SEMIANNUAL REPORTFiscal Period Ended August 31, 2019

Financial Highlights
for the Fiscal Period Ended August 31, 2019

Distributions Per Unit
(JPY)

Operating Revenues(JPY millions)

Net Income(JPY millions)

5,524

2,530

1,211

Portfolio Size
(JPY millions)Average Occupancy

113,787

99.9%

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

SEMIANNUAL REPORT

29.4%

1

Credit Rating

JCR AA(Stable)

Average Debt Cost(Long-term Debt)

0.39%

MJ Logipark Kasugai 1

Message from the Management

Dear Fellow Unitholders,
We are pleased to represent our Sixth Fiscal Period Semiannual Report of Mitsubishi Estate Logistics REIT Investment Corporation (MEL).
We would like to take this opportunity to express our heartfelt appreciation to all of our unitholders for supporting MEL.
On August 31, 2019, we concluded our sixth fiscal period. With solid operational performance, MEL reported sound financial results for the fiscal period. Our 2,530 million yen
operating revenues and our 1,211 million yen net income were both in line with our original forecast. Accordingly, our distributions per unit, including the surplus cash distributions(SCD), was 5,524 yen, which exceeded the forecast by 0.6 percent. These results were attributable to stable portfolio management. We maintained an extremely high averageoccupancy of 99.9 percent and our rents continued to grow. For the 40,000 square meters of leases that were renewed or re-tenanted during the fiscal period under review, weachieved an upward rent revision in 40 percent and achieved strong 6.8 percent rent growth in such rent revisions, with a weighted average rent growth of 3.1 percent on anominal weighted average basis. This marks the third consecutive period of growth since our inception. Also, we have achieved HYBRID internal growth other than rent revisions
through distinctive initiatives such as the receipt of green lease fee based on green lease contract, a review electricity suppliers, and a decrease in property tax due to review in asset
valuation. Capturing this momentum, we intend to strive to accomplish this HYBRID internal growth.
We have implemented various measures to improve our unitholder value based on our new management policy, “Three Pillars” that are “Alignment,” “Discipline,” and “HYBRID.”In May 2019, we introduced an asset management fee fully linked to unit price performance to align interest with our unitholders. This initiative is the first among all J-REITs.
In October 2019, we completed our second follow-on offering and successfully raised 20.1 billion yen of capital including third-party allotment. With the proceeds and debt financing,we acquired one sponsor-developed property, LOGIPORT Osaka Taisho, and four properties (MJ Logipark Tsuchiura 1, MJ Logipark Nishinomiya 1, MJ Logipark Kasugai 1 and MJ
Industrial Park Sakai (Land)) that were sourced by us the Asset Manager, totaling 30.5 billion yen. These acquisitions embody our HYBRID external growth. As a result, our portfolio
size has grown to 113.7 billion yen. With this offering and disciplined acquisition, giving due attention to our existing portfolio yield and an acquisition with NOI yield greater than theimplied cap rate, we realized an accretion of 8.0 percent distributions per unit (DPU) growth on a stabilized basis and 3.5 percent growth for net asset value (NAV) per unit.
As for the debt side, as a result of new debt financing at the time of the offering, 94.4 percent of our debt is long-term fixed interest rate debt with diversified maturities. Our
remaining debt duration was extended from 4.7 years to 6.1 years and the all in debt cost was reduced from 47 basis point to 39 basis point. Also, MEL obtained new debt
financing from two new banks, The Shinkumi Federation Bank and The 77 Bank, which further diversified our bank formation. As of the end of the reporting fiscal period, our loanto-value (“LTV”) ratio was 27.0 percent, and as a reflection of this offerings and acquisitions, our LTV ratio is forecasted to be 29.4% at the end of the fiscal period ending August
31, 2020. We will continue to maintain the LTV ratio at a conservative level and preserve a stable financial structure going forward.
Looking forward, we will endeavor to maximize our unitholder value by growing both externally and internally through the HYBRID model and follow our new management policy,“Three Pillars.” We will also fully take advantage of the good relationships Mitsubishi Estate Co., Ltd. (“MEC”) has cultivated with corporate customers over many years throughoffice and commercial facilities businesses. Furthermore, we will utilize the strength of our asset management company, Mitsubishi Jisho Investment Advisors, Inc. (MJIA), that dates
back to our founding in 2001. MJIA has a proven track record in structuring and managing various types of real estate funds including the largest private REIT in Japan. By
combining the strengths of MEC and MJIA, we will continue to pursue both internal and external growth opportunities.
With the expansion in e-commerce and the third-party logistics (3PL) market, the need for logistics facilities continues to grow in Japan. MEL will support logistical platforms inJapan 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 of MEL and the Mitsubishi Estate Group and look forward to reporting our further progress in the months and years ahead.

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

S E M I A N N U A L

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

Development / Facilities Management

Investment / Asset Management

SponsorOverview

Asset Management Company

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

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

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

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

Overview

Promoting the logistics facility business as a
growth area

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
through development /operation of advanced logistics facilities

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

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

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Our Portfolio

MEL's Investment Policy
Logistics facilities

Property Type(based on acquisition price)

80
50

Other logistics related facilities

20
50% or more

Tokyo metropolitan area

Investment Area(based on acquisition price)

Logicross Fukuoka Hisayama% or less

Other areas% or more% or less

By Investment Area

By Total Floor Space

By Acquisition Source(Based on acquisition price)(Based on acquisition price)(Based on acquisition price)■ Tokyo metropolitan area
■ Osaka metropolitan area

■ 30,000 m2 or more
■ 10,000 m2 to less than 30,000 m2■ Developed by the Sponsor■ Sourced by Asset Management
Company■ Less than 10,000 m2

JPY 5,770 million

Occupancy rate

100.0%DBJ Green Building★★★★

Logicross Atsugi

Portfolio Diversification■ Nagoya metropolitan area
■ Other

Acquisition price

Acquisition price

JPY 8,440 million

Occupancy rate

100.0%

BELS

★★★★★

CASBEES Rank for Real Estate

Logicross Kobe Sanda

1.2%

10.5%

27.7%

12.0%

44.3%
71.1%

56.7%

55.7%

Acquisition price

JPY 3,900 million

Occupancy rate

100.0%BELS★★★★

CASBEEA Rank for Real Estate

20.9%

LOGIPORT Sagamihara(49% co-ownership interest)

By Access Convenience

By Access Convenience(Based on acquisition price)(Based on acquisition price)

Acquisition price

JPY 21,364 million

Distance from Nearest Train Station

Distance from Major Trunk Road

Occupancy rate

99.7%

■ Less than 1.5 km■ 1.5 km or more

■ Less than 1 km
■ 1 km to less than 3 km

CASBEES Rank for Real Estate■ 3 km or more

LOGIPORT Hashimoto

17.4%
38.4%

61.6%

(45% co-ownership interest)

49.3%
33.3%

S E M I A N N U A L

R E P O RT

Acquisition price

JPY 18,200 million

Occupancy rate

100.0%BELS★★

CASBEES Rank for Real Estate4

Our Portfolio

Newly Acquired Properties
MJ Logipark Funabashi 1

MJ Logipark Tsuchiura 1

Acquisition price

JPY 5,400 million

Acquisition price

JPY 3,133 million

Occupancy rate

100.0%

Occupancy rate

100.0%

MJ Logipark Atsugi 1

LOGIPORT Osaka Taisho(20% co-ownership interest)

Acquisition priceJPY 6,653 million

Acquisition price

JPY 5,682 million

Occupancy rate

100.0%

Occupancy rate

99.9%

MJ Logipark Kazo 1

MJ Logipark Nishinomiya 1

Acquisition price

JPY 1,272 million

Occupancy rate

100.0%

Acquisition price

JPY 2,483 million

BELS

★★★★★

Occupancy rate

100.0%

MJ Logipark Osaka 1

MJ Logipark Kasugai 1
Acquisition price

JPY 13,670 million

Acquisition priceJPY 6,090 million

Occupancy rate

100.0%

Occupancy rate

100.0%CASBEE★★★★

MJ Logipark Fukuoka 1

MJ Industrial Park Sakai(Land)

Acquisition priceJPY 6,130 million

Acquisition price

JPY 5,600 million

Occupancy rate

100.0%

Occupancy rate

100.0%S E M I A N N U A L

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

Logicross

MJ Logipark

Brand of logistics facilities that MEC
develops throughout Japan

Properties which MEL acquired or intends toacquire from 3rd parties

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

MJIA-sourced and operated properties withexpected preferential negotiation rightBridge FundMEC Group
Occupancy
100%

Occupancy
approx. 95%

Newlyannounced

Occupancy
99.9%

Logicross Hasuda (tentative name)(79,000 m2) To be completed in FY2020

Osaka Nishi-Yodogawa Logistic Facility Center

Logicross Nagoya Kasadera(38,000 m2) Completed in FY2018 (Jointly)(80,000 m2) Completed in FY2018 (Independently)

Occupancy
100%

Newly
announced

LOGIPORT Osaka Taisho(117,000 m2) Completed in FY2017 (Jointly)

Pre-leased
100%

Occupancy
100%

Logicross Kasukabe (tentative name)(38,000 m2) To be completed in FY2021
Newlyannounced

LOGIPORT Kawasaki Bay

Logicross Yokohama Kohoku(296,000 m2) Completed in FY2019 (Jointly)(16,000 m2) Completed in FY 2019 (Independently)

Occupancy
100%

Logicross Narashino(39,000 m2) Completed in FY2017 (Independently)
Occupancy
100%

Logicross Funabashi (tentative name)(23,000 m2) To be completed in FY2021
Newlyannounced

Logicross Atsugi II

Saitomoegi Logistics FacilitiesProject (tentative name)

Logicross Zama (tentative name)

MJ Logipark Sendai 1(34,000 m2) Completed in FY2019 (Independently)(32,000 m2 / 125,000 m2) To be completed in FY2020/FY2021(183,000 m2) To be completed in FY2023(36,000 m2) Completed in FY2008

14 properties 1,141,000㎡
Notes: As of Oct. 18, 2019

S E M I A N N U A L

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Our Portfolio and Acquisition Pipelines

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

Gunma

TochigiTohoku Expressway

Pipeline Assets

Joban Expressway

Head Office / Branches of the Sponsor

MJ Logipark Tsuchiura 1
Kan-etsu Expressway

MJ Logipark Sendai 1

Ibaraki

MJ Logipark Kazo 1

Sendai

Logicross Hasuda*

MJ Logipark Kasugai 1
Logicross Nagoya Kasadera

SaitamaTokyo

Logicross Kasukabe*

Logicross Fukuoka Hisayama

Ken-o Expressway
NagoyaOsaka

Hiroshima

Fukuoka

Tokyo-Gaikan
Expressway

Yokohama

MJ Logipark Fukuoka 1

Tokyo

Osaka Metropolitan Area
Chugoku Expressway

Logicross Funabashi*

Logicross Kobe Sanda

Sanyo Expressway

Chuo Expressway

Saitomoegi Logistics Facilities Project*

LOGIPORT Hashimoto
LOGIPORT Sagamihara

Osaka International Airport
Daini Keihan Expressway

Meishin Expressway
Kobe Port

Logicross Zama*

Osaka Port
Kobe Airport

MJ Logipark Atsugi 1

Osaka
Kinki Expressway

Logicross Atsugi

LOGIPORT Osaka Taisho
MJ Logipark Osaka 1

Kanagawa

MJ Industrial Park Sakai (Land)

Hanshin Expressway

Nara

Kansai International Airport* Tentative nameNote: As of Oct. 9, 2019

S E M I A N N U A L

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7

Tomei
Expressway

Metropolitan Expressway
Bayshore Route

Logicross Narashino

Tokyo Ryutsu CenterTokyo International Airport(Haneda Airport)

Logicross Yokohama Kohoku

Logicross Atsugi II

Osaka Nishi-Yodogawa Logistic Facility Center

Osaka Branch

MJ Logipark Funabashi 1

Tokyo Port

Shin-Meishin Expressway

MJ Logipark Nishinomiya 1

Hyogo

Head Office

LOGIPORT Kawasaki Bay
Kawasaki Port
Yokohama Port

Yokohama Branch

Chiba

NaritaInternational
AirportHYBRID Internal Growth Strategy

Rent Revision (Based on Leased Area of Warehouse)■ Upward rent revision

11,000m

2

Average Rent Growth■ Rent unchanged

62,000m

2

Average rent growth

40,000m

2

19,000m■ Average rent growth of increased portion

Average occupancy rate

99.9

(%)
2

8

+3.1%

12%

%

6

43%

60%
96%

57%

Fixed-term lease rate

4

88%
2

40%

+1.8%

+0.2%

3.2%

3.4%

FP2018/8(4th FP)FP2019/2(5th FP)

6.8%

FP2019/2(5th FP)FP2019/8(6th FP)FP2020/2(7th FP)

0

FP2019/8(6th FP)%

Average remaining expiry

2.5%

4%
FP2018/8(4th FP)

100.0

+2.2%

6.8

FP2020/2(7th FP)

years

Tenant Diversification

Efforts to improve Tenants’ Satisfaction (Example)
Improvement by switching to LED based on green lease contract

Overview

Effects■ Installed LED lighting at the cost of MEL■ Receipt of half of the reduction in electricity bills andmaintenance cost to be borne by tenant as green lease fee■ Income will increase by JPY 1.9 mn per fiscal period dueto the receipt of green lease fee■ Tenants’ electricity bills are reduced substantially■ The latest dimming functions capable of adjustinggrouping and brightness improved tenants’ convenience■ IHI Infrastructure Systems

7.1%
38.6%
5.7%
5.4%

Review asset evaluation of the properties■ Review asset evaluation of the properties held
■ Negotiation with relevant government office regarding
difference from evaluation, if any

Effects■ Decreased property tax for two properties(JPY 1.7 mn per fiscal period)■ Refund of property tax due to review in asset valuation(JPY 12 mn in 6th fiscal period)■ Negotiation is underway for other propertiesS E M I A N N U A L■ Kimura Unity■ MITAKA SOKO

Efforts to reduce costs borne by Investment Corporation (Example)
Overview■ Sankyu

15.9%

R E P O RT

8

3.3%
4.3%
4.8%

5.1%
5.0%
4.9%

■ Sun City Building■ Honda Logicom■ Mitsubishi Estate■ Fukuoka Logistic System■ Company A (communications)■ Fuji Echo
■ Others

Financial Strategy

Financial Highlights

Our Lenders
1.1%

Long-term Debt Ratio

94.4

%

Fixed Interest Rate
Debt Ratio

94.4

%

4.1 3.4
4.8 % %%

Average Remaining
Debt Duration(Long-term Debt)

6.1

29.1%

5.5%
5.6%

years

Total Debt Balance
JPY

8.0%

36.5
billion

19.9%

18.5%

Average Debt Cost(Long-term Debt)

0.39%

Credit Rating

JCR:

AA-

(Stable)Debt Capacity (up to 40%)

Debt Capacity (up to 50%)

Approx.

Approx.

JPY

20.0
billion

JPY

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

29.4%■ MUFG Bank, Ltd.

■ Shinkin Central Bank

■ Mizuho Bank, Ltd.

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

■ The Shinkumi Federation Bank

■ The Norinchukin Bank

■ The 77 Bank, Ltd.

Debt Maturity Schedule■ Short-term debt

■ Long-term debt

(mn yen)

10,000

48.0

8,000

6,000

billion

4,000

2,000

0

S E M I A N N U A L

R E P O RT

9

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

(year)

ESG Initiatives

GRESB Survey

Energy Saving Initiatives

Participated in the 2019 GRESB Real Estate Assessment for the first timeAwarded the prestigious “Green Star” rating and received “4 Star” rating,the second highest rating out of five
MEL was the only J-REIT to receive “4 Star” rating among the six J-REITs
that participated for the first time

Insulated sandwich panels
for exterior walls

Installation of
motion-detection sensors

BCP Initiatives

Environment Initiatives

Enhanced greenery

Use of Renewable Energy

Sustainable Building Certifications (As of October 9, 2019)7

properties / out of 15 with building certifications
Installation of private power
generators

490,757

Insulated solar panels

Seismic isolators

Proactive Participation in CSR Activities

m2 of floor area with building certifications

64.4% of the properties in our portfolio have building certifications
Cleanup activity after Atsugi
Ayu Firework Festival volunteer worknear MJ Logipark Atsugi 1

Free beverage service for tenants at
LOGIPORT Sagamihara

MEL’s Asset Management Fee Structure
Investment unit priceAsset Management Fee Ⅰ(AUM-linked)

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

Asset Management Fee Ⅱ(Real estate profit-linked)

Adjusted NOI x 5.0% (upper limit)

JPY 262,100
3,851.10 pts

TSE REIT Index (incl. dividends)+DPU

Adjusted net income before tax x net income before tax per unit x 0.001% (upper limit)
A First for J-REITs

Asset Management Fee Ⅲ(Unitholder interest-linked)“Investment unit price-linked management fee”
Performance against TSE REIT Index ((a) – (b)) x market capitalization (for fiscal period of each term)
x 0.1% (upper limit)(a): Fluctuations in MEL’s investment unit price (incl. dividends)(b): Fluctuations in the TSE REIT Index (incl. dividends)

S E M I A N N U A L

R E P O RT10

JPY 262,100
3,851.10 pts
Mar. 29, 2019+DPU
Sept. 30, 2019

If MEL’s growth rateis greater(a) - (b) = positive↓
Increase Fee
If TSE REIT Index
growth rate is greater(a) - (b) = negative↓
Decrease FeeUnitholder Information (as of Aug. 31, 2019)

Breakdown by Units

Major Unitholders
3.8%■ Domestic individuals and others: 37,612 unit

Number ofInvestment Units

Share ofInvestment Units (%)

Japan Trustee Services Bank, Ltd. (Trust Account)

32,372

13.16

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

28,251

11.49

Mitsubishi Estate Co., Ltd.

10,000

4.06

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

8,832

3.59

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

7,132

2.90

Tokyo Century Corporation

6,069

2.46

The Chugoku Bank, Limited

5,372

2.18

The Shinkumi Federation Bank

4,806

1.95

The Iyo Bank, Ltd.

3,652

1.48

The Hyakujushi Bank, Ltd.

3,500

1.42

109,986

44.74■ Financial institutions: 144,107 unit
■ Other domestic entities: 23,894 units■ Foreign entities: 30,874 unit

15.3%

12.6%

■ Securities companies: 9,328 unit

9.7%

245,815
Units Issued
andOutstanding

58.6%

Total

Breakdown by Unitholders■ Domestic individuals and others: 9,372 unitholders■ Financial institutions: 136 unitholders■ Other domestic entities: 229 unitholders

1.1%
2.3%
1.4%

0.1%

Continuous same-boat investment in MEL by the sponsor■ Foreign entities: 105 unitholders■ Securities companies: 18 unitholders

9,860

Investment in MEL

95.1%

by MEC

Unitholders

10,000units(4.1%)(As of Oct. 18, 2019)

S E M I A N N U A L

R E P O RT

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Financial Section
BALANCE SHEETBALANCE SHEET, continued
Thousands of yen

Thousands of yen

As of

As of
February 28, 2019ASSETS
Current assets:
Cash and deposits (Notes 3, 5)
Cash and deposits in trust (Notes 3, 5)
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other current assets

 ¥

Total current assets

February 28, 2019

August 31, 2019

1,856,912
3,185,098
18,674
20,637
312,168- ¥

5,393,492

2,627,266
3,196,426
22,102
10,300753
5,856,848

Operating accounts payable
Long-term loans payable due within one year (Notes 5, 10)
Accounts payable
Distributions payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received

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

37,515,698(1,365,361)

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

Buildings in trust, net

36,150,337

35,696,466

Non-current liabilities
Long-term loans payable (Notes 5, 10)
Tenant leasehold and security deposits in trust

1,288,743(35,273)

1,286,857(48,050)

Total liabilities

1,253,469

1,238,807

-

7,372
(51)

Structures in trust, net
Machinery and equipment in trust
Less: accumulated depreciation

-

7,320

Tools, furniture and fixtures in trust

Machinery and equipment in trust, net

689

4,806

Less: accumulated depreciation

(28)

(252)

Tools, furniture and fixtures in trust, net

661

4,554

Land in trust

45,603,368

45,603,368

Total property and equipment

83,007,836

82,550,517

Intangible assets (Notes 4)
Software

6,785

5,835

Other intangible assets

841

791

Total intangible assets

7,626

6,626

Investments and other assets
Deferred tax assets (Notes 12)
Long-term prepaid expenses
Security deposit

11
14,161
10,000Total investments and other assets
Total fixed assets
Deferred assets:
Organization expenses
Total deferred assets
Total assets¥

Total current liabilities

Structures in trust (Notes 11)
Less: accumulated depreciation¥

13
11,48410,00024,172

21,49883,039,635

82,578,642

28,22328,223

22,17522,17588,461,352¥

August 31, 2019

LIABILITIESCurrent liabilities:

Total non-current liabilities

140,574
4,000,000
7,075
4,984
264,448837
407,446¥

97,5234,000,000
11,5366,549
286,273881
138,971405,806

4,825,367

4,947,542

19,924,000
1,529,276

19,924,000
1,541,562

21,453,276

21,465,562

26,278,644

26,413,105

61,262,651

61,262,651

Units issued and outstanding: 245,815units
as of August 31, 2019, and February 28, 2019
Unitholders’ capital, gross
Deduction from unitholders’ capital

61,262,651(250,808)

61,262,651(430,007)

Unitholders’ capital, net

61,011,843

60,832,644

1,170,864

1,211,916

NET ASSETS
Unitholders’ equity
Unitholders’ capital
Units authorized: 10,000,000 units

SurplusRetained earnings
Total surplus
Total unitholders’ equity
Total net assets (Notes 9)

1,170,864

1,211,916

62,182,708

62,044,560

62,182,708

Total liabilities and net assets¥

88,461,352

62,044,560¥

88,457,666

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

88,457,666

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


12

SEMIANNUAL REPORTSEMIANNUAL REPORT

13

Financial Section
STATEMENT OF INCOME AND RETAINED EARNINGSSTATEMENT OF CHANGES IN NET ASSETS
Thousands of yen

For the period ended August 31, 2019

For the period ended
February 28, 2019
Operating revenues:
Operating rental revenues (Note 7)
Other rental revenues (Note 7)
Total operating revenues
Operating expenses:
Expenses related to property rental business (Note 7)
Asset management fee
Asset custody fee
Administrative service fee
Directors’ compensation
Commission paid
Other operating expenses
Total operating expenses
Operating income
Non-operating income:Interest income
Interest on refund
Insurance income
Refund of property taxes
Other non-operating income
Total non-operating income
Non-operating expenses:
Interest expenses
Borrowing related expenses
Amortization of organization expenses
Amortization of investment unit issuance
expensesLosses due to disaster
Loss on reduction of tangible fixed assets
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes-current (Note 12)
Income taxes-deferred (Note 12)
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings¥¥

Thousands of yen
Unitholders’ equity
Surplus

August 31, 2019 
2,358,795
134,976
2,493,772¥

 
2,399,157
131,2292,530,386

Unitholders’ capital
Deduction ofUnitholders’
Unitholders’unitholders’capital, grosscapital, net
capitalBalance as of March(250,808)

61,011,843

1,170,864

1,170,864

62,182,708

62,182,708

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

Surplus cash
distributions

-

-

-

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

Net income

-

-

-

1,211,868

1,211,868

1,211,868

1,211,868

25
788
41,561
12,88055,255

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

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

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

60,832,644

1,211,916

1,211,916

62,044,560

62,044,560

48,37810,516
6,047

49,6628,915
6,047

For the period ended February 28, 2019

31,263-25,4974,303
126,007
1,171,572
1,171,572841
1
842
1,170,729
134
1,170,864

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

Total
unitholders’
UnappropriatedTotal surplus
equityretained earnings

Total net
assets959,140
209,632850
19,2782,400
57,01428,147
1,276,463
1,253,922

1, 2019 (Note 9)23
30,210130,234¥

Change during theperiodThousands of yen
Unitholders’ equity
Surplus

Unitholders’ capital
Deduction ofUnitholders’
Unitholders’unitholders’capital, net
capital, grosscapitalBalance as of
September 1, 2018
(Note 9)53,685,400(120,910)

53,564,490

1,002,724

1,002,724

54,567,214

54,567,214

Issuance of new
investment units

7,577,251-

7,577,251--

7,577,251

7,577,251

Distributions inexcess ofretained earnings-(129,898)(129,898)--(129,898)(129,898)---(1,002,590) (1,002,590)(1,002,590) (1,002,590)

-

-

-

1,170,729

1,170,729

1,170,729

1,170,729

7,577,251(129,898)

7,447,353

168,139

168,139

7,615,493

7,615,493

61,262,651(250,808)

61,011,843

1,170,864

1,170,864

62,182,708

62,182,708

Change during theperioddistributions
Net income

Yen

Net income per unit (Note 13)

Total net
assets61,262,651

940,015
190,172848
17,8692,400
49,54425,5781,226,428
1,267,344

Surplus cash

For the fiscal period ended
February 28, 2019
August 31, 2019
¥
4,798
¥

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

Total
unitholders’
UnappropriatedTotal surplus
equityretained earnings

Total change during
the period
4,930

Balance as ofFebruary 28, 2019
(Note 9)The accompanying notes are an integral part of these financial statements.


14

SEMIANNUAL REPORTSEMIANNUAL REPORT

15

Financial Section
STATEMENT OF CASH FLOWSNOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION

Thousands of yen
For the period ended
February 28, 2019
Cash flows from operating activities:
Income before income taxes
Depreciation
Amortization of investment unit issuanceInterest income
Interest expenses
Insurance income
Loss on reduction of tangible fixed assets
Losses due to disaster
Decrease (Increase) in operating accounts receivable
Decrease (Increase) in consumption taxes receivable
Decrease (Increase) in prepaid expenses
Decrease (Increase) in long-term prepaid expenses
Increase (Decrease) in operating accounts payable
Increase (Decrease) in accounts payable
Increase (Decrease) in accrued expenses
Increase (Decrease) in consumption taxes payable
Increase (Decrease) in advances received
OthersSubtotalInterest received
Interest paid
Insurance income due to disaster
Payments due to disaster
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchases of property and equipment in trust
Proceeds from tenant leasehold and security deposits
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
Proceeds from issuance of new investment units
Payment of distributions of retained earnings
Payment of distributions in excess of retained earnings
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period(Notes 3)¥¥

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

16 
1,171,572
485,904
31,263(23)
48,378(30,210)4,303
25,497
8,076(312,168)
5,504
766
45,918(5,798)19,762(108,215)
93,8689,798
1,494,200
23(47,145)
30,210(25,497)(865)
1,450,925a)August 31, 2019¥ 
1,212,751
488,054(25)
49,662(41,561)
30,725
1,075(3,427)
312,168
10,337
2,676(26,588)
4,461
21,024
138,971(1,639)5,294
2,203,961
25(48,861)
41,561(1,075)(841)
2,194,769(12,541,961)(76,924)

300,506

16,923(1,525)(4,637)(12,242,980)(64,637)

12,961,000(12,961,000)
5,023,000
7,545,987(1,002,300)(129,642)
11,437,044
644,989
4,397,022
5,042,011(1,169,608)(178,842)(1,348,450)
781,6815,042,011
5,823,693¥

Organization
Mitsubishi Estate Logistics REIT Investment Corporation (hereinafter “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 the Tokyo Stock Exchange on September 14, 2017, with Mitsubishi Estate Co., Ltd. (hereinafter “MEC”), one of thelargest comprehensive developers in Japan, acting as a sponsor. MEL focuses on investing in logistics facilities primarily in theTokyo 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 apublic offering and raised approximately 49,678 million yen. Those units are listed on the J-REIT section of the Tokyo Stock
Exchange. MEL acquired 8 properties (aggregate acquisition price: 70,879 million yen) on September 14, 2017 following its listing
and acquired 2 properties (aggregate acquisition price: 12,340 million yen) on September 3, 2018 during the reporting fiscal
period. As of August 31, 2019, MEL held in the form of beneficiary right in trust in 10 properties (aggregate acquisition price:
83,219 million yen). The total leasable area was 355,855.07㎡ and the occupancy rate remained high at 99.9% as of the end of
the reporting fiscal period.

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

2.
a)

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

b)

Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment, including property and equipment in trust,is calculated by the straight-line method over the estimated useful lives as follows:
Buildings
2-60 years
Structures
10-58 years
Machinery and equipment
12 years
Tools, furniture and fixtures

6-10 yearsc)Intangible Assets
Intangible assets are stated at cost. Amortization of intangible assets, including intangible assets in trust, is calculated by thestraight-line method over the estimated useful lives.

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

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

SEMIANNUAL REPORTSEMIANNUAL REPORT

17

Financial Sectionf)

Beneficiary Rights in Trust
As to beneficiary rights in trust, all accounts of assets and liabilities for assets in trust as well as the related income generated
and expenses incurred are recorded in the relevant balance sheet and statement of income and retained earnings accounts.
Important line items included in accounting for financial assets and liabilities in the MEL’s balance sheet are cash and deposits intrust, buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, land in trust
and tenant leasehold and security deposits in trust.

5.
a)investment units.
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.
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 theg)Taxes on Property and Equipment
With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessed and determined, theamount corresponding to the relevant fiscal period is accounted for as rental expenses.
Of the amounts paid for the acquisitions of real estate properties or beneficiary right in trust of real estate, the amountequivalent to property taxes is capitalized as part of the acquisition cost of the relevant property instead of being charged as an
expense. Not applicable for the reporting period.

h)Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

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.
(2) Type of Financial Instruments, related Risks and Risk Management System
Bank loans are mainly made to procure funds for acquisition of properties, repayment of bank loans. Although MEL is
exposed to liquidity risks upon repayment, by diversifying the maturities and lending institutions, securing liquidity of cash inhand and managing such liquidity risks by preparing and monitoring cash flows projection, such risks are maintained undercontrol. In addition, some loans bear floating interest rates and are exposed to potential risks of rising interest rates. MEL
attempts to mitigate such risks on its operations by maintaining a conservative loan to value ratio and increasing the ratio of
long-term fixed interest rate loans.
The security deposits which MEL has received from the tenants are exposed to liquidity risk due to cancelation of leaseagreement before the maturity date. In the case of trust beneficiary interest in real estate, MEL secures safety byaccumulating a portion in the trust account, and in the case of real estate, leasehold rights of real estate, and superficies, MEL
secures safety by accumulating a portion in bank savings account or bank time deposit account. Moreover, MEL ensuressafety by accurately tracking the timing of the tenant move-ins and outs and anticipating the fund demand utilizing historical
data. 3.

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

February 28, 2019
Cash and deposits¥   Cash and deposits in trust

1,856,912

August 31, 2019¥   3,185,098

Cash and cash equivalents

4.

Thousands of yen
As of¥  

5,042,011

2,627,266
3,196,426¥  

5,823,693

PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment and intangible assets as of August 31, 2019 are as follows:(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 reflectedThousands of yen

Type of assets

Balance as ofMarch 1, 2019

Buildings in trust ¥ 37,515,698
Structures in
1,288,743
trust
Machinery andPropertyequipment in
－
and
trust
equipment
Tools, furnitureand fixtures in
689
trust
Land in trust
45,603,368
Total property and equipment
84,408,499
Software¥ 9,500
Intangible
Other intangible
assets1,000
assetsTotal intangible assets
10,500FINANCIAL INSTRUMENTS
Overview(1) Policy for Financial Instruments
MEL procures funds for the acquisition of assets and repayment of debt mainly through bank loans or the issuance of new

Depreciation
Net balance
Decrease Balance as ofDepreciation
as of August Remarks
during the August 31, Accumulated
for the31, 2019
period2019
depreciation
period¥ 48,151 ¥ 28,020¥ 37,535,830 ¥ 1,839,363 ¥ 474,002 ¥ 35,696,466－

Increaseduring theperiodin 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, 2019 and February 28, 2019 are as follows:
Financial instruments for which the fair value is extremely difficult to estimate are excluded from the following table (see Note 2
below).

820

2,705

1,286,857

48,05012,7771,238,807

－

7,372

－

7,372

51

51

7,320

－

4,116

－

4,806

252

223

4,554

－

45,603,368－－
84,438,235 1,887,718
487,054¥
9,500 ¥
3,665 ¥
950

45,603,368
82,550,517
¥
5,835

－
－
－

(1) Cash and deposits(2) Cash and deposits in trust－－
60,46030,725
¥
－ ¥
－
－

－

1,000

208

50

791

－

－

－

10,500

3,873

1,000

6,626

－

Thousands of yen
As of August 31, 2019
Book value

Total assets¥  2,627,266¥

  5,823,693(4) Long-term loans payable¥

Difference  2,627,266¥

 

3,196,426¥

  5,823,693

-

¥

 

-

4,000,000

4,000,000-

19,924,000

20,381,283

457,283

year

18

¥

3,196,426(3) Long-term loans payable due within one

Total liabilities

Fair value  23,924,000

SEMIANNUAL REPORT¥  24,381,283¥

  457,283

SEMIANNUAL REPORT

19

Financial Section(Note 4) Repayment schedule for debt after August 31, 2019

Thousands of yen

Thousands of yen

As of February 28, 2019
Book value(1) Cash and deposits

Fair value¥  1,856,912¥

  5,042,011(2) Cash and deposits in trust¥  1,856,912¥

  5,042,011

3,185,098

Total assets

¥

 

  -

¥



 -

3,185,098-(3) Long -term loans payable due within one year

4,000,000

4,000,000-(4) Long-term loans payable

19,924,000

20,064,009

140,009¥   23,924,000¥   24,064,009

Total liabilities

As of August 31, 2019
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

Difference¥Long-term loans payable
due within one year
Long-term loans payableTotal  140,009(Note 1) Methods to estimate fair values of financial instruments(1) Cash and deposits and (2) Cash and deposits in trust
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.
(3) Long-term loans payable due within one year and (4) Long-term loans payable
The fair value of long-term loans payable is determined based on the present value of contractual cash flows
which would be applicable to new loans payable under the same terms. In terms of floating interest rate loans
payable, since it reflects the market interest rate in a short period of time, the fair value is approximately equal tothe book value. Thus, the book value is used.
(Note 2) Financial instruments for which the fair value is extremely difficult to estimate
As tenant leasehold and security deposits in trust has no available quoted market price, and it is impracticable toreasonably estimate their future cash flows, their fair value is not disclosed.
Thousands of yen¥ 4,000,000 ¥-¥¥ 4,000,000 ¥-

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

Tenant leasehold and security deposits in trust

August 31, 2019

¥

¥

 

1,529,276

 

- ¥

- ¥

-

Repayment schedule for debt after February 28, 2019
Thousands of yen
As of February 28, 2019
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears
Long-term loans payable
due within one year
Long-term loans payable
Total¥ 4,000,000 ¥-¥¥ 4,000,000 ¥-

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

- ¥

- ¥

- ¥

-

6.

INVESTMENT AND RENTAL PROPERTIESMEL owns logistics facilities for leasing for the purpose of earning rental income. The book value, changes during the reporting
fiscal period and fair value of the properties are as follows:

As ofFebruary 28, 2019- ¥Thousands of yen
For the fiscal period ended
February 28, 2019
August 31, 2019

1,541,562
Book value (Note 1)(Note 3) Redemption schedule for monetary claims after August 31, 2019

Cash and deposits
Cash and deposits in trust
Total

Changes during the period (Note 2)

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

Balance at the end of the period

Redemption schedule for monetary claims after February 28, 2019
Thousands of yen

Cash and deposits
Cash and deposits in trust
Total

20

Balance at the beginning of the period

Thousands of yen

As of February 28, 2019
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears¥ 1,856,912
¥
¥
¥
¥
¥
3,185,098¥ 5,042,011
¥
¥
¥
¥
¥
-

¥



70,931,988¥

 83,007,836

12,075,847¥



83,007,836(457,319)¥

82,550,517

Fair value at the end of the period (Note 3)¥
 88,370,000¥
 89,375,000(Note 1) Book value is calculated by deducting accumulated depreciation from acquisition cost.
(Note 2) The increase for the fiscal period ended February 28, 2019 was primarily a result of acquiring two new properties for a

total of 12,510,301 thousand yen. The decrease was primarily a result of the recognition of depreciation, whichamounted to 484,904 thousand yen. The increase for the fiscal period ended August 31, 2019 was primarily a result of
the recognition of CAPEX which amounted 60,460 thousand yen. The decrease was primarily a result of the recognitionof depreciation, which amounted to 487,054 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.”SEMIANNUAL REPORTSEMIANNUAL REPORT

21

Financial Section
7.

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

9.
a)

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.

ended August 31, 2019 and February 28, 2019.
Thousands of yen
For the fiscal period ended
February 28, 2019
August 31, 2019
A. Property-related revenues
Operating rental revenues
 Rental revenues
 Common area charges
 TotalOther 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
Others

b)

Yen
¥
¥
¥
¥
¥

2,254,788
104,0072,358,795¥

90,60144,375
134,976
2,493,772¥¥

February 28, 201987,52343,705
131,2292,530,386

¥
¥

¥

¥
¥

123,684
184,581
3,957
29,427
96,523484,904
1,678
15,257¥940,015
1,553,757¥¥

85,207
216,031
4,026
49,452
92,165
487,054
1,682
23,519959,140
1,571,245

8.

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

Due within one year
Due after one year

¥

Total

¥

SEMIANNUAL REPORTFor the fiscal period ended

2,294,240
104,916
2,399,157



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

22

Distributions

February 28, 2019

4,894,348
20,209,065¥

25,103,413¥ August 31, 2019  4,913,567
18,800,951


23,714,518

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)

August 31, 2019

1,170,864,727

IV. Retained earnings carried forward

179,199,135
1,350,015,980(5,492)
1,170,816,845

1,211,916,552

146,014,110
1,357,882,060(5,524)
1,211,867,950(4,763)(4,930)179,199,135

146,014,110

(729)

(594)

47,882

48,602

Pursuant to the “Policy on the Distribution of Funds” as defined in Article 35, Paragraph 1 of the Articles of Incorporation, theamount of distributions shall be the amount which does not exceed the amount of profits but exceeds 90% of the distributableprofit as defined in Article 67-15 of the Special Taxation Measures Act. Based on the policy, MEL declared distribution amounts of
1,211,867,950 yen and 1,170,816,845 yen for the fiscal periods ended and August 31, 2019 and February 28, 2019, respectively.
These amounts were equivalent to the maximum integral multiples of number of investment units issued and outstanding as ofthe end of each fiscal period. Based on the distribution policy as defined in Article 35, Paragraph 2 of the Articles ofIncorporation, MEL shall make Surplus Cash Distributions (SCD), defined as distributions in excess of retained earnings, as a returnof unitholders’ capital, each fiscal period on a continuous basis. In addition, due to temporary decrease in rental revenues for the
fiscal period ended February 28, 2019, MEL made One-time Surplus Cash Distributions equivalent to 7 percent of MEL’s
depreciation expense.
Accordingly, for the fiscal period ended August 31,2019, MEL declared SCD of 146,014,110 yen, as a return of unitholders’capital, which was the amount equivalent to approximately 30.0% of depreciation expense. For the fiscal period ended February
28, 2019, MEL declared SCD of 145,276,665 yen as a return of unitholders’ capital, which was the amount equivalent toapproximately 30.0% of depreciation expense and One-time Surplus Cash Distributions of 33,922,470 yen, equivalent to 7
percent of MEL’s depreciation expense.



SEMIANNUAL REPORT

23

Financial Section
10. LONG-TERM LOANS PAYABLE
Long-term loans payable consisted of bank borrowings under loan agreements. The following table summarizes the longterm loans payable as of August 31 2019 and February 28, 2019.

Classification

Repayment dateLong-term loans payable
due within one year

September 29, 2019

Weighted-averageinterest rate

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

0.2436%

0.3263%September 14, 2022

0.3575%September 14, 2023

0.3913%September 14, 2024
September 14, 2025
September 14, 2026
September 14, 2027

0.4288%0.4675%0.5075%0.5500%

September 14, 2022
September 14, 2025
September 14, 2026
September 14, 2028

0.2400%0.3950%0.4538%0.5750%Total long-term loans payable
Total

12. INCOME TAXESMEL is subject to Japanese corporate income taxes on its taxable income. The tax effects of temporary differences that give rise
to a significant portion of the deferred tax assets and liabilities as of August 31, 2019 and February 28, 2019 are as follows:

Thousands of yen
As ofFebruary 28, 2019
¥

¥
¥

¥
¥

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

Thousands of yen
As ofAugust 31, 2019
¥

¥
¥

¥
¥

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

Enterprise tax payable
Total deferred tax assets
Net deferred tax assets

February 28, 2019¥  1111¥  11

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, 2019 and February 28,
2019 are as follows:

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

For the fiscal period ended
February 28, 2019
August 31, 201931.51%
31.51%(31.49%)
0.05%
0.07%

13. PER UNIT INFORMATION
The following table summarizes per unit information for the fiscal periods ended August 31, 2019 and February 28, 2019.
Yen
For the fiscal period ended
February 28, 2019
August 31, 2019

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

11. REDUCTION ENTRY
The amount of reduction entry of property and equipment as of August 31, 2019 and February 28, 2019 are as follows:

¥

4,798
243,973¥

4,930
245,815

Net assets per unit
¥ 252,965¥ 252,403(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.

Thousands of yen
As ofFebruary 28, 2019¥  ¥
  4,303(31.49%)
0.05%
0.07%

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.

The stated interest rate is the weighted average interest rate during each fiscal period. The redemption schedules for longterm loans subsequent to August 31, 2019 and February 28, 2019 are disclosed in “5. FINANCIAL INSTRUMENTS.”

Buildings in trust
Structures in trust

August 31, 2019¥  1313¥
  13

August 31, 2019¥  28,020
¥

7,008

14. TRANSACTION WITH RELATED PARTIESa) Transactions and Account Balances with the Parent Company and Major Unitholders
There were no transactions and account balances for the fiscal periods ended August 31, 2019 and February 28, 2019.
b)c)

Transactions and Account Balances with Affiliates
There were no transactions and account balances for the fiscal periods ended August 31, 2019 and February 28, 2019.
Transactions and Account Balances with Companies under Common Control
There were no transactions and account balances for the fiscal periods ended August 31, 2019 and February 28, 2019.

d)

24

SEMIANNUAL REPORTTransactions and Account Balances with Board of Directors and Individual Unitholders
There were no transactions and account balances for the fiscal periods ended August 31, 2019 and February 28, 2019.
SEMIANNUAL REPORT

25

Financial Section
15. SEGMENT AND RELATED INFORMATION(For the fiscal periods ended August 31, 2019 and February 28, 2019)a) Segment Information
Disclosure is omitted because the real estate leasing business is MEL’s sole business and it has no reportable segment subject
to disclosure.
b)

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

16. SIGNIFICANT SUBSEQUENT EVENTSIssuance of New Investment Units
The board of directors held on September 19, 2019 and September 30, 2019 approved the issuance of new investment units.
Subsequently, the payments were completed on October 7, 2019 and November 7, 2019, respectively, for the issuance of new
investment units through public offering and third-party allotment.

Issuance of New Investment Units through Public Offering
Number of investment units
Issue price (offer price)
Total issue price (total offer price)Amount paid in (issue value)
Total amount paid in (total issue value)
Payment date

: 57,150 units: 335,887 yen per unit
: 19,195,942,050 yen: 324,690 yen per unit
:18,556,033,500 yen: October 7, 2019

Issuance of New Investment Units through Third-Party Allotment
Number of investment units    
: 2,850 units
Amount paid in (issue value): 324,690 yen per unit
Total amount paid in (total issue value): 925,366,500 yen
Payment date
: November 7, 2019
Allotee: SMBC Nikko Securities Inc.

26

SEMIANNUAL REPORTSEMIANNUAL REPORT27