SEMIANNUAL REPORTFiscal Period Ended August 31, 2020

Financial Highlights
for the Fiscal Period Ended August 31, 2020

Distributions Per Unit
(JPY)

Operating Revenues(JPY millions)

6,003

3,342

Net Income(JPY millions)Credit Rating

1,654

JCR AA(Stable)

Portfolio Size
(JPY millions)Average Occupancy

142,194

99.9%

Loan-to-Value Ratio(Forecasted 2021/8)

Average Debt Cost

30.9%

0.37%

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Message from the Management

Dear Fellow Unitholders,
We are pleased to represent our Eighth 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, 2020, we concluded our eighth fiscal period. With the solid operational performance, MEL reported sound financial results for the fiscal period. Our 3,342 million yen
operating revenues and our 1,654 million yen net income were both in line with our original forecast. Accordingly, our distributions per unit, including the surplus cash distributions(SCD), was 6,003 yen, which exceeded the forecast by 0.9 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. Despite the current COVID-19 situation, for the 21,000 square meters of leases that were renewed or re-tenanted
during the fiscal period under review, we achieved an upward rent revision of 93 percent, and achieved a strong 10.4 percent in rent growth for the increased portion and rent
growth of 9.5 percent on a nominal weighted average basis. This marks the fifth consecutive period of growth since our listing. Also, for the lease agreements expiring in the fiscal
period ending February 28, 2021, we have already signed leases for 86% of lease agreements and 80% of the tenants have agreed to increase rents. and achieved rent growth by
8.9% for the increased portion. If we assume no rent increase for the remaining 14% for which the contract is not yet signed, the rent growth will be 7.1% on a weighted averagenominal basis. We feel with the COVID-19 situation, there is a growing need for consumers to purchase daily necessities and other goods online. With this trend, we believe BtoC
needs for consumer goods are increasing. We believe strong needs for logistics will continue but will closely monitor the trends and needs going forward. Also, we have achieved
HYBRID internal growth other than rent revisions through distinctive initiatives such as receipt of green lease fees based on green lease contracts, improvement of tenant satisfaction
by increasing parking space and installation of solar panels on the rooftop. Capturing this momentum, we intend to strive to accomplish this HYBRID internal growth.
In September 2020, we completed our third follow-on offering and successfully raised 18.3 billion yen of capital including overallotment. With the proceeds and debt financing, we
acquired three sponsor-developed properties (Logicross Osaka (60% co-beneficiary interest), Logicross Nagoya Kasadera (60% co-beneficiary interest) and LOGIPORT Osaka Taisho)(additional 17.5% co-beneficiary interest) and two properties (MJ Logipark Kazo 2 and MJ Logipark Sendai 1) that were sourced by the Asset Management Company, totaling 28.4
billion yen. These acquisitions embody our HYBRID external growth. As a result, our portfolio size has grown to 142.1 billion yen. With this offering and disciplined acquisition,
having particular attention to our existing portfolio yield and acquisition with NOI yield greater that the implied cap rate, we realized accretion of 8.3 percent distribution per unit
(DPU) growth on a stabilized basis and 6.8 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, 95.8 percent of our debt is long-term fixed interest rate debt with diversified maturities. Our remaining debt duration is 5.4 years and all in debt
cost is 37 basis points. Also, MEL obtained new debt financing from four banks (Sumitomo Mitsui Trust Bank, Limited, The Yamanashi Chuo Bank, Ltd., The Yamaguchi Bank, Ltd. and The Bank of Toyama, Ltd.), which further
diversified our bank formation. As of the end of the reporting fiscal period, our loan-to-value (“LTV”) ratio was 29.4 percent, and as a reflection of this offerings and acquisitions, our LTV ratio is forecasted to be 30.9% at the endof the fiscal period ending August 31, 2021. We will continue to maintain the LTV ratio at a conservative level and preserve a stable financial structure going forward.
As for ESG, MEL is committed to endeavoring to enhance consideration toward the environment, social contributions and corporate governance to improve the sustainability of society. We recognize that this is an important social
responsibility for a listed enterprise to assume, and also believe that it is essential for maximizing our unitholder value. MEL continues to proactively pursue green building certifications where possible. We are proud that our ESG
efforts have been recognized by third-party assessment providers. For example, we have participated in the 2020 GRESB Real Estate Assessment and have been awarded the highest “5 Stars” rating and the prestigious “GreenStar” rating. MEL was also recognized as the Global Listed Industrial Sector Leader and Asia Listed Industrial Sector Leader, demonstrating our outstanding performance in ESG. Furthermore, our sponsor, Mitsubishi Estate Co., Ltd.
(“MEC”), announced the “Sustainable Development Goals 2030” in January 2020. To put our commitment into practice based on the above recognition, MEL strives to invest in environmentally friendly logistics facilities and willcontinue to focus on maximizing the energy efficiency of our properties as well as contribution actions to the local communities.
Looking forward, we will endeavor to maximize our unitholder value by growing both externally and internally through our HYBRID model and follow our management policy, “Three Pillars.” We will also fully take advantage ofthe good relationships that MEC has cultivated with corporate customers over many years through office and commercial facilities businesses. Furthermore, we will utilize the strength of Mitsubishi Jisho Investment Advisers, Inc.
(MJIA), which boasts an extensive track record 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 which logistics
facilities continues to grow in Japan.
We sincerely appreciate your continued support of MEL and the Mitsubishi Estate Group and look forward to reporting our further progress in the months and years ahead.

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

S E M I A N N U A L

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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 the society through a variety ofbusiness activities as one of the largest comprehensive
real estate developers

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

Overview

Promoting the logistics facility business as a
growth area

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

Constant supply of pipeline properties from sponsor throughdevelopment / operation of advanced logistics facilities

SupportUnique property sourcing capacity with discerning
judgment

Utilization of the Sponsor's know-how and corporate
customer relations in the leasing activities

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

S E M I A N N U A L

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Flexible and diverse acquisition strategy, using a wide
range of schemes, including bridge funds
Competitive real estate fund management capability
backed by a diverse deal track record3Progress of Management Policy based on “Three Pillars”

Execution of Growth Strategy based on “Three Pillars” (Since April 2019)

Alignment

Align interests
with unitholders

Assetmanagement
fee fully linked
to unit priceperformance

Support fromthe Sponsor's
announcementof its long term
management planand continued
same boat
investment

Inclusion in
the FTSE EPRA
NareitGlobal Real
Estate IndexSeries

ESG initiatives
and greening of
the portfolio

Discipline
External growthwith attention
to portfolio yieldand implied
cap rate

External growthutilizing LTV

Achievedisciplined growthFlexible financing
carefully watching
the market
conditions

Measures for the Future

Aim for further inclusion in major indicesand improve liquidity by steadily increasing
market capitalization
Introduce cumulative investment
for employees

Maximize unitholder value throughdisciplined acquisitions and utilizing low LTV
Consider issuance of bonds including
green bonds aiming for diversification offinancing method(shelf registration already filed)

Flexible property
acquisition
strategyutilizingbridge funds

HybridEnhance MEL’s uniquestrategy Hybrid Model

Enhancedcollaboration
withTokyo Ryutsu
Center(TRC)

Internal growthutilizing
management
capability ofAsset Management
Company
and leasing
capacity of
the Sponsor

Expandingpipelines fromboth the Sponsor
and Asset
Management
Company

Note: Executed measures after Apr. 2020 are highlighted in red.

S E M I A N N U A L

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Continue “Hybrid” external
and internal growth
Secure pipelines continuously
from the Sponsor
Secure pipelines through utilizing
Asset Management Company’s various
sourcing methods, such as CRE proposals

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■ 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

Sponsor-developed properties with expected
preferential negotiation right

MJIA-sourced and operated properties withexpected preferential negotiation right

Mitsubishi Estate
Occupancy
100%

Occupancy
100%

Bridge Fund / 3rd Party Bridge
Pre-leased
100%

Occupancy
100%

Occupancy
100%

Logicross Yokohama Kohoku

Logicross Atsugi II

Logista·Logicross Ibaraki Saito (B)Logicross Narashino

Logicross Osaka(16,000 m2)
Completed in 2019 (Independently)(35,000 m2)
Completed in 2019 (Independently)(31,000 m2)
To be completed in 2021

(39,000 m2)
Completed in 2018 (Independently)(36,000 m2)
Completed in 2018 (Jointly)

Pre-leased
100%

Occupancy
100%

Occupancy
100%

Logista·Logicross Ibaraki Saito (A)Logicross Hasuda (tentative name)

Logicross Kasukabe (tentative name)

Logicross Nagoya Kasadera

LOGIPORT Kawasaki Bay(115,000 m2)
To be completed in 2021

(79,000 m2)
To be completed in 2021

(39,000 m2)
To be completed in 2021

(72,000 m2)
Completed in 2019 (Independently)(296,000 m2)
Completed in 2019 (Jointly)

No Picture
MJ Industrial Park Kobe (Land) (tentative name)

Other multiple projects

Logicross Funabashi (tentative name)

Logicross Zama (tentative name)(23,000 m2)
To be completed in 2021

(183,000 m2)
To be completed in 2023

Land: 31,000 m2
Building: Completed in 202013 properties 1,001,000 ㎡

Note: As of Oct. 15, 2020

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Other multiple projects

HYBRID Internal Growth Strategy

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

FP 2018/8(4th FP)

43%

57%

FP 2019/2(5th FP)■ Undecided

Average Rent
GrowthAverage Rent Growthof Increased Portion

+1.8%

+3.0%

11,000 m 2

4%

96%

62,000 m 2+0.2%

Average occupancy rate

99.9

+3.4%

%

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

FP 2020/2(7th FP)88%

FP 2020/8(8th FP)

40,000 m 2

60%

12% 19,000 m 2

7% 21,000 m 2

93%

+3.1%

+6.8%

+2.2%

+2.5%

100.0

+9.5%

+10.4%

Weighted averagelease expiry(Note 1)

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

80%
0

+7.1%

6% 14% 22,000 m 2
15,000

5.7

+8.9%

%

years

65,000 (m 2)40,00086% contracted

Tenant Data
Tenant Diversification (Based on leased area)

Type of Cargo (Based on leased area) (Note 2)
Cargo for EC■ IHI Infrastructure Systems

13.0%
5.8%

49.3%

■ Sankyu■ Kimura Unity

4.7%■ MITAKA SOKO

4.4%

■ Sun City Building

4.1%
4.1%
4.0%
3.9%
3.5%
3.2%

8.9%
30.6%

■ Toho Transportationand Warehouse■ Others

Note 1: Lease contracts that are not yet contracted are assumed to be unchanged for the calculation
Note 2: Excludes land

75.8

83.1 %

16.9%■ Food and Drink■ BtoC■ Pharmaceuticals
and Medical Devices

4.4%■ BtoB■ PC/Communications Equipment

7.7%

Daily necessities +cargo expected toincrease in demand

BtoC■ Household Goods

6.0%■ Mitsubishi Estate■ KDDI

62.1%

6.0%

8.0%

■ Honda Logicom■ Fukuoka Logistic System

Daily Necessities

1.3%

23.8 %

Delivery Destination (Based on leased area) (Note 2)■ Casual Clothing■ Home Appliancesand Precision Equipment

27.0%■ Raw/Component Materials■ Furniture and Home Goods%■ Others

S E M I A N N U A L

R E P O RT

6

83.1%

Our Portfolio (as of Sept. 1, 2020)

Logicross Fukuoka Hisayama

Logicross Nagoya Kasadera (60% beneficiary interest ratio)

MJ Logipark Funabashi 1

Acquisition price JPY 5,770 million

Acquisition price JPY 8,705 million

Acquisition price JPY 5,400 million

Occupancy rate

100.0%

Occupancy rate

100.0%

Occupancy rate

DBJ Green Building ★★★★

CASBEE

Logicross Atsugi

LOGIPORT Sagamihara (49% beneficiary interest ratio)

MJ Logipark Atsugi 1
Acquisition price JPY 6,653 million

Acquisition price JPY 8,440 million
BELS

★★★★★

Acquisition price JPY 3,900 million
BELS

★★★★

100.0%

Acquisition price JPY 6,130 million

100.0%

Acquisition price JPY 21,364 million Occupancy rate

CASBEES Rank for Real Estate

CASBEE

99.7%

Occupancy rate

LOGIPORT Hashimoto (45% beneficiary interest ratio)

MJ Logipark Kazo 1

99.9%

Acquisition price JPY 1,272 million

S Rank for Real Estate

BELS

100.0%

Acquisition price JPY 18,200 million Occupancy rate

CASBEEA Rank for Real Estate

BELS

MJ Logipark Tsuchiura 1
100.0%

Acquisition price JPY 3,133 million

Acquisition price JPY 1,637 million

Occupancy rate

100.0%

Occupancy rate

MJ Logipark Sendai 1
100.0%

Acquisition price JPY 7,388 million

Occupancy rate

100.0%★★

CASBEE

Occupancy rate

100.0%

MJ Logipark Nishinomiya 1

MJ Industrial Park Sakai (Land)

Acquisition price JPY 2,483 million

Acquisition price JPY 5,600 million

LOGIPORT Osaka Taisho (37.5% beneficiary interest ratio)

MJ Logipark Osaka 1

Acquisition price JPY 5,874 million

Acquisition price ① 5,682 m ② 4,802 m Occupancy rate

Acquisition price JPY 6,090 million

CASBEE

Occupancy rate

100.0%★★★★★

Logicross Osaka (60% beneficiary interest ratio)
100.0%

100.0%S Rank for Real Estate

Occupancy rate

Occupancy rate

Occupancy rate

MJ Logipark Kazo 2

S Rank for New Construction Nagoya

Occupancy rate

Logicross Kobe Sanda

MJ Logipark Fukuoka 1

99.9%
S Rank for Real Estate

Occupancy rate

MJ Logipark Kasugai 1
100.0%

Acquisition price JPY 13,670 million
CASBEES E M I A N N U A L

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A Rank for New Construction Aichi

Occupancy rate

100.0%

Occupancy rate

100.0%

Our Portfolio and Acquisition Pipelines

Tokyo Metropolitan Area

Property Acquired in the 9th FP

Pipeline Assets

Current Assets

Head Office / Branches of Mitsubishi Estate
SapporoGunma

Nagoya Metropolitan Area
Gifu
Meishin
Expressway

Joban Expressway

Chuo Expressway

Nagoya BranchKan-etsu Expressway

Aichi

SendaiShin-Tomei
Expressway

Nagoya Port

MJ Logipark Tsuchiura 1
Ibaraki

MJ Logipark Kazo 1

Logicross Nagoya Kasadera(Note 2)
Isewangan Expressway

MJ Logipark Kazo 2

MJ Logipark Sendai 1

MJ Logipark Kasugai 1

Mie

TochigiTohoku Expressway

Logicross Hasuda*
SaitamaTokyo

Logicross Kasukabe*
Ken-o Expressway

Tomei
Expressway

Chubu
International
AirportNagoyaLogicross Fukuoka Hisayama

Fukuoka

Tokyo-Gaikan
Expressway

Yokohama

Osaka

Hiroshima

MJ Logipark Fukuoka 1

Tokyo

Osaka Metropolitan Area
Chugoku Expressway

Logicross Funabashi*

Logicross Kobe Sanda

Sanyo Expressway

Chuo Expressway

Logista·Logicross Ibaraki Saito (A, B)

LOGIPORT Hashimoto
LOGIPORT Sagamihara

Osaka International Airport
Daini Keihan Expressway

Meishin Expressway

MJ Industrial Park Kobe (Land)*Osaka Branch

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 1: As of Oct. 15, 2020
Note 2: For Logicross Osaka and Logicross Nagoya Kasadera, remaining 40% co-beneficiary interest are left in the pipeline

S E M I A N N U A L

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Tomei
Expressway

Metropolitan Expressway
Bayshore Route

Logicross Narashino

Tokyo Ryutsu CenterTokyo International Airport(Haneda Airport)

Logicross Yokohama Kohoku

Logicross Atsugi II

Logicross Osaka(Note2)

Kobe Port

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Financial Strategy

Financial Highlights

Lenders

Long-term Debt Ratio

95.8

%

Fixed Interest
Rate Ratio

95.8

1.1%
1.1%
1.9%
3.1%
3.7%

Average Remaining
Debt Duration(Long-term Debt)

%

5.6

1.1%
0.6%

26.5%

4.2%
5.8%

years

7.0%

■ MUFG Bank, Ltd.
■ Mizuho Bank, Ltd.
■ Sumitomo Mitsui Banking Corporation■ The Bank of Fukuoka, Ltd.
■ The Norinchukin Bank
■ The Shinkumi Federation Bank
■ Shinkin Central Bank
■ Shinsei Bank, Limited■ Development Bank of Japan■ The 77 Bank, Ltd.

Total Debt Balance
JPY47,574
millions

8.0%

New Lenders

19.4%■ Sumitomo Mitsui Trust Bank, Limited■ The Yamanashi Chuo Bank, Ltd.
■ The Yamaguchi Bank, Ltd.
■ The Bank of Toyama, Ltd.

16.6%

Average Debt Cost

0.37%

Credit Rating

JCR:

Loan-to-Value Ratio(Forecasted 2021/8)

AA- 30.9%

Green Loan

MEL actively promotes financing with ESG assessment
by external agencies. MUFG ESG Evaluation for J REIT
and SMBC Funding to promote SDGs are the firstcases in J REIT.

(Stable)Debt Capacity (up to 40%)

Debt Capacity (up to 50%)

Approx.

Approx.

Debt Maturity Schedule

22.0 JPY 57.0

(JPY millions)

10,000JPY

billion■ Existing borrowings ■ New borrowings

billion

8,000

6,000

Preparation for Green Bond Issuance

4,000

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

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

2,000

0

S E M I A N N U A L

R E P O RT

2020

9

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

(year)

ESG Initiatives

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

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

1 Pursue energy efficiency and low carbon
2 Improve water resource management and waste management

GRESB Assessment

3 Enhance tenant safety, security and satisfaction

MEL participated in the 2020 GRESB Real Estate Assessment and wasawarded the prestigious “5 Stars” and “Green Star” rating andrecognized as the Globally Listed Industrial Sector Leader.

4 Empower our people
5 Collaborate with external stakeholders
6 Disclose ESG information and obtain environmental certifications
7 Ensure compliance and risk management

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

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

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

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

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

3. Innovation
Innovative urban development that continuously renews society

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

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ESG Initiatives

Environment

SocialSustainable Building Certifications
Ratio of Green Properties in Portfolio (GFA basis)

Certification System

No. of Properties

Building-Housing EnergyEfficiency
Labeling System (BELS)

4Comprehensive Assessment
System for Built Environment
Efficiency (CASBEE) for Real
EstateDBJ Green Building Certification

7

1

74.3

Proactive Participation in CSR Activities%

Property Name

Evaluation

Logicross Atsugi

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

Logicross Kobe Sanda

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

Logicross Nagoya Kasadera

CASBEE S Rank for New Construction Nagoya

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

Donation of stockpile
from LOGIPORT Hashimoto

Lawn-mowing at greenery areas
in MJ Logipark Atsugi 1

LOGIPORT Sagamihara

CASBEE S Rank for Real Estate

Collaboration with Local Educational Institute and Improvement in
Tenant Satisfaction

LOGIPORT Hashimoto

BELS: ★★
CASBEE S Rank for Real Estate

Local universities and vocation schools in the region were involved as part of the redesigning of theemployee lounge at MJ Logipark Fukuoka 1.

LOGIPORT Osaka Taisho

CASBEE S Rank for Real Estate

Logicross Fukuoka Hisayama DBJ Green Building Certification: ★★★★

CASBEE S Rank for Real Estate CASBEE A Rank for New Construction Aichi
MJ Logipark Kazo 1

BELS: ★★★★★

ExamplesAfter

BeforeEnergy Saving Initiatives

Governance

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

Installation of
motion-detection sensors

Reuse of OA floor panels of
office buildings in
Marunouchi

Asset Management Fee Ⅰ(AUM-linked)

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

Asset Management Fee Ⅱ(Real estate profit-linked)

Adjusted NOI x 5.0% (upper limit)

Asset Management Fee Ⅲ(Unitholder interest-linked)

Adjusted net income before tax × net income before tax per unit ×
0.001% (upper limit)
1st in J-REIT“Fee linked to investment unit price”
Performance against TSE REIT Index ((a) - (b)) × market capitalization(for fiscal period of each term) × 0.1% (upper limit)(a): Fluctuations in MEL’s investment unit price (incl. dividends)(b): Fluctuations in the TSE REIT Index (incl. dividends)

Renovation with LED
installed based on
green lease contract

Use of Renewable Energy / BCP Initiatives

Insulated solar panels

Seismic isolators

Installation of private power
generators

Measures against infectious
diseases(use of hand sanitizers)

S E M I A N N U A L

Same-boat investment by Mitsubishi Estate as of Oct. 15, 2020

R E P O RT

11

4.1%

Unitholder Information (as of Aug. 31, 2020)

Breakdown by Units

Major Unitholders
2.8%■ Domestic individuals and others: 30,567 units

Number ofInvestment Units

Share ofInvestment Units (%)

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

45,637

14.92

Custody Bank of Japan, Ltd. (Trust Account)

41,416

13.54

Mitsubishi Estate Co., Ltd.

12,450

4.07

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

11,471

3.75

Custody Bank of Japan, Ltd. (Securities Investment Trust Account)

11,402

3.72

The Chugoku Bank, Limited

5,986

1.95

The Shinkumi Federation Bank

5,748

1.87

Tokyo Century Corporation

5,619

1.83

GOLDMAN SACHS INTERNATIONAL

5,040

1.64

JP MORGAN CHASE BANK 385771

4,047

1.32

148,816

48.66■ Financial institutions: 175,192 units

10.0%■ Other domestic entities: 25,023 units■ Foreign entities: 66,507 units■ Securities companies: 8,526 units

21.7%

305,815
8.2%

Units Issued
andOutstanding

57.3%

Total

Breakdown by Unitholders■ Domestic individuals and others: 8,256 unitholders■ Financial institutions: 134 unitholders■ Other domestic entities: 227 unitholders

2.0%
2.6%
1.5%

0.2%

Continuous Same-Boat Investment in MEL by the Sponsor■ Foreign entities: 172 unitholders■ Securities companies: 17 unitholders

Investment in MEL

8,806

by MEC

Unitholders

93.8%

S E M I A N N U A L

R E P O RT

12

14,200(4.1%)

units

Financial Section
BALANCE SHEET, continued

BALANCE SHEET

Thousands of yen

Thousands of yen

As of

As of
February 29, 2020
ASSETS
Current assets:
Cash and deposits (Notes 4, 6)
Cash and deposits in trust (Notes 4, 6)
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other current assets

 ¥

Total current assets

February 29, 2020

August 31, 2020

3,003,699
4,283,495
21,44815,967
1,005,408
1,010

 
¥

3,504,701
4,389,936
27,45914,807
15,8458,331,030

7,952,750

Fixed assets:
Property and equipment (Notes 5, 7)
Buildings in trust (Note 12)
Less: accumulated depreciation

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

48,174,980(2,987,424)

Buildings in trust, net

45,746,915

45,187,555

1,759,218(64,520)

1,760,155(81,973)

Structures in trust (Note 12)
Less: accumulated depreciation
Structures in trust, net

1,694,698

1,678,181

26,039(599)

41,356(1,989)25,44039,367

5,697

11,091

Less: accumulated depreciation(676)(1,515)Tools, furniture and fixtures in trust, net

5,020

9,576

Land in trust

65,551,550

65,551,550

Total property and equipment

113,023,624

112,466,230

4,885

3,935

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

Intangible assets (Note 5)
Software

LIABILITIESCurrent liabilities:
Operating accounts payable
Short-term loans payable (Notes 6,11)¥

Accounts payable
Distributions payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term loans payable (Notes 6, 11)
Tenant leasehold and security deposits in trust (Note 6)
Total non-current liabilities

August 31, 2020

89,8912,050,000¥

90,602950,000

9,754
6,394
355,054944
558,492
16

8,322
6,017
419,864837
204,777
528,045-

3,070,548

2,208,467

34,424,000
2,129,916

34,424,000
2,195,412

36,553,916

36,619,412

39,624,465

38,827,879

As of August 31, 2020 and February 29, 2020
Unitholders’ capital, gross
Deduction from unitholders’ capital

80,744,051(576,021)

80,744,051(750,029)

Unitholders’ capital, net

80,168,030

79,994,021

Total liabilities
NET ASSETS
Unitholders’ equity
Unitholders’ capital
Units authorized: 10,000,000 units
Units issued and outstanding: 305,815 units

Surplus

Other intangible assets

741

691

Retained earnings

1,632,627

1,654,877

Total intangible assets

5,626

4,626

Total surplus

1,632,627

1,654,877

Total unitholders’ equity

81,800,657

81,648,898

16
38,695
10,00011
33,07810,000Total net assets (Note 10)81,800,657

81,648,898

48,71243,090Investments and other assets
Deferred tax assets (Note 13)
Long-term prepaid expenses
Security deposit
Total investments and other assets

113,077,964

112,513,946

Deferred assets:
Organization expenses

Total fixed assets

16,127

10,079Total deferred assets

16,127

10,079Total assets¥

121,425,122¥

Total liabilities and net assets¥

121,425,122¥

120,476,777

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

120,476,777

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

13

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SEMIANNUAL REPORTSEMIANNUAL REPORT

14

Financial Section
STATEMENT OF CHANGES IN NET ASSETSSTATEMENT OF INCOME AND RETAINED EARNINGS

Operating revenues:
Operating rental revenues (Note 8)
Other rental revenues (Note 8)
Total operating revenues
Operating expenses:
Expenses related to property rental business (Note 8)
Asset management fee
Asset custody fee
Administrative service fee
Directors’ compensation
Commission paid
Other operating expenses
Total operating expenses
Operating income
Non-operating income:Interest income
Interest on refund
Insurance income
Refund of property taxes
Total non-operating income
Non-operating expenses:
Interest expenses
Borrowing related expenses
Amortization of organization expenses
Amortization of investment unit issuance expenses
Losses due to disaster
Reduction entry of tangible fixed assets
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes-current (Note 13)
Income taxes-deferred (Note 13)
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings

Thousands of yen
For the period ended
February 29, 2020
August 31, 2020
 
 
¥
3,046,460¥
3,179,904
154,419
162,864
3,200,880
3,342,769¥

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

1,187,243
307,446
1,150
16,7842,400
66,88030,886
1,612,790
1,729,97833
15,442
5,279
20,755

36
2,174
2,211

65,512
3,055
6,047
47,254
11,885
3,200
136,956
1,633,525
1,633,525
949
(3)
946
1,632,579
48
1,632,627

68,8801,723
6,047
76,651
1,655,538
1,655,538
842
5
848
1,654,690
187
1,654,877¥

Yen

Net income per unit (Note 14)

For the period ended
February 29, 2020
August 31, 2020
¥
5,563
¥

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

5,410

For the period ended August 31, 2020
Thousands of yen
Unitholders’ equity
Surplus

Unitholders’ capital
Deduction ofUnitholders’
Unitholders’unitholders’capital, grosscapital, net
capitalBalance as of March
1, 2020 (Note 10)¥ 80,744,051¥ (576,021) ¥ 80,168,030

UnappropriatedTotal surplus
retained earnings

Total
unitholders’equityTotal
net assets¥ 1,632,627 ¥ 1,632,627¥ 81,800,657¥ 81,800,657--(174,008)(174,008)

Change during theperiodDistributions inexcess ofretained earnings
Surplus cash
distributions-(174,008)(174,008)---(1,632,440) (1,632,440)(1,632,440)(1,632,440)

Net income

-

-

-

1,654,690

1,654,690

1,654,690

1,654,690

Total change during
the period-(174,008)(174,008)

22,24922,249(151,759)(151,759)

Balance as of August
31, 2020 (Note 10)¥ 80,744,051¥ 1,654,877 ¥ 1,654,877¥ 81,648,898¥ 81,648,898

UnappropriatedTotal surplus
retained earnings

Total
unitholders’equityTotal
net assets¥ 1,211,916 ¥ 1,211,916¥ 62,044,560¥ 62,044,560



¥ (750,029) ¥ 79,994,021

For the period ended February 29, 2020

Thousands of yen
Unitholders’ equity
Surplus

Unitholders’ capital
Deduction ofUnitholders’
Unitholders’unitholders’capital, grosscapital, net
capitalBalance as of
September 1, 2019

¥ 61,262,651¥ (430,007) ¥ 60,832,644(Note 10)
Change during theperiodIssuance of new
investment units

19,481,400-

19,481,400--

19,481,400

19,481,400

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

Surplus cash
distributions

-

-

-

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

Net income

-

-

-

1,632,579

1,632,579

1,632,579

1,632,579

Total change during
the period

19,481,400(146,014)

19,335,385

420,711420,71119,756,096

19,756,096

Balance as ofFebruary 29, 2020
(Note 10)

¥ 80,744,051¥ 1,632,627 ¥ 1,632,627¥ 81,800,657¥ 81,800,657¥ (576,021) ¥ 80,168,030

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

15

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SEMIANNUAL REPORTSEMIANNUAL REPORT

16

Financial Section
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATIONSTATEMENT OF CASH FLOWSCash flows from operating activities:
Income before income taxes
Depreciation
Amortization of investment unit issuanceInterest income
Interest expenses
Insurance income
Loss on reduction entry of tangible fixed assets
Losses due to disaster
Decrease (Increase) in operating accounts receivable
Decrease (Increase) in consumption taxes receivable
Decrease (Increase) in prepaid expenses
Decrease (Increase) in long-term prepaid expenses
Increase (Decrease) in operating accounts payable
Increase (Decrease) in accounts payable
Increase (Decrease) in accrued expenses
Increase (Decrease) in consumption taxes payable
Increase (Decrease) in advances received
OthersSubtotalInterest received
Interest paid
Insurance income due to disaster
Payments due to disaster
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchases of property and equipment in trust
Proceeds from tenant leasehold and security deposits intrust
Repayments from tenant leasehold and security deposits
in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of new investment units
Payment of distributions of retained earnings
Payment of distributions in excess of retained earnings
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period(Note4)

Thousands of yen
For the period ended
February 29, 2020
August 31, 2020
 
 
¥
1,633,525¥
1,655,538
581,736
605,448
47,254(33)(36)
65,512
68,880(15,442)
3,200
11,885653(6,010)(1,005,408)
1,005,408(5,667)
1,159(27,211)
5,617(10,476)
11,159(1,782)(1,432)
66,32664,162(138,971)
204,777
152,685(30,446)5,806(8,803)
1,363,593
3,575,421
33
36(63,058)(68,232)
15,442(2,249)(9,635)(886)(949)
1,312,875
3,496,640¥(31,063,835)(47,866)

615,973

78,145(27,619)(12,650)(30,475,481)

17,6282,950,000(900,000)
14,500,000(4,000,000)
19,434,145(1,212,050)(145,986)
30,626,108
1,463,502
5,823,693(1,100,000)(1,632,883)(173,942)(2,906,826)
607,443
7,287,195

7,287,195¥

7,894,638a)Organization
Mitsubishi Estate Logistics REIT Investment Corporation (hereinafter “MEL”) was established on July 14, 2016 under the “Acton Investment Trust and Investment Corporation” (hereinafter the “Investment Trust Law”), and acquired 1 property worth
5,400 million yen on September 29, 2016, and was listed on the REIT Securities Market of the Tokyo Stock Exchange on
September 14, 2017, with Mitsubishi Estate Co., Ltd. (hereinafter “MEC”), one of the largest comprehensive developers in Japan,
acting as a sponsor. MEL focuses on investing in logistics facilities primarily in the Tokyo Metropolitan Area. MEL is externallymanaged by a licensed asset management company, Mitsubishi Jisho Investment Advisors, Inc. (hereinafter the “Asset Manager”
or “MJIA”). On September 13, 2017, MEL issued 198,000 new units through a public offering and raised approximately 49,678
million yen. Those units are listed on the J-REIT section of the Tokyo Stock Exchange. MEL acquired 7 properties (aggregateacquisition price: 65,479 million yen) on September 14, 2017 following its listing and acquired 2 properties (aggregate acquisition
price: 12,340 million yen) on September 3, 2018. Furthermore, MEL acquired one additional property on September 2, 2019,
and additional four properties on October 9, 2019, total of five properties worth aggregate acquisition price of 30,568 million
yen during the reporting fiscal period. As of August 31, 2020, MEL held in the form of beneficiary right in trust in 15 properties(aggregate acquisition price: 113,787 million yen), and the occupancy rate remained high at 99.9% as of the end of the reporting
fiscal period.

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

2.
a)

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

b)

Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment, including property and equipment in trust,is calculated by the straight-line method over the estimated useful lives as follows:
Buildings
2-63 years
Structures
10-58 years
Machinery and equipment
12 years
Tools, furniture and fixtures
4-10 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)

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

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.

17

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SEMIANNUAL REPORTSEMIANNUAL REPORT

18

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.

g)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)3.

Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

As the basic policy of the ASBJ for the development of accounting standard for fair value measurement, the ASBJ basically adopted
all provisions of IFRS 13 by using the unified measurement method, from the point of view of improving the comparability of financial
statements among domestic and foreign companies. In addition, considering the actual practices that have been executed in Japan,
other treatments for individual items are established within the scope not to impair comparability between the financial statements.
(2) Scheduled date of application 
The accounting standards will be applied from the beginning of the fiscal period ending February 28, 2022.
(3) Impact of applying the accounting standards 
The impact of applying the “Accounting Standard for Fair Value Measurement” and its guidance on the financial statements iscurrently under evaluation.
・“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31 issued on March 31, 2020)(1) Overview
Paragraph 125 of International Accounting Standard 1 (IAS 1), “Presentation of Financial Statements,” (issued by the IASB in 2003)
requires disclosure of information about the “assumptions the entity makes about the future, and other major sources of estimation
uncertainty.” In this regard, there has been a request that the major sources of estimation uncertainty should be disclosed in the notes
to financial statements under Japanese GAAP to provide useful information to users of financial statements. In response to this request,
the ASBJ developed and issued “Accounting Standard for Disclosure of Accounting Estimates.”・“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on March 31,
2020)

The Accounting Standards Committee's basic policy for the development of this standard is not to expand individual notes, but toindicate the principles (disclosure purposes). Specific disclosures are to be determined by corporates based on the purpose of
disclosure, and are to be developed based on the rules set forth in IAS No. 1, Item 125.

・“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March 31, 2020)(2) Scheduled date of application

・“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31,
2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States havejointly developed comprehensive accounting standards for revenue recognition and issued “Revenue from Contracts with Customers”(IFRS 15 (IASB) and Topic 606 (FASB)) in May 2014. Given the situation where IFRS 15 will be applied from fiscal years beginning on orafter January 1, 2018 and that Topic 606 will be applied from fiscal years beginning after December 15, 2017, the ASBJ has developed
comprehensive accounting standards for revenue recognition and issued them together with the implementation guidance. The basic
policy of the ASBJ when it developed the accounting standards for revenue recognition was to specify the accounting standards,
incorporating the basic principles of IFRS 15 as a starting point, from the perspective of comparability between financial statements,
which is one of the benefits of maintaining compatibility with IFRS 15. The basic policy also stipulates that if there is an item to which
consideration should be given, such as practices that have been conducted thus far in Japan, alternative treatments will be added tothe extent to which comparability is not impaired.
(2) Scheduled date of application

The accounting standard will be applied from the end of the fiscal period ending August 31, 2021.
・“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ Statement No. 24 issued
on March 31, 2020)(1) Overview
The ASBJ’s Standards Advisory Council recommended that the ASBJ consider enhancing disclosures for notes relating to “accounting
policies and methods adopted in the cases where the relevant accounting standards were not clear.” In response to such
recommendations, the ASBJ issued the revised “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error
Corrections.”
To improve the note information concerning “The accounting policies and methods which have been adopted in the cases where
the relevant accounting standards are not available”, the provision of Financial Accounting Principles (note 1-2) will be followed toensure consistency with actual practices when the relevant accounting standards exist.
(2) Scheduled date of application
The accounting standard will be applied from the end of the fiscal period ending August 31, 2021.

The accounting standards will be applied from the beginning of the fiscal period ending February 28, 2022.
(3) Impact of applying the accounting standards
The impact of applying “Accounting Standard for Revenue Recognition” and its guidance on The financial statements is currently
under evaluation.
・“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019)4.

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:・”Accounting Standard for Financial Instruments” (ASBJ Statement No.10 issued on July 4, 2019)
・“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on July 4, 2019) ・“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31,
2020)(1) Overview

February 29, 2020
Cash and deposits¥   Cash and deposits in trust
Cash and cash equivalents

Thousands of yen
As of3,003,699

August 31, 2020¥   4,283,495¥  

7,287,195

3,504,701
4,389,936¥  

7,894,638

The IASB and the FASB have established detailed guidance regarding fair value measurement (IFRS 13 “Fair Value Measurement”(IASB) and Topic 820 “Fair Value Measurement” (FASB)). The ASBJ repeatedly considered the guidance regarding fair value of financial
instruments and disclosure in order to improve the comparability with such international accounting standards, and issued “AccountingStandard for Fair Value Measurement” and “Implementation Guidance on Accounting Standard for Fair Value Measurement.”
19

SEMIANNUAL REPORTSEMIANNUAL REPORT

20

Financial Section
5.

PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment and intangible assets as of August 31, 2020 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

Thousands of yen

price available, fair value is based on a price that is reasonably estimated. Since various assumptions and factors are reflectedin estimating the fair value, different assumptions and factors could result in a different value.

Type of assets

Balance as ofMarch 1, 2020

Buildings in¥ 48,149,573
trust
Structures in
1,759,218
trust
Property Machinery andequipment in
26,039andequipment trust
Tools, furnitureand fixtures in
5,697
trust
Land in trust
65,551,550
Total property and equipment ¥ 115,492,079
Software¥9,500
Intangible Other
intangible
1,000
assetsassetsTotal intangible assets¥
10,5006.
a)Increaseduring theperiodDecreaseduring theperiodDepreciation
Net balance
Balance as ofDepreciation
as of August Remarks
August 31, Accumulated
for the31, 2020
2020
depreciation
period¥ 25,406¥¥48,174,980 ¥ 2,987,424 ¥ 584,766¥ 45,187,555

-

936

-

1,760,155

81,973

17,453

1,678,181-

15,316-

41,356

1,989

1,389

39,367

-

5,394

-

11,091

1,515

838

9,576

-

65,551,550- ¥ 115,539,133 ¥ 3,072,903 ¥ 604,448¥
9,500 ¥
5,565 ¥
950

65,551,550¥112,466,230
¥
3,935

-

¥ 47,053
¥
-

¥
¥

¥

-

-

¥

-

¥

1,000

308

50

10,500 ¥5,873 ¥

1,000

¥

691

-

4,626

-

FINANCIAL 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
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 the
purposes of reducing risks of rising interest rates related to financings and other types of risks. MEL does not use derivativetransactions for speculative purposes. Not applicable for the reporting period.
(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. 21b)

Estimated Fair Value of Financial Instruments
The book value, fair value and differences between the values as of August 31, 2020 and February 29, 2020 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, 2020
Book value(1) Cash and deposits¥  3,504,701¥

  7,894,638(2) Cash and deposits in trust
Total assets

Fair value

Difference¥  3,504,701¥

 

4,389,936

¥

 

¥

 

-

4,389,936-

7,894,638-(3) Short -term loans payable

950,000

950,000-(4) Long-term loans payable

34,424,000

34,648,574

224,574

Total liabilities¥ 35,374,000¥

  35,598,574¥

  224,574

Thousands of yen
As of February 29, 2020
Book value(1) Cash and deposits¥  3,003,699¥

  7,287,195(2) Cash and deposits in trust
Total assets

Fair value

Difference¥  3,003,699¥

  7,287,195

4,283,495

¥

 

  -

¥



 -

4,283,495-(3) Short -term loans payable

2,050,000

2,050,000-(4) Long-term loans payable

34,424,000

34,909,833

485,833

Total liabilities¥ 36,474,000¥

 36,959,833¥

  485,833(Note 1) Methods to estimate fair values of financial instruments(1) Cash and deposits and (2) Cash and deposits in trust (3) Short-term loans payable
Due to the short maturities, the book value of these instruments is deemed a reasonable approximation of thefair value, and therefore, the book value is used as the fair value.
(4) Long-term loans payable
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
As ofTenant leasehold and security deposits in trust

February 29, 2020

August 31, 2020

¥

¥

 

2,129,916

 

2,195,412


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22

Financial Section(Note 3) Redemption schedule for monetary claims after August 31, 2020

7.

Thousands of yen

Cash and deposits
Cash and deposits in trust
Total

As of August 31, 2020
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears¥ 3,504,701 ¥
- ¥
- ¥
- ¥
- ¥
4,389,936¥ 7,894,638 ¥
- ¥
- ¥
- ¥
- ¥
-

fiscal period and fair value of the properties are as follows:
Thousands of yen
For the period ended
February 29, 2020
August 31, 2020
Book value (Note 1)
Balance at the beginning of the period

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

Thousands of yen

Short-term loans payable
Long-term loans payableTotal

 113,023,624(557,394)

Balance at the end of the period¥

 113,023,624¥

 112,466,230¥

 122,500,000¥

 123,615,000(Note 2) The increase for the fiscal period ended Feb. 29, 2020 was primarily a result of acquiring five new properties for a total of
31,015,705 thousand yen. The decrease was primarily a result of the recognition of depreciation, which amounted to580,736 thousand yen. The increase for the fiscal period ended Aug. 31, 2020 was primarily a result of the recognition of
CAPEX which amounted 47,053 thousand yen. The decrease was primarily a result of the recognition of depreciation,
which amounted to 604,448 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 “8. PROPERTY-RELATED REVENUES AND
EXPENSES.”

8.

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, 2020 and February 29, 2020.
Thousands of yen
For the period ended
February 29, 2020
August 31, 2020
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¥¥¥¥¥2,910,265
136,194
3,046,460¥

104,384
50,035
154,419
3,200,880

¥

¥

¥
¥

3,035,383
144,521
3,179,904
111,023
51,841
162,864
3,342,769


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

23¥

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

Thousands of yen

Short-term loans payable
Long-term loans payable
Total

82,550,517
30,473,107

Repayment schedule for debt after February 29, 2020
As of February 29, 2020
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears¥ 2,050,000 ¥
- ¥
- ¥
- ¥
- ¥
2,211,000
3,310,000
6,540,000
3,400,000 18,963,000¥ 2,050,000 ¥ 2,211,000 ¥ 3,310,000 ¥ 6,540,000 ¥ 3,400,000 ¥18,963,000(Note 1) Book value is calculated by deducting accumulated depreciation from acquisition cost.

(Note 4) Repayment schedule for debt after August 31, 2020
As of August 31, 2020
Due after
Due after four Due after fiveDue within Due after one Due after two
three to fourto two years to three years
to five years
years
one yearyears¥ 950,000 ¥
- ¥
- ¥
- ¥
- ¥
2,211,000
3,310,000
6,540,000
3,400,000 18,963,000¥ 950,000 ¥ 2,211,000 ¥ 3,310,000 ¥ 6,540,000 ¥ 3,400,000 ¥18,963,000¥

Changes during the period (Note 2)

Redemption schedule for monetary claims after February 29, 2020

Cash and deposits
Cash and deposits in trust
Total

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

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

104,652
313,996
4,957
41,40699,083
604,448
2,427
16,272¥¥

1,076,349
2,124,531¥¥

1,187,243
2,155,525


SEMIANNUAL REPORTSEMIANNUAL REPORT

24

Financial Section
9.

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

Due within one year
Due after one year

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

August 31, 2020¥
  5,853,529
34,518,339

Total

¥

¥



44,530,639



40,371,869

11. SHORT-TERM AND LONG-TERM LOANS PAYABLE
Short-term and long-term loans payable consisted of bank borrowings under loan agreements. The following tablesummarizes the short-term and long-term loans payable as of August 31, 2020 and February 29, 2020.

Classification

Repayment date

Short-term loans payable

October 9, 2020

0.3263%September 14, 2022

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

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

0.4288%0.1800%

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

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

September 14, 2027

0.5500%

October 9, 2027
September 14, 2028

0.2400%0.5750%

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

0.4200%0.4900%Distributions
Yen
For the period ended
February 29, 2020

August 31, 2020

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)¥ 1,632,627,605¥ 1,654,877,226

174,008,735
1,806,449,205(5,907)
1,632,440,470


181,042,480
1,835,807,445(6,003)
1,654,764,965(5,338)(5,411)

174,008,735

181,042,480

(569)

(592)

IV. Retained earnings carried forward¥

187,135¥

112,261Pursuant 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
1,654,764,965 yen and 1,632,440,470 yen for the fiscal periods ended August 31, 2020 and February 29, 2020, respectively.
These amounts were equivalent to the maximum integral multiples of number of investment units issued and outstanding as ofthe end of each fiscal period. Based on the distribution policy as defined in Article 35, Paragraph 2 of the Articles ofIncorporation, MEL shall make Surplus Cash Distributions (SCD), defined as distributions in excess of retained earnings, as a returnof unitholders’ capital, each fiscal period on a continuous basis.
Accordingly, for the fiscal period ended August 31, 2020, MEL declared SCD of February 29, 2020, MEL declared SCD of
181,042,480 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 29, 2020, MEL declared SCD of 174,008,735yen, as a return of unitholders’ capital,
which was the amount equivalent to approximately 30.0% of depreciation expense.

SEMIANNUAL REPORT

¥

¥
¥

¥
¥

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

August 31, 2020
¥

¥
¥

¥
¥

200,000
750,000
950,000
720,000
1,491,000
430,000
2,050,000
830,000
3,000,000
1,760,000
1,330,000
450,000
900,000
1,250,000
1,250,000
620,000
800,000
200,000
710,000
500,000
2,400,000
400,000
1,340,000
1,340,000
880,000
880,000
1,250,000
830,000
807,000
1,256,000
750,000
4,000,000
34,424,000
35,374,000

The stated interest rate is the weighted average interest rate during each fiscal period. The redemption schedules for longterm loans subsequent to August 31, 2020 and February 29, 2020 are disclosed in “6. FINANCIAL INSTRUMENTS.”

12. REDUCTION ENTRY
The amount of reduction entry of property and equipment as of August 31, 2020 and February 29, 2020 are as follows:
Thousands of yen
As of
Buildings in trust
Structures in trust

25

February 29, 2020

0.1425%

Total short-term loans payable
Long-term loans payable September 14, 2021

10. NET ASSETSa) Stated 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)

Weighted-averageinterest rate
0.1358%

Thousands of yen
As ofFebruary 29, 2020¥
  31,220
¥

7,008



August 31, 2020¥
  31,220
¥

7,008

SEMIANNUAL REPORT

26

Financial Section
13. INCOME TAXESMEL is subject to Japanese corporate income taxes on its taxable income. The tax effects of temporary differences that give rise
to a significant portion of the deferred tax assets and liabilities as of August 31, 2020 and February 29, 2020 are as follows:
Thousands of yen
As ofEnterprise tax payable
Total deferred tax assets
Net deferred tax assets

February 29, 2020¥
  1616¥
  16

August 31, 2020¥
  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, 2020 and February 29,2020 are as follows:

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

For the period ended
February 29, 2020
August 31, 2020
31.51%
31.46%(31.49%)
0.04%
0.06%

(31.45%)
0.04%
0.05%

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

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

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

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

5,563
293,461¥

5,410
305,815

16. SEGMENT AND RELATED INFORMATION(For the fiscal periods ended August 31, 2020 and February 29, 2020)a) Segment Information
Disclosure is omitted because the real estate leasing business is MEL’s sole business and it has no reportable segment subject
to disclosure.
b)

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

17. SIGNIFICANT SUBSEQUENT EVENTSIssuance of New Investment Units
MEL issued new investment units based on the resolution made by the board of directors on August 13, 2020 and August 24,
2020 and the payment was completed on September 1, 2020 and September 30, 2020 for the issuance of new investment units
through public offering and third-party allotment, respectively.
<Issuance of New Investment Units through Public Offering>Number of units issued and outstanding: 40,500 units
Issue price (offer price): 431,701 yen per unit
Total amount issued (total offer price): 17,483,890,500 yen
Issue amount (amount paid in): 417,236 yen per unit
Net proceeds (total issue value): 16,898,058,000 yen
Payment date
: September 1, 2020
<Issuance of New Investments Units through the Third-Party Allotment>
Number of units issued and outstanding: 1,922 units
Issue amount (amount paid in): 417,236 yen per unit
Net proceeds (total issue value): 801,927,592 yen
Payment date
: September 30, 2020
Allotee: SMBC Nikko Securities Inc.

Net assets per unit
¥ 267,484¥ 266,987(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.

15. TRANSACTION WITH RELATED PARTIESa) Transactions and Account Balances with the Parent Company and Major Unitholders
There were no transactions and account balances for the fiscal periods ended August 31, 2020 and February 29, 2020.

27b)Transactions and Account Balances with Affiliates
There were no transactions and account balances for the fiscal periods ended August 31, 2020 and February 29, 2020.

c)

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

d)

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

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28

Financial Section

29

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30

Financial Section

31

SEMIANNUAL REPORTSEMIANNUAL REPORT32