥

¥

Yen

4,798,577
230,320
5,028,898

1,801,259
398,037
1,558
21,662
2,400
101,640
70,591
2,397,151
2,555,935

1,744,322
475,962
1,570
17,686
2,400
102,961
43,502
2,388,405
2,640,493

55
829
604
2,284
3,773

57
36,387
737
37,182112,251
5,343
3,959
4,032
35,343
16,411
177,341
2,382,367
2,382,367
834
4
839
2,381,528
193
2,381,722

111,309
6,916
2,899
15,157
136,283
2,541,392
2,541,392
913
(3)
909
2,540,482
101
2,540,583¥

For the period ended
August 31, 2021
February 28, 2022
Net income per unit (Note 16)

¥

6,108

¥

6,495

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

Mitsubishi Estate Logistics REIT Investment Corporation

17

Financial Section
STATEMENT OF CHANGES IN NET ASSETSFor the period ended August 31, 2021

For the period ended February 28, 2022
Thousands of yen
Unitholders’ equity
Surplus

Unitholders’ capital
Deduction
fromUnitholders’
Unitholders’capital, net
capital, gross unitholders’capitalBalance as of
September 1, 2021

UnappropriatedTotal surplus
retained earnings

Total
unitholders’equityTotal
net assets

Balance as of March¥115,191,501¥(1,162,998) ¥114,028,503¥2,381,722 ¥2,381,722¥116,410,225¥116,410,225

Issuance of new
investment units
Distributions inexcess of-(264,016)(264,016)--(264,016)(264,016)

Surplus cash
distributions

Total change during
the period

-

-

-

(2,381,621) (2,381,621)(2,381,621)(2,381,621)

-

-

-

2,540,482

2,540,482

2,540,482

2,540,482-(264,016)(264,016)

158,861

158,861(105,154)(105,154)

Balance as ofFebruary 28, 2022
(Note 12)Total
net assets¥98,444,036¥ (931,072)¥97,512,964¥2,073,248 ¥2,073,248¥99,586,213¥99,586,213

16,747,464-

16,747,464--

16,747,464

16,747,464-(231,925)(231,925)--(231,925)(231,925)---(2,073,054) (2,073,054)(2,073,054)(2,073,054)

-

-

-

2,381,528

2,381,528

2,381,528

2,381,528

16,747,464(231,925)

16,515,539

308,473

308,473

16,824,012

16,824,012¥2,381,722 ¥2,381,722¥116,410,225¥116,410,225

retained earnings

Surplus cash
Net income

Total
unitholders’equityperiodretained earnings
distributions

UnappropriatedTotal surplus
retained earnings

Change during theChange during theperiod18

Unitholders’ capital
Deduction
fromUnitholders’
Unitholders’capital, net
capital, gross unitholders’capital1, 2021 (Note 12)(Note 12)Distributions inexcess ofThousands of yen
Unitholders’ equity
Surplus¥115,191,501 ¥ (1,427,014) ¥113,764,487¥2,540,583 ¥2,540,583¥116,305,071¥116,305,071

Net income
Total change during
the period

Balance as of August¥115,191,501
31, 2021 (Note 12)¥(1,162,998) ¥114,028,503

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

Mitsubishi Estate Logistics REIT Investment Corporation

19

Financial Section
STATEMENT OF CASH FLOWSCash flows from operating activities:
Income before income taxes
Depreciation
Investment unit issuance expenses
Investment corporation bond issuance expenses
Interest income
Interest expenses
Interest expenses on investment corporation bonds
Reversal of cash distribution payable
Compensation income for damage or loss
Loss on reduction of tangible fixed assets
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 in trust
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
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 the period
Cash and cash equivalents at the end of the period(Note 5)

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

20

NOTES TO FINANCIAL STATEMENTS
Thousands of yen
For the period ended
August 31, 2021
February 28, 2022¥¥

2,382,367
882,10335,343
16,411(55)
112,251
5,343(2,284)(14,832)
615,612(628)
1,003
41,049(10,191)
67,176
161,834
67,8024,360,307
55(107,225)(924)
4,252,212¥

2,541,392
887,512(57)
111,309
6,916(737)(36,387)
15,157
4,954
594,077(306)
8,371(58,169)
1,595
83,773281,822(1,248)(44,444)
4,395,532
57(121,243)(835)
4,273,511(29,046,707)
895,083(20,172)(28,171,796)(175,529)
35,200(14,179)(154,509)

3,500,000(4,100,000)
10,300,000
1,983,588
16,712,121(2,072,871)(231,878)
26,090,959
2,171,375
9,472,211
11,643,587(1,400,000)
2,711,000(2,211,000)(2,381,210)(263,864)(3,545,074)
573,927
11,643,587
12,217,514

¥

1.
a)

ORGANIZATION AND BASIS OF PRESENTATION
Organization
Mitsubishi Estate Logistics REIT Investment Corporation (hereinafter “MEL”) was established on July 14, 2016 under the “Act on 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.,
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 externally managed by a licensed asset management company, Mitsubishi Jisho Investment Advisors, Inc.. As of
February 28, 2022, MEL held in the form of trust beneficiary interest in 22 properties (aggregate acquisition price: 170,404 million yen), and theoccupancy rate remained high at 99.6% 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, theJapanese Financial Instruments and Exchange Act and their related accounting regulations, and in conformity with accounting principles
generally accepted in Japan (hereinafter the “Japanese GAAP”), which are different in certain respects as to application 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 with Japanese 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, amountsof 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 and August of eachyear. 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 arevery liquid and realizable with a maturity of three months or less when purchased and that are subject to insignificant 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 calculatedby the straight-line method over the estimated useful lives as follows:c)

Buildings
Structures

2-63 years
10-58 years

Machinery and equipment
Tools, furniture and fixtures

8-12 years
3-15 years

Intangible Assets

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

Mitsubishi Estate Logistics REIT Investment Corporation

21

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

e)f)Organization Expenses
Not applicable.
Investment Unit Issuance Expenses
Not applicable.

g)

Investment corporation bond Issuance Expenses
Not applicable.

h)

Revenue Recognition
Details of the main performance obligations related to revenues arising from contracts with customers of MEL and the normal timing at whichsuch performance obligations are satisfied (the normal timing for recognizing revenue) are as follows.
(1) Sale of Real Estate
Income from the sale of real estate is recorded as income when the buyer, who is the customer, acquires control of the relevant real estate
by fulfilling the obligation of delivery stipulated in the contract for the sale of real estate.
(2) Utilities Charge
Revenues from utilities are recorded according to the supply of electricity, water, etc. to the lessee who is the customer based on the lease
contract for real estate, etc. and the agreement incidental thereto.
Among the revenue from utilities, if the tenant is determined as an agent by MEL, the net amount obtained by deducting the amount tobe paid to the other party from the amount received as electricity and gas charges supplied by the other party is recognized as revenue.

3. CHANGES IN ACCOUNTING POLICIESApplication of Accounting Standard for Revenue Recognition
The "Accounting Standard for Revenue Recognition" (Accounting Standard Board of Japan ("ASBJ") Statement No. 29, March 31, 2020;
hereinafter the "Revenue Recognition Accounting Standard") has been applied from the beginning of the fiscal period ended February 28,
2022. Under this accounting standard, revenue is recognized in an amount expected to be received in exchange for goods or services whencontrol of promised goods or services is transferred to a customer. There is no impact from this change on the fiscal period ended February
28, 2022.
In accordance with the transitional treatment outlined in Paragraph 89‐3 of Accounting Standard for Revenue Recognition, the noterelated to the Revenue Recognition for the previous fiscal period is not presented.
4. CHANGES IN DISPLAY METHOD
Application of Accounting Standard for Fair Value Measurement
The “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter the "Fair Value Measurement
Accounting Standard") has been applied from the beginning of the fiscal period ended February 28, 2022. In accordance with thetransitional treatment provided for in Paragraph 19 of the “Accounting Standard for Fair Value Measurement” and Article 44–2 of the“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the Fair Value Measurement Accounting Standard
will henceforth be applied on an ongoing basis.
In accordance with the provisions of Article 2, Paragraph 5 of the Supplementary Provisions of the Cabinet Office Ordinance for Partial
Revision of the Ordinance on Terminology, Forms, and Preparation Methods of Financial Statements, etc. (Cabinet Office Ordinance No. 61,
September 24, 2021), the matters listed in Article 8-6-2, Paragraph 1, Item 3 of the Ordinance on Terminology, Forms, and Preparation
Methods of Financial Statements, etc. after the revision have been omitted.

i)

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 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 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.

j)Taxes on Property and Equipment
With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessed and determined, the amountcorresponding 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, the amount equivalent toproperty taxes is capitalized as part of the acquisition cost of the relevant property instead of being charged as an expense.

22

Mitsubishi Estate Logistics REIT Investment Corporation

23

Financial Section
5.

CASH5.ANDCASHCASHAND
EQUIVALENTS
CASH EQUIVALENTS
Relationshipbetween cash
and cashin statementof cash flows
and flows
accounts
amounts
the accompanying
balance sheet
Relationshipbetweencashequivalents
and cash equivalents
in statementof cashandandaccounts
andinamounts
in the accompanying
balance sheet
are as follows:
are as follows:
ThousandsThousandsof yenof yenAs of
As of
August 31,August2021 31, 2021
February 28,
February2022 28, 2022
Cash and deposits
Cash and deposits¥¥ 4,669,730 4,669,730¥¥ 11,643,58711,643,587

Cash and deposits
Cash andindeposits
trust in trust¥ 5,380,624 5,380,624¥¥12,217,51412,217,514

6,973,856 6,973,856

Cash and cash
Cashequivalents
and cash equivalents
6.

¥

6,836,890 6,836,890

ThousandsThousandsof yenof yen10,500¥-¥¥- - ¥ ¥

-10,500¥

10,500¥8,873¥¥8,8731,000 ¥

1,000
¥
1,626
¥

(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

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 the necessary 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 ofDepreciation Net balanceNet
Balance as of
Balance as of
Decrease Decrease
Balance as of
Balance as of Depreciationas balance as
Increase during
Increase during
Type of assets
Type of assetsSeptember September
1,1,during the during
Februarythe 28,February
28,
of Februaryof
28,February
Remarks
28, Remarks
Accumulated
Accumulated
Depreciation
Depreciation
the period the period
2021
2021
periodperiod2022
2022
2022
2022
depreciationdepreciation
for the period
for the period
Buildings inBuildings in¥ 69,323,806¥ 69,323,806¥ 110,087 ¥ 110,087¥- ¥ ¥ 69,433,894¥ 69,433,894¥ 5,420,209¥ 5,420,209¥ 848,154 ¥ 848,154¥ 64,013,685¥ 64,013,685
trust
trust
Structures in
Structures
trust
in trust
2,413,488 2,413,48816,709
16,70915,15715,1572,415,040 2,415,040
150,817 150,817
24,09024,0902,264,223 2,264,223
Property Property
Machinery andMachinery and202,323 202,323- 202,323
202,32335,872
35,872
11,543
11,543166,450 166,450
andequipment
equipmentin trust
in trust
andequipment equipment
Tools, furniture
Tools, furnitureand fixturesandin fixtures in 28,674
28,674 4,525
4,525 33,200
33,200 7,116
7,116
2,723
2,723 26,083
26,083trust
trust
Land in trustLand in trust101,608,148101,608,148- 101,608,148
101,608,148- 101,608,148
101,608,148
Total property
Total
and
propertyequipment
and equipment¥173,576,441¥173,576,441¥ 131,323 ¥ 131,323¥ 15,157 ¥ 15,157¥173,692,607¥173,692,607¥ 5,614,015¥ 5,614,015¥ 886,512 ¥ 886,512¥168,078,592¥168,078,592
Software Software ¥
9,500
¥
9,500
¥
-¥ ¥
- - ¥ ¥
- 9,500¥¥9,500 8,415¥¥8,415950 ¥¥950 1,085¥-1,085Intangible Intangible
Other intangible
Other intangible
assets1,000- - 1,000
1,000 458
458 50
50
541
- 541
1,000
assetsassetsassets
10,500¥FINANCIAL INSTRUMENTS
Overviewbonds 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

PROPERTY
AND EQUIPMENT
AND INTANGIBLEASSETS ASSETS
6.
PROPERTY
AND EQUIPMENT
AND INTANGIBLE
Property andPropertyequipment
and equipment
and intangible
and intangible
assets as of
assetsFebruary
as of28,
February2022 are28,as2022
follows:
are as follows:

Total intangible
Totalassets
intangible assets ¥7.
a)-1,626-

investment units, comprehensively taking into account the financial environment, MEL’s capital structure and the 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 derivativetransactions solely for the purposes of reducing risks of rising interest rates related to financings and other types of risks. There was noderivative 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 and lending institutions, securingliquidity 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 tomitigate such risks on its operations by maintaining a conservative loan to value ratio and increasing the ratio of long-term fixed interest rateloans.
The security deposits which MEL has received from the tenants are exposed to liquidity risk due to cancelation of lease agreement before
the maturity date. In the case of trust beneficiary interest in real estate, MEL secures safety by 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 ensures safety by accurately tracking the timing of the tenant move-ins and outs andanticipating the fund demand utilizing historical data.
(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.

24

Mitsubishi Estate Logistics REIT Investment Corporation

25

Financial Sectionb)

Estimated Fair Value of Financial Instruments
The book value, fair value and differences between the values as of February 28, 2022 are as follows: Financial instruments for “Cash and

The book value, fair value and differences between the values as of August 31, 2021 are as follows: Financial instruments for “Cash anddeposits”,” Cash and deposits in trust” and “Short-term loans payable” are excluded from the following table due to the short maturities anddeposits”,” Cash and deposits in trust” and “Short-term loans payable” are excluded from the following table due to the short maturities andthe book value of these instruments which is deemed a reasonable approximation of the fair value. “Tenant leasehold and security deposits inthe book value of these instruments which is deemed a reasonable approximation of the fair value. “Tenant leasehold and security deposits intrust” is also excluded from the following table because of lack of materiality.

trust” is also excluded from the following table because of lack of materiality.

Thousands of yen
Thousands of yen

Book value(1)Long-term loans payable due within one year(2)

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

3,310,000¥

3,316,298

2,000,000(Note 1) Methods to estimate fair values of financial instruments¥

58,374,000

Long-term loans payable due within one year

¥

6,298

(2)

Investment corporation bonds

2,000,000

2,035,749

35,749(26,200)(3)

Long-term loans payable

53,663,000

54,043,474

380,474

824,89359,178,991¥

804,991

Total liabilities(Note1) Methods to estimate fair values of financial instruments

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 fairvalue is approximately equal to the book value. Thus, the book value is used.

57,874,000¥

2,211,276¥

58,290,500¥

276

416,500

value is approximately equal to the book value. Thus, the book value is used
(Note2) Repayment schedule for debt after August 31, 2021

Thousands of yen
As of August 31, 2021
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

Calculated based on the reference values published by the Japan Securities Dealers Association.

(Note 2) Repayment schedule for debt after February 28, 2022
Thousands of yen
As of February 28, 2022
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

26

¥

¥

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(2) Investment corporation bonds-

2,211,000

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

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¥ 3,310,000 ¥¥(1) Long-term loans payable due within one year, (2) Investment corporation bonds and (3) Long-term loans payable(1) Long-term loans payable due within one year and (3) Long-term loans payable

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

Difference(1)

53,888,893¥

Fair value (Note 1)

Difference

1,973,800

53,064,000

Total liabilities

Book value

Fair value (Note 1)

- ¥

- ¥

- ¥

- ¥

-

-

-

-

6,540,000¥ 3,310,000 ¥ 6,540,000

2,000,000

Long-term loans payable
due within one year
Investment corporationbonds
Long-term loans payableTotal¥ 2,211,000 ¥
-

- ¥

- ¥

- ¥

- ¥

-

-

-

-

3,310,000¥ 2,211,000 ¥ 3,310,000

2,000,000

6,540,000
5,900,000
4,970,000 32,943,000¥ 6,540,000 ¥ 5,900,000 ¥ 4,970,000 ¥34,943,000

4,550,000
6,320,000
5,010,000 30,644,000¥ 4,550,000 ¥ 6,320,000 ¥ 5,010,000 ¥32,644,000

Mitsubishi Estate Logistics REIT Investment Corporation

27

Financial Section
8.

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

9.

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

and fair value of the properties are as follows:

28, 2022 and August 31, 2021.
Thousands of yen
For the period ended
August 31, 2021
February 28, 2022

Thousands of yen
For the period ended
August 31, 2021
February 28, 2022
Book value (Note 1)
Balance at the beginning of the period¥

Changes during the period (Note 2)

140,675,424¥

28,173,514

168,848,938(770,346)

Balance at the end of the period¥

168,848,938¥

168,078,592

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

189,300,000¥

191,520,000(Note 1) Book value is calculated by deducting accumulated depreciation from acquisition cost.
(Note 2) The increase for the fiscal period ended August 31, 2021 was primarily a result of the acquiring new properties for a total of 28,886,168
thousand yen. The decrease was primarily a result of the recognition of depreciation, which amounted to 881,103 thousand yen. The
increase for the fiscal period ended February 28, 2022 was primarily a result of the recognition of CAPEX which amounted 131,323
thousand yen. The decrease was primarily a result of the recognition of depreciation, which amounted to 886,512 thousand yen.
(Note 3) The fair value at the end of the period is determined based on appraised value provided by independent real estate appraisers.
Income and loss in connection with investment and rental properties are disclosed in “9. PROPERTY-RELATED REVENUES AND EXPENSES.”

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¥

4,533,464
187,280
4,720,745¥

144,882
87,458232,341
4,953,086¥¥

208,222407,913
7,306
142,071
131,715881,103
3,676¥

212,078
407,631
7,202
62,387
144,931886,5123,710¥¥

1,801,259
3,151,826¥¥

1,744,322
3,284,575¥¥¥¥

Others4,606,378
192,198
4,798,577¥

151,770
78,550230,320
5,028,898¥¥

19,251

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

19,867

10. REVENUE RECOGNITION(For the fiscal period ended February 28, 2022)a) Breakdown information on revenue from contracts with customers
Thousands of yen
Revenue from contracts withcustomers
Received utilities cost¥

Others

Net sales to external customers

151,770

¥

Total

¥

151,770

151,770
4,877,127¥

5,028,898(Note1) Rental business revenue, etc. subject to ASBJ Statement No. 13, "Accounting Standard for Lease Transactions," and transfers of real estate,28

Mitsubishi Estate Logistics REIT Investment Corporation

29

Financial Section
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 from the 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

11. LEASESThe future minimum rental revenues from tenants subsequent to each fiscal period end under the non-cancelable operating leases ofproperties are as follows:
Thousands of yen
As ofon 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 period of revenues expected to be recognized in the following accounting period or thereafter
from contracts with customers existing at the end of the current accounting period(1)Balance of contract assets and contract liabilities, etc.

Claims generated from contracts with customers(balance at beginning of the fiscal period)
Claims generated from contracts with customers¥

Due after one year
Total

August 31, 2021
8,732,265

February 28, 2022¥
8,951,097

58,945,497¥

55,564,422

67,677,762¥

64,515,520

12. NET ASSETSa) Stated CapitalThousands of yen
For the fiscal period from
September 1, 2021 to
February 28, 2022

MEL issues only non-par value units in accordance with the Investment Trust Law. The entire amount of the issue price of new units isdesignated as stated capital. The Investment Corporation is required to maintain net assets of at least 50,000 thousand yen as required by the¥b)

32,553

Investment Trust Law.
Distributions
Yen
For the period ended

29,511(balance at end of the fiscal period)
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)

Due within one year¥-

(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 “AccountingStandard Guidance for Revenue Recognition”, as MEL is entitled to receive from the customers the amount of consideration that directly
corresponds to the value to the tenants who are the customers for the portion of performance completed by the end of the period.
Accordingly, MEL has applied the provisions of paragraph 80-22(2) of the "Accounting Standard for Revenue Recognition" and has notincluded them in the notes to the transaction price allocated to its remaining performance obligations.

August 31, 2021
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 28, 2022

¥ 2,381,722,226¥¥ 2,540,583,889

264,016,125

265,580,665

2,645,637,140(6,764)2,806,002,490(7,174)

2,381,621,015

2,540,421,825(6,089)(6,495)

264,016,125

265,580,665

(675)

(679)

101,211¥

162,064

Pursuant to the “Policy on the Distribution of Funds” as defined in Article 35, Paragraph 1 of the Articles of Incorporation, the amount of
distributions shall be the amount which does not exceed the amount of profits but exceeds 90% of the distributable profit as defined in Article
67-15 of the Special Taxation Measures Act. Based on the policy, MEL declared distribution amounts of 2,540,421,825 yen and 2,381,621,015
yen for the fiscal periods ended February 28, 2022 and August 31, 2021, respectively. These amounts were equivalent to the maximum integral

30

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31

Financial Section
multiples of number of investment units issued and outstanding as of the end of each fiscal period. Based on the distribution policy as definedin Article 35, Paragraph 2 of the Articles of Incorporation, MEL shall make Surplus Cash Distributions (SCD), defined as distributions in excess ofretained earnings, as a return of unitholders’ capital, each fiscal period on a continuous basis.
Accordingly, for the fiscal period ended February 28, 2022, MEL declared SCD of 265,580,665 yen, 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, 2021, MEL declared SCD of
264,016,125 yen, as a return of unitholders’ capital, which was the amount equivalent to approximately 30.0% of depreciation expense.

13. 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 table summarizes the shortterm and long-term loans payable as of February 28, 2022 and August 31, 2021.

Weighted-averageinterest rate
September 1, 2021(Note 1)
0.1755%
Short-term loans payable
March 9, 2022(Note 2)
0.1511%
Total short-term loans payable
Long-term loans payable
September 14, 2021
0.3263%due within one year
(Note 3) (Note 4)
September 14, 2022
0.3575%Classification

Repayment dateThousands of yen
As ofAugust 31, 2021

February 28, 2022

¥

¥

¥
¥

0.2400%Total Long-term loans payable due within one year
Long-term loans payable
September 2, 2023
September 14, 2023

0.2500%0.3913%September 1, 2024
September 14, 2024
October 9, 2024

0.2000%0.4288%0.1800%March 9, 2025
September 1, 2025

0.2100%0.2000%

September 14, 2025
October 9, 2025
September 1, 2026
September 14, 2026
October 9, 2026

32

0.2663%0.4675%0.3950%0.2160%0.2413%0.3125%0.2500%0.5075%0.4538%0.2600%¥¥500,000
900,000
1,400,000
720,000
1,491,000
430,000
2,050,000
830,000
5,521,000
3,000,000
1,760,000
1,330,000
450,000
1,150,000
900,000
1,250,000
1,250,000
1,350,000
1,500,000
300,000
800,000
620,000
800,000
200,000
750,000
500,000
710,000
500,000
2,400,000
400,000¥¥¥¥

430,000
2,050,000
830,000
3,310,000
3,000,000
1,760,000
1,330,000
450,000
1,150,000
900,000
1,250,000
1,250,000
1,350,000
1,500,000
300,000
800,000
620,000
800,000
200,000
750,000
500,000
500,000
710,000
500,000
2,400,000
400,000

Mitsubishi Estate Logistics REIT Investment Corporation

33

Financial Section

Classification

Repayment date
March 9, 2027
September 14, 2027

Weighted-averageinterest rate
0.3663%0.5500%

October 9, 2027
March 9, 2028

0.2400%0.4313%

March 19, 2028
September 1, 2028

0.3963%0.4238%September 14, 2028

0.5750%

October 10, 2028
March 9, 2029

0.3738%0.4200%0.5013%

March 19, 2029
September 1, 2029
September 14, 2029
September 30, 2029
March 9, 2030
August 30, 2030

0.4663%0.4182%0.4400%0.4900%0.5549%0.4683%0.5000%March 7, 2031
March 9, 2033

0.6176%0.6500%Total long-term loans payable
Total

Thousands of yen
As ofAugust 31, 2021¥¥

900,000
1,340,000
1,340,000
880,000
880,000
1,250,000
900,000
800,000
800,000
900,000
500,000
830,000
807,000
1,256,000
750,000
500,000
500,000
500,000
1,000,000
1,750,000
4,000,000
1,050,000
2,000,000
500,000
500,000
1,000,000
1,000,000
50,353,000
57,274,000b)February 28, 2022¥¥

900,000
1,340,000
1,340,000
880,000
880,000
1,250,000
900,000
800,000
800,000
900,000
500,000
830,000
807,000
1,256,000
720,000
750,000
500,000
500,000
500,000
1,000,000
1,750,000
1,491,000
4,000,000
1,050,000
2,000,000
500,000
500,000
1,000,000
1,000,000
53,064,000
56,374,000

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 February
28, 2022 and August 31, 2021

Maturity
Classification
Total Short-term investment corporation bonds
Series 1

April 14, 2036
Total Long-term investment corporation bonds

Thousands of yen
As ofAugust 31, 2021
February 28, 2022

Interest rate
0.7000%

¥

-

¥

-

¥

2,000,000¥

2,000,000¥

2,000,000¥

2,000,000

14. REDUCTION ENTRY
The amount of reduction entry of property and equipment as of February 28, 2022 and August 31, 2021 are as follows:
Thousands of yen
As of
Buildings in trust
Structures in trust

August 31, 2021¥¥

31,2207,008

February 28, 2022¥
31,220¥22,166

15. 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 28, 2022 and August 31, 2021 are as follows:
Thousands of yen
As ofEnterprise tax payable
Total deferred tax assets
Net deferred tax assets

August 31, 2021
¥
¥

11
11
11

February 28, 2022
¥
¥

14
14
14

The stated interest rate is the weighted average interest rate during each fiscal period. The redemption schedules for long-term loans
payable subsequent to August 31, 2021 and February 28, 2022 are disclosed in “7. FINANCIAL INSTRUMENTS”.
(Note 1) The short-term loan of 500 million yen was repaid on September 1, 2021.
(Note 2) The short-term loan of 900 million yen was repaid in advance on December 9, 2021.
(Note 3) The long-term loan of 720 million yen was repaid on September 14, 2021.
(Note 4) The long-term loan of 1,491 million yen was repaid on September 14, 2021.

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Financial Section
Reconciliations of major items that caused differences between the statutory tax rate and effective tax rate with respect to pre-tax incomed)August 31, 2021
Statutory tax rate
Adjustments:
Deductible cash distributions
Other
Actual effective income tax rate

For the period ended
February 28, 2022
31.46%
31.46%

18. SEGMENT AND RELATED INFORMATION(For the fiscal periods ended February 28, 2022 and August 31, 2021)a)(31.45%)
0.03%
0.04%

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(31.45%)
0.02%
0.04%

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 a tax deductible distribution as defined in theSpecial Taxation Measures Act.
16. PER UNIT INFORMATION
The following table summarizes per unit information for the fiscal periods ended February 28, 2022 and August 31, 2021.

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

Yen
For the period ended
August 31, 2021
February 28, 2022¥

Transactions and Account Balances with Board of Directors and Individual Unitholders
There were no transactions and account balances for the fiscal periods ended February 28, 2022 and August 31, 2021.

reflected in the accompanying statements of income for the fiscal periods ended February 28, 2022 and August 31, 2021 are as follows:

6,108
389,872¥

6,495
391,135

Net assets per unit¥
297,621¥297,352(Note) Basic net income per unit is based on the weighted average number of units issued and outstanding during the period. Diluted
earnings per unit and related information are not disclosed as no dilutive units were outstanding.
17. 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 28, 2022 and August 31, 2021.
b)Transactions and Account Balances with Affiliates
There were no transactions and account balances for the fiscal periods ended February 28, 2022 and August 31, 2021.

c)

Transactions and Account Balances with Companies under Common Control(i) Operating Revenues
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues on thestatement 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 the amount 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 thestatement of income and retained earnings.
19. SIGNIFICANT SUBSEQUENT EVENTSIssuance of New Investment Units
MEL issued new investment units based on the resolution made by the board of directors on February 7, 2022 and February 16, 2022
and the payment was completed on March 1, 2022 and March 23, 2022 for the issuance of new investment units through public offeringand third-party allotment, respectively.
<Issuance of New Investment Units through Public Offering>Number of units issued: 56,000 units
Issue price: 406,965 yen per unit
Total amount issued: 22,790,040,000 yen
Issue amount: 393,608 yen per unit
Net proceeds: 22,042,048,000 yen
Payment date
: March 1, 2022
<Issuance of New Investments Units through the Third-Party Allotment>
Number of units issued: 2,800 units
Issue amount: 393,608 yen per unit
Net proceeds: 1,102,102,400 yen
Payment date
: March 23, 2022
Allotee: SMBC Nikko Securities Inc.

There were no transactions and account balances for the fiscal periods ended February 28, 2022 and August 31, 2021.

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Financial Section

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39

Other Information
Remuneration Policy for the Asset Management Company’s Directors, Corporate Auditors and Employeesi) Remuneration for Asset Management Company’s Directors

Remuneration for Asset Management Company’s Directors and Corporate Auditors
April 1, 2021 to March 31, 2022

 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 approved at the General
Meeting of Shareholders.

Directors

 Remuneration amount. Remuneration of each director is determined by the representative director based on the
remuneration table, which assigns responsibilities and position to each director. The responsibilities and position ofeach director are determined by the representative director through comprehensive assessment that includes eachindividual’s abilities and experience.

ii) Remuneration for Asset Management Company’s Corporate Auditors
 Remuneration decision process. Remuneration for corporate auditors is determined at the General Meeting of
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.

Total

Number of
person(s)remunerated

Remuneration

Number of
person(s)remunerated

Remuneration

Number of
person(s)remunerated

Remuneration

6¥68,050,000

1¥1,200,000

7¥69,250,000

Remuneration basedon resolutions of theGeneral Meeting of
Shareholders

 Bonus. Depending corporate performance, bonuses may be paid to directors upon resolution of the Board of Directors.

Corporate auditors

Notes: 1. Remuneration for directors is as per the Companies Act of Japan, Article 361, Paragraph 1, Item 1.
2. Mitsubishi Jisho Investment Advisors, Inc. had four directors (one director served as a part-time role) and two corporate auditors (part-time) as of February 28,
2022.

Remuneration for Asset Management Company’s Employees
April 1, 2021 to March 31, 2022iii) Remuneration for Asset Management Company’s Employees
All employees (Note 1)

 Remuneration system based on skill development. The Asset Management Company’s salary system is based on thelevel of each employee’s professional skills. In order to motivate employees to improve their performance and develop
their professional skills, the Asset Management Company has (i) a performance-based bonus system that rewards theemployee based on the performance of the Asset Management Company as well as the employee’s performance taking
into account the employee’s contribution to the performance of the Asset Management Company and the employee’s
work ethic, and (ii) a performance evaluation and promotion system that evaluates once a year whether to increase theemployee’s remuneration and/or to promotion the employee, in each case based on the employee’s performance andwork 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 are taken into consideration
when determining salary increases.

Remuneration
Number of employees

Remuneration based oncompensation rules
Note:

98

Total

Fixed

Variable (Note 2)¥905,119,333¥605,005,176¥300,114,157

1. Total number of employees of the Asset Management Company who received remuneration during the fiscal year, excluding 15 employees dispatched fromseveral companies, to which the Asset Management Company paid ¥160,179,998 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 Management Company’s Employees” above.

 Retirement allowance program. The Asset Management Company 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 time.

 Executive officer’s remuneration. Remuneration for executive officers is determined by the representative director inaccordance with the policy for executive officers.

40

There are potential conflicts of interest between MEL and the Asset Management Company with respect to remuneration for the AssetManagement Company’s directors, corporate auditors and employees. We believe that the above remuneration policy mitigates suchpotential conflicts. In addition, the Asset Management Company has adopted an internal set of rules that apply to all related-party
transactions, such as transactions between MEL and the Asset Management Company. These rules require strict compliance by the AssetManagement Company with laws and regulations regarding related-party transactions. They also contain specific procedures to befollowed in the event of a transaction that involves a related party, in order to implement arm’s length terms.

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41

Other Information
Information Required under Article 22(2)(d) of the EU Alternative Investment Fund Managers
Directive (AIFMD)

Risk Factors
An investment in MEL’s units involves significant risks. The principal risks with respect to investment in MEL are as follows.

 Material Changes in Information Listed in Article 23 of AIFMD during the Financial Period Covered by the Report(Fiscal period ended February 28 2022 (September 1, 2021 to February 28, 2022))

The principal risks with respect to investment in MEL are as follows:

None.

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Any adverse conditions in the Japanese economy 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 that invest in a
broader range of real estate or real estate-related assets;
Scaling back of monetary policies by the United States, Japan and other major countries may result in increased market
interest rates in Japan and reduced 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 orfind 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 that is accretive toearnings;
MEL’s reliance on Mitsubishi Estate Co., Ltd. and the Mitsubishi Estate Group companies could have a material 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 Management Company manages multiple REITs and property funds and there are potential conflicts of interest
between MEL and other property funds managed by the Asset Management Company;
There are potential conflicts of interest between MEL and certain Mitsubishi Estate Group companies, including the AssetManagement Company;
Any inability to obtain financing for future acquisitions or refinance MEL’s existing debt could adversely affect the growthof 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 of violence orwar, 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 landliquefaction;
Most of the logistics facilities in MEL’s current portfolio and anticipated portfolio cater to a single tenant or a small numberof tenants and are typically designed for a specific use, which may make it difficult to find substitute 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 to uncertainties;

Mitsubishi Estate Logistics REIT Investment Corporation

43

Other Information
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A high loan-to-value ratio, or LTV, may increase MEL’s exposure to changes in interest rates and have a material 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 to significant
uncertainties;
MEL’s performance depends on the efforts of key personnel of the Asset Management Company;
MEL’s failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify it fromcertain 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 or trust
beneficiary co-ownership interest, and its rights relating to such properties may be affected by the intentions of other owners;
and
MEL is subject to increasing scrutiny from certain investors and regulations with respect to environmental, social andgovernance 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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44

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 to acquire;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;

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risks related to the Asset Management Company’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 J-REITs;
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 of shareholders 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; andrisks related to appraisal NAV of MEL’s units.

Mitsubishi Estate Logistics REIT Investment Corporation

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Other Information
Periodic disclosure for financial products referred to in Article 8(1) of Regulation (EU)2019/2088 and Article 6 ofRegulation (EU) 2020/852
Product name: Mitsubishi Estate Logistics REIT Investment Corporation (“MEL”)
Legal entity identifier: Mitsubishi Jisho Investment Advisors, Inc. (the “Asset Management Company”)
The Asset Management Company 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 thefollowing 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)
an environmental objective: ___%
characteristics andwhile it did not have as its objective a sustainable
investment, it had a proportion of ____% of sustainable☐ in economic activities that qualify
investments
as environmentallysustainable
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
Taxonomy☐ with an environmental objective in economic
activities that do not qualify as environmentally
sustainable under the EU Taxonomy☐ with a social objective

To what extent were the environmental and/or social characteristics promoted by this financial product met?
Headed by our sponsor, Mitsubishi Estate Co., Ltd. (together with its consolidated subsidiaries and affiliates, the “Mitsubishi
Estate Group”), the Mitsubishi Estate Group, to which 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 to contribute 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 Asset Management Company, 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.
Environmental initiatives – climate change response. We implement energy-saving measures and take steps to reducegreenhouse gas emissions in our portfolio. Towards these ends, we have installed LED lighting and rooftop solar panels
in our properties. We also track energy consumption, solar power generation and CO2 emission levels in our portfolio.
Furthermore, we display posters that raise awareness on energy-saving measures in common areas of our properties.

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



Environmental initiatives - certification of our properties. To track the environmental performance of our properties, werely 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 other equivalent certifications.

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



Social initiatives - local communities. We build and maintain good relations with local residents, governments and othercommunity members by providing and ensuring a pleasant and safe environment. We support local communities in theevent of disasters by providing our 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 ouremployees, and we endeavor to establish an environment that supports a healthy work-life balance. To help achieve these☐ It made sustainable investments with ☒ It promoted E/S characteristics, but did notmake any
a social objective: ____%
sustainable investments

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Other Information
goals, we have introduced flexible working hours, a defined contribution pension plan and various leave programs that are
tailored to varying needs and circumstances.
●

Social initiatives – human resources development. The Asset Management Company develops human resources withextensive 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 inhoning their skills as real estate asset management professionals, and we subsidize the costs required to obtain and maintainsuch qualifications.

How did the sustainability indicators perform?
We use the following indicators to measure the attainment of the E/S characteristics we promote:








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Environmental initiatives – reduction of CO2 emission. We aim to reduce CO2 emission by 30% by FY2030 from abase year of FY2017. We classify our annual CO2 emissions into three categories: scope 1, scope 2 and scope 3. In
addition to tracking our CO2 emissions, we also track CO2 emission intensity, the latter of which decreased by 7.1%
from FY2019 to FY2020. In the fiscal period ended February 28, 2022, as a part of our ongoing implementation ofenvironmental initiatives, we installed LED lighting to properties in our portfolio as needed, discussed how to better
utilize renewable energy and reviewed our electricity purchase agreements. Furthermore, we switched to RE100,
meaning 100% of electricity used is generated from renewable energy, at MJ Logipark Sendai 1 in February 2022 andprocured a certain amount electricity (2,900,320kWh) used in FY2021 at Logicross Nagoya Kasadera by purchasing
Non-Fossil Value Certificate, which certifies that the electricity purchased is generated by non-fossil fuel energy
sources and carries environmental value.
Environmental initiatives – reduction of energy consumption. We aim to reduce energy consumption by 15% by
FY2030 from a base year of FY2017. We classify our annual energy consumption into two categories: gas and fuelconsumption, and electricity consumption. In addition to tracking our energy consumption levels, we also track ourrenewable energy production, as well as our energy consumption intensity, the latter of which decreased by 3.2%
from FY2019 to FY2020. In the fiscal period ended February 28, 2022, as a part of our ongoing implementation ofenvironmental initiatives, we installed LED lighting to properties in our portfolio as needed, discussed how to better
utilize renewable energy and reviewed our electricity purchase agreements.
Environmental initiatives – water management. We have set a target not increasing our water 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 10.1% from FY2019 to FY2020. In the fiscal period ended February 28,
2022, 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 66.6% and 63.4%, in FY2019 and FY2020, respectively. In addition to tracking our recycling rate,
we also track the amount of waste discharged by weight. In the fiscal period ended February 28, 2022, as a part of ourongoing waste management initiative, we implemented our thorough waste recycling management at each propertyof our portfolio.

Environmental initiatives - certification of our 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 February 28, 2022 and August 31,
2021, 79.1% of our properties were Green Buildings based on floor area. In the fiscal period ended February 28, 2022,
as a part of our ongoing environmental initiatives, we continued improving environmental performance of ourproperties and obtaining environmental certificates at our properties by enhancing energy efficiency and utilizing
renewable energy.

Social initiatives – tenants. We conduct surveys on a regular basis to measure satisfaction amongst our tenants. Thesesurveys are conducted either in person or in the form of a questionnaire. These surveys help formulate future measuresthat 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,
as well as measures to prevent damage to property caused by birds in MJ Logipark Sendai 1. In addition, we consider
and integrate our tenant’s needs and feedbacks in renovations of our 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 thelayout of the lounge area to facilitate individual use. While we conduct tenant satisfaction surveys on a regular basis,
we did not conduct such surveys during the fiscal periods ended February 28, 2022 and August 31, 2021. However,
we have continuously improved our properties in order to enhance our tenants’ satisfaction. In the fiscal period ended
February 28, 2022, we implemented the following measures;
Property Name
Logicross Fukuoka Hisayama
Logicross Nagoya Kasadera

LOGIPORT Sagamihara
LOGIPORT Hashimoto
MJ Logipark Kazo 1
MJ Logipark Osaka 1
MJ Logipark Fukuoka 1
MJ Logipark Nishinomiya 1
MJ Logipark Sendai 1

MeasureInstalling bird nets
Implementing advertising digital signage and AI
camera, which monitors utilization status of smoking
room in five smoking rooms(i) implementing measures against bird damage, (ii)switching to LED in three tenant-exclusive areas, (iii)
redesigning north and south break rooms, and (iv)
installing of shatter-resistant panels in north and south
break rooms
Switching to LED in eight tenant-exclusive areas
Introducing LED street lights
Conducting road line paving work
Switching to LED in one tenant-exclusive area
Switching to LED in the entire tenant-exclusive area
and common area
Renovating the break room

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Other Information●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 such as community clean-up events around our properties
with local residents and around our office with local workers, and the designation by municipalities of our properties
as disaster evacuation sites such as disaster cooperation building and tsunami evacuation building. In the fiscal period
ended February 28, 2022, we conducted clean-up projects around the neighborhood of the Asset Management
Company’s office and redesigned break rooms of LOGIPORT Sagamihara.
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 14.3% as of April 1, 2021. From August 2021 toSeptember 2021, we hired a third party survey agency and conducted an employee satisfaction survey on an
anonymous basis, of which results showed 87% of our employees were satisfied or moderately satisfied with overall
working conditions at the Asset Management Company. As a part of our ongoing 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 annual interview
with the human resources department. As a measure to combat and eliminate workplace harassment, we provide
annual training on harassment prevention to promote better understanding of workplace harassment and reporting
policies among our management and employees, and to help create workplace environment where everyone can feelsafe and comfortable while performing their job. In FY2021, we held our annual training on harassment prevention
in December 2021, and the annual training for FY2022 is scheduled to be held in July 2022. Furthermore, we
continuously work to keep our employees informed and up-to-date on the Asset Management Company’s code of
conduct guidelines, the “interpretation about code of conducts to implementing MJIA values,” which contributes toforming common enterprise value among our employees. We held a training on this code of conduct guidelines in
July 2021 and plan to implement various measures to form common MJIA values among our employees in FY2022.
Moreover, we have set an annual 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 our rate of employees returning
to work after taking childcare leave, the latter of which stand at 6% and 100% respectively as of April 1, 2021.

…and compared to previous periods?

How did this financial product consider principal adverse impacts on sustainability factors?
We believe that investment decisions that negatively affect climate or other environment-related resources, or havenegative implications for society, can have a significant impact on and present risks to unitholder value. To this end, we consider
the principal adverse impacts of our investment decisions on the above sustainability factors to be a key factor in making acomprehensive investment decision and in the management process throughout the lifecycle of the properties in our portfolio.
What were the top investments of this financial product?
Largest investments

Sector

Logistics facilities
OthersReal estate
Real estate% Assets(based on acquisition price)
92.7%
7.3%

Country
Japan
Japan

What was the proportion of sustainability-related investments?
As of February 28, 2022, 79.1% of the properties in the portfolio were Green Buildings, and 20.9% were nonqualified
assets based on gross floor area. These percentages have remained the same as those as of August 31, 2021. In the fiscal period
ended February 28, 2022, we continued improving environmental performance of our properties and obtaining environmental
certificates at our properties by enhancing energy efficiency and utilizing renewable energy. Our target is to achieve a portfolioof which 100% (excluding properties where we own only the underlying land) constitutes Green Buildings by FY2030, and weplan to further increase the number of such assets by continuing to acquire Green Building certifications for the buildings in our
properties.

●

What was the asset allocation?

See above.
●

Not applicable.
●

79.1% is #1 Aligned with E/Scharacteristics(1)What were the objectives of the sustainable investments that the financial product partially made and how did thesustainable investment contribute to suchobjectives?

How did the sustainable investments that the financial product partially made not cause significant harm to any
environmental or social sustainable investment objective?

#1B Other E/Scharacteristics(3)Investments of MEL
20.9% qualifies as #2 Other(2)Not applicable.

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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 at least 80% of our portfolio, and for other types ofproperties related to or compatible with logistics facilities to make up no more than 20% of our 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 our portfolio, and for properties located elsewhere in Japan to make up
no more than 50% of our portfolio based on acquisition price.
To what extent were the sustainable investments with an environmental objective aligned with the EU Taxonomy?
Not applicable.
●

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 with previous 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 orsocial safeguards?
As of February 28, 2022, 20.9% of our properties were not Green Buildings based on gross floor area. The AssetManagement Company’s investment decision-making process involves assessment of material ESG-related risks andopportunities 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 AssetManagement Company and we review ESG-related due diligence findings and take into account the acquisition of environmental
certifications or future potential to obtain them 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 diligencethat such properties are still ESG-conscious because we regularly acquire properties from the Mitsubishi Estate Group, whichemphasizes 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 the reference period?
As described in greater detail above, we implement various environmental initiatives at our properties including thefollowing:Reduction of CO2 emission;
Reduction of energy consumption;
Water and waste management; andCertification of our properties.

As described in greater detail above and our website, we implement various social initiatives at our 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.

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Other Information●

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

●

How did this financial product perform with regard to the sustainability indicators to determine the alignment of thereference 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.

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