SEMIANNUAL REPORTFiscal Period Ended August 31, 2018

Financial Highlights
for the Fiscal Period Ended August 31, 2018
Distributions Per Unit
(JPY)

5,292

Operating Revenues(JPY millions)

2,186

Period-End
Occupancy

99.9%
ome
Net Inc ions)
ill(JPY m

1,002

ting

Credit Ra

ioat-Value R
Loan-toA
A
RCJ(Stable)

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1
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o
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t
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o
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P
illions
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P
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7
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5, 201ct. 1
s of OSEMIANNUAL REPORT

1

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, 201

t. 3
f Sep

Message from the Executive Director

Dear Fellow Unitholders,
We are pleased to present our Fourth Fiscal Period Semiannual Report of Mitsubishi Estate Logistics REIT
Investment Corporation (MEL).
We would like to take this opportunity to express our heartfelt appreciation to all of our unitholders forsupporting MEL.
On August 31, 2018, we concluded our fourth fiscal period (from March 1, 2018 to August 31, 2018). With the solid operational performance, MEL reported
sound financial results for the fiscal period. Our 2,186 million yen operating revenues and our 1,002 million yen net income were both in line with our original
forecast. Accordingly, our distributions per unit, including the surplus cash distributions (SCD), was 5,292 yen, which exceeded the forecast by 0.8 percent.
These results were attributable to stable portfolio management. We maintained an extremely high average occupancy of more than 99 percent and our rents
grew as well. For the 11,000 square meters of leases that were renewed or re-tenanted during the fiscal period under review, we achieved weighted averagerent growth of 1.8 percent on a nominal weighted average basis. As of August 31, 2018, we have a well-diversified debt maturity schedule, with an averageremaining debt duration of 5.6 years with loan-to-value (LTV) ratio of 25.0 percent, which reserves MEL’s additional borrowing capacity for our further external
growth in the future.
On September 10, 2018, we have concluded our first follow-on offering with a total amount of 7.2 billion yen. Within one year since our IPO, and with theproceeds from the offering, MEL acquired 2 advanced logistics facilities (Logicross Atsugi and Logicross Kobe Sanda, acquisition price of 12.3 billion yen), bothdeveloped by our sponsor, Mitsubishi Estate Co., Ltd. (MEC). With this offering and acquisition, we increased our portfolio size by approximately 17% andgrew our distributions per unit by approximately 3%. MEL currently owns 10 properties totaling 83.2 billion yen. As for the debt side, MEL obtained new debt
financing from three banks, Shinkin Central Bank, The Norinchukin Bank and Shinsei Bank. We were able to achieve lowering our borrowing spread than at thetime of our IPO back in September 2017. After this debt financing, LTV ratio is forecasted to be 27.1% at the end of the fiscal period ending February 28,
2019. We will continue to maintain the LTV ratio at conservative level and preserve a stable financial structure going forward.
Looking forward, we will aim to maximize unitholder value by liberally utilizing our sponsor pipeline. We will also fully take advantage of the good relationships
MEC have cultivated with corporate customers over many years through office and commercial facilities businesses. Furthermore, we will utilize the strength of
our asset management company, Mitsubishi Jisho Investment Advisors, Inc. (MJIA), which boasts an extensive track record that dates back to our founding in
2001. MJIA has the proven track record in structuring and managing various types of real estate funds including the largest private REIT in Japan. By combining
the strengths of MEC and MJIA, we will continue to pursue both internal and external growth opportunities. With the expansion in e-commerce and the thirdparty logistics (3PL) market, the need for logistics facilities continues to grow in Japan. MEL will support logistical platforms in Japan while adapting to changes
in the environments that surround logistics facilities and contribute to the development of logistical mechanisms that support people’s livelihoods.
We sincerely appreciate your continued support towards MEL and the Mitsubishi Estate Group, and look forward to reporting our further progress in the months
and years ahead.

Masaki Sakagawa
Executive Director
Mitsubishi Estate Logistics REIT Investment Corporation

S E M I A N N U A L

R E P O RT

2

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

Development / Facilities Management

Investment / Asset Management

SponsorOverview

Asset Management Company

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

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

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

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

Overview

Promoting the logistics facility business as a
growth area

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

Unique property sourcing capacity with discerning
judgement

Constant supply of pipeline properties as thesponsor through its business of developing andmanaging advanced types of logistics facilities

SupportUtilization of MEC group’s know-how andcorporate customer relations in the leasing business

S E M I A N N U A L

Flexible acquisition strategy using a wide range ofschemes, including bridge funds
Competitive real estate fund management
capability backed by a diverse deal track record

R E P O RT

3

Our Portfolio
MEL's Investment Policy
Logistics facilities

80

Property Type(based on acquisition price)

Tokyo metropolitan area

Other

% or more

20

Investment Area(based on acquisition price)% or less50% or more

Other areas50% or less

Portfolio Diversification
By Investment Area (Based on acquisition price)

By Access Convenience (Based on acquisition price)■ Tokyo metropolitan area
■ Kansai area
■ Other

Distance from Nearest Train Station■ Less than 1.5 km■ 1.5 km to less than 3 km

14.3%

40.4%

12.0%

Tenant Diversification (Based on leased area)■ Sankyu Inc.
■ MITAKA SOKO Co., Ltd.
■ Sun Toshi Tatemono K.K.
■ Mitsubishi Estate Co., Ltd.
■ Fukuoka Logistic Systems Corp.
■ Others

11.0%
8.4%
7.9%
57.7%

59.6%

7.5%

73.7%

By Total Floor Space (Based on acquisition price)■ Less than 1 km
■ 1 km to less than 3 km
■ 3 km to less than 5 km

■ 30,000 m2 or more
■ 10,000 m2■ Less than 10,000 m2

By Access Convenience (Based on acquisition price)

Remaining Lease Period (Based on annual rent)

Distance from Major Trunk Road

1.5%

to less than 30,000 m

7.5%

2

■ 7 years or more

■ 5 to less than 7 years■ 3 to less than 5 years■ 1 to less than 3 years

7.4%

29.3%

22.0%

24.6%

■ Less than 1 year

52.2%
69.2%

40.4%
22.2%

22.2%
9.0%
Note: As of Sept. 3, 2018

S E M I A N N U A L

R E P O RT

4

Portfolio Summary

Logicross Fukuoka Hisayama

MJ Logipark Funabashi 1

Acquisition price

5,770 million yen

Acquisition price5,400 million yen

Occupancy rate

100.0%

Occupancy rate

100.0%

Logicross Atsugi

MJ Logipark Atsugi 1

Acquisition price

8,440 million yen

Acquisition price

6,653 million yen

Occupancy rate

100.0%

Occupancy rate

100.0%

Logicross Kobe Sanda

MJ Logipark Kazo 1

Acquisition price

3,900 million yen

Acquisition price

1,272 million yen

Occupancy rate

100.0%

Occupancy rate

100.0%LOGIPORT Sagamihara

MJ Logipark Osaka 1(Beneficiary interest 49%)

Acquisition price

21,364 million yen

Acquisition price

6,090 million yen

Occupancy rate

99.7%

Occupancy rate

100.0%LOGIPORT Hashimoto

MJ Logipark Fukuoka 1(Beneficiary interest 45%)

Acquisition price

18,200 million yen

Acquisition price

6,130 million yen

Occupancy rate

100.0%

Occupancy rate

100.0%

Note: As of Sept. 3, 2018

S E M I A N N U A L

R E P O RT

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Potential Acquisition Pipeline

Properties with Preferential Negotiation Right (Note 1)
Fiscal Year (Planned) of Completion

2017

2018

2019

2020 / 2021

Property Name

Location

Total Floor Area

LOGIPORT Osaka Taisho

Osaka, Osaka

121 thousand m

Joint

Logicross Narashino

Narashino, Chiba

39 thousand m2

Independently

Osaka Nishi-Yodogawa Logistic Facility Center

Osaka, Osaka

38 thousand m2

Joint

Logicross Nagoya Kasadera

Nagoya, Aichi

80 thousand m

2

Independently

Logicross Yokohama Kohoku

Yokohama, Kanagawa

16 thousand m

Independently

LOGIPORT Kawasaki Bay

Kawasaki, Kanagawa

296 thousand m2

Joint

Logicross Atsugi II

Atsugi, Kanagawa

34 thousand m2

Independently

Ibaraki, Osaka

32 thousand m2 /125 thousand m2

Joint

Plan of Saito Moegi Logistic Facility
Total

2

781 thousand m

LOGIPORT Osaka Taisho

Logicross Narashino

Osaka Nishi-Yodogawa Logistic Facility Center

LOGIPORT Kawasaki Bay

Logicross Atsugi II

Plan of Saito Moegi Logistic Facility

Development22

Logicross Nagoya Kasadera

Logicross Yokohama Kohoku

Properties with Preferential Negotiation Right through Bridge Fund Scheme (Note 2)
Acquisition Year of the Bridge Funds

2016
2017

Property NameType

IHI Group Sakai Factory (Land)

Land of Factory

87 thousand m2 (Note 3)

MJ Logipark Kasugai 1

Logistics facility

58 thousand m2

MJ Logipark Sendai 1

Logistics facility

36 thousand m2

Total

IHI Group Sakai Factory (Land)

Total Floor Area

MJ Logipark Kasugai 1

181 thousand m2

MJ Logipark Sendai 1

Notes:
1. There may be cases where MEL is not granted the preferential negotiation right based on the sponsor support agreement, such as cases where consent for the grant of the preferential negotiation right or the sale has not been obtained from co-owners, quasi-co-owners or joint business partners, if there are any such parties.
2. Fund scheme means a method to acquire properties from development funds to which MJIA provides investment advisory services, a flexible method to acquire properties, etc. by utilizing bridge funds depending on the capital market environment and the timing of property acquisition.
3. The data for IHI Group Sakai Factory (Land) shows that of “site area”.

S E M I A N N U A L

R E P O RT

6

Our Portfolio and Acquisition Pipelines

Tokyo Metropolitan Area

■ Current Assets
Sapporo■ Pipeline Assets

Gunma

TochigiTohoku Expressway● Head Office / Branches of the Sponsor

Joban Expressway
Kan-etsu Expressway

MJ Logipark Sendai 1

Ibaraki

MJ Logipark Kazo 1

Sendai

MJ Logipark Kasugai 1
Logicross Nagoya Kasadera

SaitamaTokyo

Logicross Fukuoka Hisayama

Ken-o Expressway
NagoyaOsaka

Hiroshima

Fukuoka

Tokyo-Gaikan
Expressway

Yokohama

MJ Logipark Fukuoka 1

Tokyo

Osaka Metropolitan Area
Chugoku Expressway

京都府

Logicross Kobe Sanda

Chuo Expressway

Saito Moegi Logistic Facility
LOGIPORT Hashimoto
LOGIPORT Sagamihara

Osaka International Airport
Daini Keihan Expressway

Meishin Expressway

Osaka Nishi-Yodogawa Logistic Center

Osaka Branch
Osaka Port
Kobe Airport

MJ Logipark Atsugi 1

Osaka

Logicross Atsugi

Kinki Expressway

LOGIPORT（県内総生産額順）
Osaka Taisho
都道府県別県内総生産

MJ Logipark Osaka 1

Kanagawa■上位25％以上（11都道府県）
IHI Group Sakai Factory (Land)■上位50％以上25％未満（12府県）■上位75％以上50％未満（12県）

Hanshin Expressway■上位75％未満（12県）

Nara

主要高速道路Kansai International Airport

Note: As of Sept. 3, 2018

S E M I A N N U A L

Tomei
Expressway

Metropolitan Expressway
Bayshore Route

Logicross Narashino

Tokyo Ryutsu CenterTokyo International Airport(Haneda Airport)

Logicross Yokohama Kohoku
Logicross Atsugi II

Kobe Port

MJ Logipark Funabashi1

Tokyo Port

Shin-Meishin Expressway

Sanyo Expressway

Hyogo

Head Office

R E P O RT

7

LOGIPORT Kawasaki Bay
Kawasaki Port
Yokohama Port

Yokohama Branch

Chiba

NaritaInternational
AirportFinancial Strategy

Financial Highlights

Our Lenders
3.3% 2.1%

Long-Term Debt Ratio

100.0

%

Fixed Interest Rate

83.3

%

Average Remaining
Debt Duration

5.6

5.2
%
9.0%
Total Debt Balance

years

23.9

12.1%

billion yen

15.7%

Average Debt Cost

0.47%

Credit Rating

JCR:

AA-

(Stable)Debt Capacity (up to 40%)

Debt Capacity (up to 50%)

Approx.

Approx.

18.5
billion yen

40.0
billion yen

36.8%

15.7%

Forecasted
Loan-to-Value Ratio(5th FP)■ MUFG Bank, Ltd.

27.1%

■ Sumitomo Mitsui Banking Corporation

Debt Maturity Schedule

New Lenders■ Mizuho Bank, Ltd.

■ Shinkin Central Bank

■ Development Bank of Japan Inc.

■ The Norinchukin Bank

■ THE BANK OF FUKUOKA, LTD.

■ Shinsei Bank, Limited■ Long-term debt

■ Short-term debt

(mn yen)

6,000
5,000
4,000
3,000
2,000
1,000

Note: As of Oct. 15, 2018

0

2019

S E M I A N N U A L

2020

R E P O RT

2021

8

2022

2023

2024

2025

2026

2027

2028

Unitholder Information

Breakdown by Unitholder■ Domestic individuals and others■ Financial institutions■ Domestic entities

Major Unitholders

0.8%
2.7%
1.2%

■ Foreign entities■ Securities companies

11,015

95.1%

Unitholders

Breakdown by Unit

Share ofInvestment Units (%)

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

27,236

12.72

Japan Trustee Services Bank, Ltd. (Trust Account)

21,035

9.82

Mitsubishi Estate Co., Ltd.

8,000

3.73

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

6,508

3.04

NORTHERN TRUST CO. (AVFC) RE COLONIAL FIRST STATE INVESTMENTS LIMITED

5,008

2.34

The Hyakujushi Bank, Ltd

4,324

2.02

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

4,243

1.98

The Chugoku Bank, Limited

3,826

1.78

THE IYO BANK, Ltd.

3,652

1.70

JA-Bank SAGA

3,424

1.60

Total

87,256

40.77

1.2%

■ Domestic individuals and others■ Financial institutions

Continuous sameboat investment in MEL by the sponsor

9.5%■ Domestic entities

22.6%■ Foreign entities■ Securities companies

Number ofInvestment Units

0.2%

10.0%

214,000
Units Issued
andOutstanding

Investment in MEL
by MEC

10,000units(4.1%)(As of Sept. 10, 2018)56.7%

Note: As of Aug. 31, 2018

S E M I A N N U A L

R E P O RT

9

ESG Initiatives

Environment Initiatives
The Mitsubishi Estate Group has established an environmental management system and strives to protect theenvironment by promoting environmental initiatives and reducing environmental impact, while also complying
with environmental laws and regulations. The Mitsubishi Estate Group also proposes cutting-edge
environmental initiatives to ensure that its business activities play a leading role in the development ofsustainable communities.
MEL strives to invest in environmentally friendly logistics facilities, and will continue to focus on maximizing
the energy efficiency of our properties and is committed to minimizing environmental impact through various
sustainable features and initiatives.

Installation of solar panels

Installment of LED lightings

Enhanced greenery(Logicross Fukuoka Hisayama)(LOGIPORT Sagamihara)(Logicross Atsugi)

Supporting Local Communities
The Mitsubishi Estate Group has adopted as its fundamental mission the goal of creating a truly meaningfulsociety by building attractive, environmentally sound communities where people can live, work and relax with
contentment. By putting this mission into practice, MEL will actively play a role in the CSR initiatives
conducted by Mitsubishi Jisho Investment Advisors, Inc., MEL’s asset management company.

Cleanup activity after Firework Festival
Volunteer work near MJ LogiPark Atsugi 1

Free beverage service for tenants at
LOGIPORT Sagamihara

Sound Corporate Governance
MEL is composed of one Executive Director, two Supervisory Directors, and the Board of Directors, on which all MEL’s directors serve as members, plus an accounting auditor as well as the General Meeting of Unitholders.
MEL is prohibited from having any employees under the Japanese Act on Investment Trusts and Investment Corporations, and therefore commissions business operations to its asset management company, Mitsubishi Jisho
Investment Advisors, Inc.

S E M I A N N U A L

R E P O RT

10

Financial Section
BALANCE SHEET, continued

BALANCE SHEET

Thousands of yen

Thousands of yen

As of

As of
February 28, 2018ASSETS
Current assets:
Cash and deposits (Notes 3, 5)
Cash and deposits in trust (Notes 3, 5)
Operating accounts receivable
Prepaid expenses
Deferred tax assets (Note 11)
Consumption taxes receivable
Other current assets
Total current assets
Fixed assets:
Property and equipment (Notes 4, 6)
Buildings in trust
Less: accumulated depreciation
Buildings in trust, net
Structures in trust
Less: accumulated depreciation
Structures 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 4)
Software
Other intangible assets
Total intangible assets
Investments and other assets
Long-term prepaid expenses
Security deposit
Total investments and other assets
Total fixed assets
Deferred assets:
Organization expenses
Total deferred assets
Total assets¥¥

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

February 28, 2018

August 31, 2018

1,500,868
2,665,332
19,701
27,5092,517,417
2
6,730,832¥

1,869,456
2,527,566
26,751
26,14212
3,834
4,453,762

33,007,595(471,462)
32,536,132
1,115,119(11,272)
1,103,847
144
(4)
139
37,655,333
71,295,451

33,073,864(893,213)
32,180,650
1,118,406(22,533)
1,095,873
144
(12)
132
37,655,333
70,931,988

8,685
941
9,626

7,735
891
8,626

26,417
10,00036,417
71,341,495

14,92810,00024,92870,965,543

40,31940,31978,112,648

34,271
34,27175,453,578¥

LIABILITIESCurrent liabilities:
Operating accounts payable
Short-term loans payable (Notes 5,10)
Accounts payable
Distributions payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term loans payable (Notes 5, 10)
Tenant leasehold and security deposits in trust( Note 5)
Total non-current liabilities
Total liabilities
NET ASSETS
Unitholders’ equity
Unitholders’ capital
Units authorized: 10,000,000 units
Units issued and outstanding: 214,000units
As of August 31, 2018 and February 28, 2018,
respectively
Unitholders’ capital, gross
Deduction from unitholders’ capital
Unitholders’ capital, net
SurplusRetained earnings
Total surplus
Total unitholders’ equity
Total net assets (Note 9)
Total liabilities and net assets¥¥

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

－
11

SEMIANNUAL REPORT－

1 －77,9452,618,000
8,926
169,092605
342,96783
63
3,217,683

August 31, 2018¥

71,563
12,873
4,439
243,452861
108,215
313,57883
755,068

18,901,000

18,901,000

1,235,148

1,230,295

20,136,148
23,353,832

20,131,295
20,886,363

53,685,400

53,564,490

53,685,400
53,685,400

53,685,400(120,910)
53,564,490

1,073,416
1,073,416
54,758,816
54,758,816
78,112,648

1,002,724
1,002,724
54,567,214
54,567,214
75,453,578¥

2 －SEMIANNUAL REPORT

12

Financial Section
STATEMENT OF CHANGES IN NET ASSETSFor the period ended August 31, 2018

STATEMENT OF INCOME AND RETAINED EARNINGS
Thousands of yen

Thousands of yen
Unitholders’ equity
Surplus

For the period ended
February 28, 2018
August 31, 2018
Operating revenues:
Operating rental revenues (Note 7)
Other rental revenues (Note 7)
Total operating revenues
Operating expenses:
Expenses related to property rental business (Note 7)
Asset management fee
Asset custody fee
Administrative service fee
Directors’ compensation
Commission paid
Other operating expenses
Total operating expenses
Operating income
Non-operating income:Interest income
Interest on refund
Total non-operating income
Non-operating expenses:
Interest expenses
Borrowing related expenses
Amortization of organization expenses
Amortization of investment unit issuance expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes-current (Note 11)
Income taxes-deferred (Note 11)
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings¥¥

1,923,172
119,267
2,042,440¥

2,043,691
143,164
2,186,855

622,889
107,897699
12,2462,400
42,054
10,380798,568
1,243,871

860,255
178,404730
16,7562,400
46,76827,5801,132,896
1,053,959

16
16

21
3,320
3,342

36,083
10,026
6,047
117,715
169,872
1,074,015
1,074,015
605
605
1,073,410
5
1,073,416¥

38,4909,391
6,047
53,9301,003,371
1,003,371
865
(12)
852
1,002,518
206
1,002,724

Unitholders’ capital
Deduction ofUnitholders’
Unitholders’unitholders’capital, net
capital, grosscapitalBalance as of March
1, 2018 (Note 9)-

53,685,400

1,073,416

1,073,416

54,758,816

54,758,816-(120,910)(120,910)--(120,910)(120,910)---(1,073,210) (1,073,210)(1,073,210)(1,073,210)

-

-

-

1,002,518

1,002,518

1,002,518

1,002,518-(120,910)(120,910)(70,691)(70,691)(191,601)(191,601)

1,002,724

54,567,214

54,567,214

Change during theperioddistributions inexcess ofretained earnings
Surplus cash
distributions
Net income
Total change during
the period
Balance as of August
31, 2018 (Note 9)

53,685,400

Unitholders’capital, grossBalance as of September 1, 2017
(Note 9)Net income per unit (Note 12)－
13

SEMIANNUAL REPORT

53,564,490

1,002,724

Thousands of yen
Unitholders’ equity
Surplus
Total unitholders’ Total net assets
UnappropriatedequityTotal surplus
retained earnings

2,000,000

43,53343,533

2,043,533

2,043,533

51,685,400-(43,528)(43,528)

51,685,400(43,528)

51,685,400(43,528)

Change during the period
Issuance of new investments
Surplus cash distributions
Total change during the period

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

(120,910)

For the period ended February 28, 2018

Balance as of February 28, 2018

Yen

Total net
assets

53,685,400

Net income

For the fiscal period ended
February 28, 2018
August 31, 2018
¥
5,389
¥

Total
unitholders’
UnappropriatedTotal surplus
equityretained earnings(Note 9)-1,073,410

1,073,410

1,073,410

1,073,410

51,685,400

1,029,882

1,029,882

52,715,282

52,715,282

53,685,400

1,073,416

1,073,416

54,758,816

54,758,816

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

4,684

3 －
－

4 －

SEMIANNUAL REPORT

14

Financial Section
STATEMENT OF CASH FLOWS

Notes to Financial Statements
1. ORGANIZATION AND BASIS OF PRESENTATION

Thousands of yena)

For the period ended
February 28, 2018
August 31, 2018
Cash flows from operating activities:
Income before income taxes
Depreciation
Amortization of organization expenses
Interest income
Interest expenses
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
Purchases of intangible assets
Proceeds from tenant leasehold and security deposits
in trust
Repayments from tenant leasehold and security
deposits in trust
Net cash provided by 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
Proceeds from issuance of new investment units
Payment of distributions of retained earnings
Payment of distributions in excess of retained earnings
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 3)¥

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

¥

1,074,015
404,146
117,715(16)
36,083(19,701)(2,517,417)(10,791)(7,327)
57,835(1,517)140,098(5,093)309,379
10,391(412,200)16(31,032)(24,830)(468,046)¥

1,003,371
434,019(21)
38,490(7,049)2,517,417
1,367
11,489(546)
3,947
73,873
108,215(29,388)
2,153
4,157,339
21(38,004)(608)
4,118,748

Organization
Mitsubishi Estate Logistics REIT Investment Corporation (“MEL”) was established on July 6, 2016 under the “Act on Investment
Trust and Investment Corporation” (hereinafter the “Investment Trust Law”), and was listed on the REIT Securities Market of theTokyo Stock Exchange on September 14, 2017, with Mitsubishi Estate Co., Ltd. (“MEC”), one of the largest comprehensive
developers in Japan, acting as a sponsor. MEL focuses on investing in logistics facilities primarily in the Tokyo Metropolitan Area.
MEL is externally managed by a licensed asset management company, Mitsubishi Jisho Investment Advisors, Inc. (hereinafter the“Asset Manager” or “MJIA”). On September 13, 2017, MEL issued 198,000 new units through a public offering and raised
approximately 49,678 million yen. Those units are listed on the J-REIT section of the Tokyo Stock Exchange. As of August 31, 2018,
MEL held in the form of beneficiary right in trust in 8 properties (aggregate acquisition price: 70,879 million yen). The total
leasable area was 313,164.65㎡ and the occupancy rate remained high at 99.9% as of the end of the reporting fiscal period.

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

(66,292,554)(10,500)(75,392)-

2.

1,154,359

13,282a)(15,174)(18,135)(65,163,870)(80,246)

investments that are very liquid and realizable with a maturity of three months or less when purchased and that are subject toinsignificant risks of changes in value.

4,548,000(1,930,000)
14,901,000
51,567,684(43,528)
69,043,156
3,411,239
754,961
4,166,201(2,618,000)(1,069,453)(120,226)(3,807,680)
230,821
4,166,201
4,397,022¥b)

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

Property and equipment

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

Buildings
Structures

2-57 years
10-57 years

Tools, furniture and fixtures

10 years

Intangible assets
Intangible assets are stated at cost. Amortization of intangible assets, including intangible assets in trust, is calculated by thestraight-line method over the estimated useful lives.
d)e)Long-term prepaid expenses
Long-term prepaid expenses are amortized by the straight-line method.
Organization Expenses
All organization expenses are amortized over five years using straight-line method.

f)

Beneficiary Rights in Trust
As to beneficiary rights in trust, all accounts of assets and liabilities for assets in trust as well as the related income generated

and expenses incurred are recorded in the relevant balance sheet and statement of income and retained earnings accounts.
Important line items included in accounting for financial assets and liabilities in the MEL’s balance sheet are cash and deposits intrust, buildings in trust, structures in trust, tools, furniture and fixtures in trust, land in trust and tenant leasehold and security
deposits in trust.
15

SEMIANNUAL REPORT

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5 －

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6 －

SEMIANNUAL REPORT

16

Financial Sectiong)

MEL generally invests surplus funds in bank deposits, considering the safety and liquidity of the investment and also
reflecting the market environment and cash positions of MEL itself. MEL enters into derivative transactions solely for theTaxes on Property and Equipment

With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessed and determined, theamount corresponding to the relevant fiscal period is accounted for as rental expenses.

purposes of reducing risks of rising interest rates related to financings and other types of risks. MEL does not use derivativetransactions for speculative purposes. Not applicable for the reporting period.

Of the amounts paid for the acquisitions of real estate properties or beneficiary right in trust of real estate, the amountequivalent to property taxes is capitalized as part of the acquisition cost of the relevant property instead of being charged as an
expense. Not applicable for the reporting period.

(2) Type of Financial Instruments, related Risks and Risk Management Systemh)Bank loans are mainly made to procure funds for acquisition of properties, repayment of bank loans. Although MEL is
exposed to liquidity risks upon repayment, by diversifying the maturities and lending institutions, securing liquidity of cash inConsumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

hand and managing such liquidity risks by preparing and monitoring cash flows projection, such risks are maintained undercontrol. In addition, some loans bear floating interest rates and are exposed to potential risks of rising interest rates. MEL

CASH AND CASH EQUIVALENTS
Relationship between cash and cash equivalents in statement of cash flows and accounts and amounts in the accompanying
balance sheet are as follows:

attempts to mitigate such risks on its operations by maintaining a conservative loan to value ratio and increasing the ratio of
long-term fixed interest rate loans.

3.

The security deposits which MEL has received from the tenants are exposed to liquidity risk due to cancelation of leaseagreement before the maturity date. In the case of trust beneficiary interest in real estate, MEL secures safety by

Thousands of yen
As ofFebruary 28, 2018
Cash and deposits¥

Cash and deposits in trust

August 31, 2018¥

2,665,332

Cash and cash equivalents

4.

1,500,868¥

4,166,201

accumulating a portion in the trust account, and in the case of real estate, leasehold rights of real estate, and superficies, MEL
secures safety by accumulating a portion in bank savings account or bank time deposit account. Moreover, MEL ensuressafety by accurately tracking the timing of the tenant move-ins and outs and anticipating the fund demand utilizing historical
data.

1,869,456
2,527,566¥

4,397,022(3) Supplemental Explanation Regarding the Estimated Fair Values of Financial Instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market
price available, fair value is based on a price that is reasonably estimated. Since various assumptions and factors are reflected

PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment and intangible assets as of August 31, 2018 are as follows:
Thousands of yen

Depreciation
Increase Decrease Balance as of
Net balance
Balance as ofDepreciation
Type of assets
during the during the August 31, Accumulated
as of August Remarks
March 1, 2018
for theperiodperiod201831, 2018
depreciation
periodBuildings in trust ¥ 33,007,595 ¥ 66,269 ¥- ¥ 33,073,864 ¥ 893,213 ¥ 421,751 ¥ 32,180,650 (Note)
Structures in
1,115,119
3,287
1,118,406
22,533
11,261
1,095,873 (Note)
Property trust
Tools, furniture
and
144
144
12
7
132
equipment and fixtures intrust
Land in trust
37,655,333
37,655,333
37,655,333－－
71,778,191
69,556
71,847,748
915,759
433,019
70,931,988
Total property and equipment
Software¥9,500 ¥
- ¥- ¥9,500 ¥
1,765 ¥
950 ¥7,735
Intangible
Other intangible
1,000
1,000
108
50
891
assetsassetsTotal intangible assets
10,50010,500
1,873
1,000
8,626
(Note) The amount of increase during the period is primarily attributable to capital expenditure.

in estimating the fair value, different assumptions and factors could result in a different value.
b)

Estimated Fair Value of Financial Instruments
The book value, fair value and differences between the values as of August 31, 2018 and February 28, 2018 are as follows:

Financial instruments for which the fair value is extremely difficult to estimate are excluded from the following table (see Note 2
below).
Thousands of yen
As of August 31, 2018
Book value(1) Cash and deposits¥(2) Cash and deposits in trust
Total assets¥

2,527,566
¥

¥

-

¥

-

-

18,901,000¥¥

4,397,022-(4) Long-term loans payable

Difference

1,869,456
2,527,566

4,397,022(3) Short-term loans payable
Total liabilities

Fair value

1,869,456-

18,887,140

18,901,000¥(13,859)

18,887,140¥(13,859)

Thousands of yen
5.

FINANCIAL INSTRUMENTSa)

Overview(1) Policy for Financial Instruments

As of February 28, 2018
Book value(1) Cash and deposits

MEL procures funds for the acquisition of assets and repayment of debt mainly through bank loans or the issuance of new
investment units.

(2) Cash and deposits in trust

In borrowing funds, MEL takes consideration in interest rate trend, debt cost, floating or fixed interest rate, borrowing
period and repayment date.
In the case of borrowing, the lender shall be limited to qualified institutional investors as stipulated in Article 2, Paragraph 3,
Item of the Financial Instruments and Exchange Act of Japan (limited to institutional investors prescribed in Article 67-15 of
the Taxation Special Measures Law), with in principle no collateral / no guarantee. However, MEL may provide assets as
collateral in consideration of financing environment and economic conditions. In addition, in order to flexibly procure thenecessary funds related to MEL's operation such as property acquisition and repayment debt financing, MEL may enter into
the overdraft agreements, commitment line agreements or conclude the reserved agreements.

(3) Short-term loans payable－
17

SEMIANNUAL REPORT

7 －Total assets¥

1,500,868
2,665,332¥

4,166,201¥

21,519,000

Difference¥

4,166,201¥

21,473,391-

18,855,391¥-

2,618,000

18,901,000¥

1,500,868
2,665,332

2,618,000(4) Long-term loans payable
Total liabilities

Fair value¥(45,608)¥(45,608)(Note 1) Methods to estimate fair values of financial instruments(1) Cash and deposits and (2) Cash and deposits in trust (3) Short-term loans payable
Due to the short maturities, the book value of these instruments is deemed a reasonable approximation of thefair value, and therefore, the book value is used as the fair value.
－

8 －SEMIANNUAL REPORT

18

Financial Section(4) Long-term loans payable
The fair value of long-term loans payable is determined based on the present value of contractual cash flows

6.

INVESTMENT AND RENTAL PROPERTIESMEL owns logistics facilities for leasing for the purpose of earning rental income. The book value, changes during the reportingwhich would be applicable to new loans payable under the same terms. In terms of floating interest rate loans
payable, since it reflects the market interest rate in a short period of time, the fair value is approximately equal tofiscal period and fair value of the properties are as follows:
Thousands of yen
For the fiscal period ended
February 28, 2018
August 31, 2018

the book value. Thus, the book value is used.
(Note 2) Financial instruments for which the fair value is extremely difficult to estimate
As tenant leasehold and security deposits in trust has no available quoted market price, and it is impracticable toBook value (Note 1)
Balance at the beginning of the periodreasonably estimate their future cash flows, their fair value is not disclosed.
Thousands of yen

Tenant leasehold and security deposits in trust¥

1,235,148

1,230,295

Thousands of yen

Cash and deposits
Cash and deposits in trust
Total

71,295,451¥

71,295,451¥

70,931,988(363,463)

yen. The decrease was primarily a result of the recognition of depreciation, which amounted to 433,019 thousand yen.
The increase for the fiscal period ended February 28, 2018 was primarily a result of acquiring properties for a total of(Note 3) Redemption schedule for monetary claims after August 31, 2018
As of August 31, 2018
Due after
Due after four Due after fiveDue within Due after one Due after two
three to four
to five years
years
one yearto two years to three years
years¥ 1,869,456
¥
¥
¥
¥
¥
2,527,566¥ 4,397,022
¥
¥
¥
¥
¥
-

¥

Fair value at the end of the period (Note 3)¥
74,700,000¥
74,980,000(Note 1) Book value is calculated by deducting accumulated depreciation from acquisition cost.
(Note 2) The increase for the fiscal period ended August 31, 2018 was primarily a result of CAPEX for a total of 69,556 thousand

August 31, 2018¥

5,389,730
65,905,721

Balance at the end of the period

As ofFebruary 28, 2018¥

Changes during the period (Note 2)

66,282,079 thousand yen. The decrease was primarily a result of the recognition of depreciation, which amounted to403,281 thousand yen.
(Note 3) The fair value at the end of the period is determined based on appraised value provided by independent real estateappraisers.
Income and loss in connection with investment and rental properties are disclosed in “7. PROPERTY-RELATED REVENUES AND
EXPENSES.”

Redemption schedule for monetary claims after February 28, 2018
Thousands of yen

Cash and deposits
Cash and deposits in trust
Total

As of February 28, 2018
Due after
Due after four Due after fiveDue within Due after one Due after two
three to four
to five years
years
one yearto two years to three years
years¥ 1,500,868 ¥
- ¥
- ¥
- ¥
- ¥
2,665,332¥ 4,166,201 ¥
- ¥
- ¥
- ¥
- ¥
-

(Note 4) Repayment schedule for debt after August 31, 2018
Thousands of yen

Short-term loans payable
Long-term loans payable
Total

As of August 31, 2018
Due after
Due after four Due after fiveDue within Due after one Due after two
three to four
to five years
years
one yearto two years to three years
years
¥
- ¥
- ¥
- ¥
- ¥
- ¥
- ¥ 4,000,000
2,211,000
2,480,000 10,210,000¥- ¥ 4,000,000 ¥- ¥ 2,211,000 ¥ 2,480,000 ¥10,210,000

Repayment schedule for debt after February 28, 2018
Thousands of yen

Short-term loans payable
Long-term loans payable
Total

19

SEMIANNUAL REPORTAs of February 28, 2018
Due after
Due within Due after one Due after two
Due after four Due after five
three to four
one yearto two years to three years
to five years
years
years
¥ 2,618,000 ¥
- ¥
- ¥
- ¥
- ¥
- ¥ 4,000,000
2,211,000
2,480,000 10,210,000¥ 2,618,000 ¥ 4,000,000 ¥- ¥ 2,211,000 ¥ 2,480,000 ¥10,210,000

－

9 －

7.

PROPERTY-RELATED REVENUES AND EXPENSES

The following table summarizes the revenues and expenses generated from property leasing activities for the fiscal periods
ended August 31, 2018 and February 28, 2018.
Thousands of yen
For the fiscal period ended
February 28, 2018
August 31, 2018
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

¥
¥
¥
¥
¥

¥

Others1,827,408
95,764
1,923,172¥

82,062
37,205
119,267
2,042,440¥

76,157
6,356
3,262
31,38287,651
403,281
1,298

¥

¥
¥

¥

13,500Total rental expenses
C. Operating income from property leasing (A-B)

¥
¥

－

10 －

622,889
1,419,550

1,940,907
102,783
2,043,691
99,06444,099143,164
2,186,855

87,649185,803
3,547
30,163
104,285
433,019
1,382
14,404¥¥860,255
1,326,599

SEMIANNUAL REPORT

20

Financial Section
8.

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

February 28, 2018
3,767,422

Due after one year

August 31, 2018
3,412,347

11,126,683
¥

Total

9.
a)

¥

14,894,106

9,981,099¥

13,393,446

NET ASSETSStated Capital

MEL issues only non-par value units in accordance with the Investment Trust Act. The entire amount of the issue price of newunits is designated as stated capital. The Investment Corporation is required to maintain net assets of at least 50 million yen as
required by the Investment Trust Act.
b)

Distributions
Yen
For the fiscal period ended
February 28, 2018

August 31, 2018

I. Unappropriated retained earnings
II. Distributions in excess of retained earnings

1,073,416,180

1,002,724,829

Deduction from unitholders’ capital
III. Distributions

120,910,000
1,194,120,000

129,898,000
1,132,488,000(5,580)1,073,210,000(5,292)
1,002,590,000(5,015)
120,910,000(4,685)
129,898,000(565)
206,180(607)
134,829(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

10. SHORT-TERM AND LONG-TERM LOANS PAYABLE
Short-term and long-term loans payable consisted of bank borrowings under loan agreements. The following tablesummarizes the long-term loans payable as of August 31, 2018 and February 28, 2018.
Thousands of yen
As of
Weighted-average
Classification
Repayment dateFebruary 28, 2018
August 31, 2018
interest rate
Short-term loans payable¥
873,000¥
September 14, 2018
0.1244%872,000(Note)
873,000
Total short-term loans payable¥
2,618,000¥
Long-term loans payable¥
1,400,000¥
1,400,000
September 29, 20190.2441%
1,200,000
1,200,000
1,400,000
1,400,000
720,000
720,000
September 14, 2021
0.3263%
1,491,000
1,491,000
430,000
430,000
September 14, 2022
0.3575%2,050,000
2,050,000
1,760,000
1,760,000
September 14, 2023
0.3913%
1,330,000
1,330,000
450,000
450,000
September 14, 2024
0.4288%900,000
900,000
September 14, 2025
0.4675%620,000
620,000
September 14, 2026
0.5075%710,000
710,000
1,340,000
1,340,000
1,340,000
1,340,000
September 14, 2027
0.5500%880,000
880,000
880,000
880,000
Total long-term loans payable¥
18,901,000¥
18,901,000
Total¥
21,519,000¥
18,901,000
Note: MEL prepaid the short-term loans payable on June 14, 2018.
The stated interest rate is the weighted average interest rate during each fiscal period. The redemption schedules for longterm loans subsequent to August 31, 2018 and February 28, 2018 are disclosed in “4. FINANCIAL INSTRUMENTS.”

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 1,002,590,000 yen and 1,073,210,000 yen for the fiscal periods ended August 31, 2018 and February
28, 2018, respectively. These amounts were equivalent to the maximum integral multiples of number of investment units
issued and outstanding as of the end of each fiscal period. Based on the distribution policy as defined in Article 35,
Paragraph 2 of the Articles of Incorporation, MEL shall make Surplus Cash Distributions (SCD), defined as distributions inexcess of retained earnings, as a return of unitholders’ capital, each fiscal period on a continuous basis. Accordingly, MEL
declared SCD of 129,898,000 yen and 120,910,000 yen, as a return of unitholders’ capital, which was the amount equivalent
to approximately 30.0% of depreciation expense for the period ended August 31, 2018 and February 28, 2018, respectively.

－
21

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11 －

12 －
SEMIANNUAL REPORT

22

Financial Section
11. INCOME TAXESMEL is subject to Japanese corporate income taxes on its taxable income. The tax effects of temporary differences that give rise
to a significant portion of the deferred tax assets and liabilities as of August 31, 2018 and February 28, 2018 are as follows:

14. SEGMENT AND RELATED INFORMATION(For the fiscal periods ended August 31, 2018 and February 28, 2018)a)to disclosure.

Thousands of yen
As ofFebruary 28, 2018¥

Enterprise tax payable
Total deferred tax assets
Net deferred tax assets-¥

August 31, 2018
¥

12
12
12

¥

Reconciliations of major items that caused differences between the statutory tax rate and effective tax rate with respect to pretax income reflected in the accompanying statements of income for the fiscal periods ended August 31, 2018 and February 28,
2018 are as follows:
For the fiscal period ended
February 28, 2018
August 31, 201831.74%
31.74%

Statutory tax rate
Adjustments:
Deductible cash distributions
Valuation allowance for deferred tax assets
Other
Actual effective income tax rate

(31.55%)(0.19%)
0.06%
0.06%

(31.72%)
-%
0.06%
0.08%

MEL has a policy of making cash distributions of earnings in excess of 90% of distributable income as defined in the Special
Taxation Measures Act for the fiscal period to qualify for conditions, as set forth in the Special Taxation Measures Act, to achieve a
deduction of cash distributions for income tax purposes. Based on this policy, MEL treated the cash distributions of earnings as atax deductible distribution as defined in the Special Taxation Measures Act.

12. PER UNIT INFORMATION
The following table summarizes per unit information for the fiscal periods ended August 31, 2018 and February 28, 2018.
Yen
For the fiscal period ended
February 28, 2018
August 31, 2018
Net income per unit
Basic net income per unit

¥

5,389

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

Related Information(1) Information by Geographic Region(i) Operating Revenues
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues
on the statement of income and retained earnings.
(ii) Property and Equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounts for over 90% of theamount of property and equipment on the balance sheet.
(2) Information by Each Major Customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating
revenues on the statement of income and retained earnings.

SIGNIFICANT SUBSEQUENT EVENTSMEL issued new investment units with terms and conditions described below based on a resolution made by the board of directors on
August 23, 2018, and September 3, 2018. Subsequently, the payment for the public offering and the third-party allotment was completed
on September 10, 2018 and October 11, 2018, respectively.
Issuance of New Investment Units through the Public Offering
Number of investment units issued：

30,300 units

Issue price (offer price)：

246,772 yen per unit

Total amount issued：

7,477,191,600 yen

Issue amount (amount to be paid)：

238,166 yen per unit

Net proceeds：

7,216,429,800 yen

Payment Date：

September 10, 2018

Issuance of New Investment Units through the Third-Party Allotment

4,684

199,149
214,000
Weighted average number of units outstanding
Net assets per unit¥
255,882¥
254,986(Note) Basic net income per unit is based on the weighted average number of units issued and outstanding during theperiod. Diluted earnings per unit and related information are not disclosed as no dilutive units were outstanding.

Number of investment units issued：

1,515 units

Issue amount (amount to be paid)：

238,166 yen per unit

Net proceeds：

360,821,490 yen

Payment Date：

October 11, 2018

Purchaser：

SMBC Nikko Securities Inc.

13. TRANSACTION WITH RELATED PARTIESa) Transactions and Account Balances with the Parent Company and Major Unitholders
There were no transactions and account balances for both periods presented.
b)Transactions and Account Balances with Affiliates
There were no transactions and account balances for both periods presented.

c)Transactions and Account Balances with Companies under Common Control
There were no transactions and account balances for both periods presented.

d)

23

Transactions and Account Balances with Board of Directors and Individual Unitholders
There were no transactions and account balances for both periods presented.

SEMIANNUAL REPORT

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13 －

－

14 －

SEMIANNUAL REPORT

24

Financial Section

Independent Auditor’s Report
The Board of Directors
Mitsubishi Estate Logistics REIT Investment Corporation
We have audited the accompanying financial statements of Mitsubishi Estate Logistics REIT Investment
Corporation, which comprise the balance sheet as at August 31, 2018, and the statements of income andretained earnings, changes in net assets, and cash flows for the six-month period then ended and asummary of significant accounting policies and other explanatory information, all expressed in Japaneseyen.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the preparation and fair presentation of
the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. The purposeof an audit of the financial statements is not to express an opinion on the effectiveness of the entity’s
internal control, but in making these risk assessments the auditor considers internal controls relevant to
the entity’s preparation and fair presentation of the financial statements in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Mitsubishi Estate Logistics REIT Investment Corporation as at August 31, 2018, and its
financial performance and cash flows for the six-month period then ended in conformity with accounting
principles generally accepted in Japan.

November 28, 2018
Tokyo, Japan

25

SEMIANNUAL REPORTSEMIANNUAL REPORT26