Mitsui Fudosan Logistics Park Inc. (MFLP-REIT)

Securities Code

3471

MEMO

1

Table of Contents
1. Basic Strategy of MFLP-REIT

4. Logistics Market Overview……

P4

4-1. Logistics Market Overview

Mitsui Fudosan’s Logistics Facilities Business……

P5

5. Appendix

1-3. Roadmap to Stable Growth of MFLP-REIT……

P6

1-4. Future Growth Strategy……

P7

1-1. Basic Strategy of MFLP-REIT

……

P29

• Statement of Income and Balance Sheet

……

P34

• Individual Property Income Statement

……

P35

• Period-End Appraisal Summary

……

P36

1-2. Trajectory of Growth of

2. Financial Summary
P9• Mitsui Fudosan’s

2-1. Financial Highlights……

2-2. 2nd Fiscal Period P/L…… P10Major Development/Operation Track Record ……

P37

2-3. 3rd Fiscal Period Earnings Forecast…… P11• MFLP Komaki Property Overview

……

P38

2-4. Distribution Trends…… P12• Initiatives for ESG

……

P39

• Interest Rate Market Data

……

P41

• Status of Interest-Bearing Debt

……

P42

• Investment Unit Price Trends

……

P43

• Status of Unitholders

……

P44

3. Management Status of MFLP-REIT
3-1. Portfolio Status…… P143-1-1. Location
3-1-2. Quality
3-1-3. Balance

……
……
……

3-2. External Growth…… P193-3. Internal Growth…… P223-4. Financial Strategy…… P253-5. Unitholder Relations…… P27

P15
P17
P18

2

1. Basic Strategy of MFLP-REIT

3

1-1. Basic Strategy of MFLP-REIT
MFLP-REIT has established a strategic partnership in the logistics facilities business withcomprehensive developer Mitsui Fudosan under which it seeks to maximize unitholder value
Mitsui Fudosan assumes mainly the role of “development” and MFLP-REIT assumes mainly the role of “holding”

Holding

Strategic
partnership

Development

Management41-2. Trajectory of Growth of
Mitsui Fudosan’s Logistics Facilities BusinessImage of growth ofproperties (to be) developed/operated by Mitsui Fudosan

Cumulative total investment size as at July 201728 facilities 400.0 billion yen (*1)
Cumulative total investment size as at March 201622 facilities 300.0 billion yen (*1)
Cumulative total investment size as at March 2015

13 facilities 160.0 billion yen (*1)

MFLP-REIT
IPO

Transition from
Logistics Properties Department to“Logistics Properties Business Division”
at Mitsui Fudosan

Establishment of“Logistics Properties Department”
in Retail Properties Divisionat Mitsui Fudosan

平成24年度Fiscal 2012

平成25年度

平成26年度Fiscal 2013

Fiscal 2014

平成27年度Fiscal 2015

平成28年度（予定）

Fiscal 2016

平成29年度（予定）

Fiscal 2017
(planned)

平成30年度（予定）

Fiscal 2018
(planned)

平成31年度（予定）

Fiscal 2019(planned)

平成32年度（予定）

Fiscal 2020
(planned)

Properties defined in “Right of first look and preferential negotiation agreement”
9 properties 790,000 m2 *2
Construction completed: 490,000 m2 *2
Partially acquired

Property acquiredby MFLP-REIT
in 3rd fiscal period

Partially acquired

MFLP Komaki
40% quasi co-ownership interest
Acquisition amount

3.2 billion yen

Acquired on August 4, 2017
*
*1:
*2:
*3:

Partial acquisition

MFLP Sakai(80%)*3

MFLP Fukuoka I(81%)*3

MFIP Inzai(80%)*3

MFLP Hiratsuka

MFLP Hino

Construction started:
300,000 m2
MFLP Ibaraki

Partially acquired

MFLP Komaki(60%)*3

MFLP Inazawa

Expansion ofproperties defined in“Right of first look andpreferential negotiationagreement”

MFLP Atsugi II

Numerical figures are rounded down to the nearest specified unit and percentage figures are rounded to one decimal place. The same shall apply hereinafter.
“Cumulative total investment size” is based on materials released at each point in time by Mitsui Fudosan. For details, please refer to “About major properties developed/operated by Mitsui Fudosan” on p. 45.
The floor area subject to the “Right of first look and preferential negotiation agreement” (after taking into consideration the quasi co-ownership interest).
The percentage figure in parentheses is the percentage of quasi co-ownership interest subject to the “Right of first look and preferential negotiation agreement.”51-3. Roadmap to Stable Growth of MFLP-REIT– Acquisition of MFLP
Komaki as First Step –Maximization of unitholder value through expansion of asset size and LTV management
Fiscal 2016
1st & 2nd fiscal periods

Asset size

Fiscal 2017
3rd fiscal period

Acquisition of MFLP Komaki

75.5 billion yen

78.7 billion yen

9 properties
350,000 m2

10 properties
360,000 m2

LTV ratio
End of 1st
fiscal period

End of 2nd
fiscal period

End of 3rd fiscal period
Forecast

24.5%

21.6%

23.4%

Distribution
per unit (DPU)
2nd
1stfiscal period fiscal period

3rd fiscal period
Forecast

5,198 yen 5,346 yen

5,493 yen

Market cap
End of 2nd fiscal period

Fiscal 2018 to Fiscal 2020
Fiscal 2021 or after
4th fiscal period
5th fiscal period or afterContinuous acquisition of properties,
centering on properties defined in“Right of first look andpreferential negotiation agreement”

Medium-term target asset size

200.0 billion yen

Fund procurement andLTV management
optimal forthe expansion of asset size

Continuous DPU growththrough leverage effects

Medium- to long-term
stabilized LTV level

40% to 50% range

Growthpotential

Expansion of market cap
through public offerings, etc.

71.5 billion yen

6

1-4. Future Growth Strategy
Growth accompanied by quality in line with the interests of unitholders
by selecting fund procurement means appropriate for the acquisition size

Strategic partnership

Properties defined in“Right of first look andpreferential negotiation agreement”

9 properties 790,000 m2 *1
MFLP Sakai(80%)*2

MFIP Inzai(80%)*2

MFLP Hino

MFLP Fukuoka IMFLP Hiratsuka MFLP Inazawa(81%)*2

MFLP Komaki(60%)*2

MFLP Ibaraki

MFLP Atsugi II

Select fund procurement means appropriate for the acquisition size

PolicyAcquisition
size

Fund procurement means

Effects
 Expansion of asset size

Medium tolarge

Property acquisition throughpublic offerings, borrowings, etc.
Additional
issuance ofinvestment units

×

Properleveragecontrol DPU growth throughLTV management
 Enhancement of liquidity throughexpansion of market cap
 Expansion of investor baseAcquisition
size
Small tomediumFund procurement means
Property acquisition utilizing
borrowings and internal reserves

Effects
DPU growth throughLTV management■3rd fiscal period (FP):
Effective acquisition of MFLP Komaki (40% quasi co-ownership interest) through borrowings, etc.

MFLP Komaki

3.2 bn yen+

Borrowings 2.2 bn yen+ Internal reserves

Distribution per unit (DPU) for 3rd FP
5,493 yen (Forecast)

LTV ratio at end of 3rd FP

Comparison with 1st FP (Actual):+5.7%
Comparison with forecast*3
before acquisition of MFLP Komaki : +5.5%

23.4% (Forecast)*1: The floor area subject to the “Right of first look and preferential negotiation agreement” (after taking into consideration the quasi co-ownership interest).
*2: The percentage figure in parentheses is the percentage of quasi co-ownership interest subject to the “Right of first look and preferential negotiation agreement.”*3: “Forecast before acquisition of MFLP Komaki” refers to the forecast for the 3rd fiscal period (fiscal period ending January 31, 2018) of MFLP-REIT announced on March 16, 2017.

7

2. Financial Summary(2nd fiscal period: from February 1, 2017 to July 31, 2017)8

2-1. Financial Highlights(total amount of acquisition price)75.5 billion yen

80.0

80.8
78.4

9 properties

Appraisal value
at end of period

Asset

Appraisal value at end of period (billion yen)

9 properties

Asset sizeat end of period

80.8 billion yen(as at July 31, 2017)

Ratio of investment area ofassets held

75.5

Tokyo metropolitan area

70.0

93.9%

IPO *1

End of 1st fiscal period

End of 2nd fiscal period

LTV ratio at end of period

Occupancy rate
at end of period *2

100%

25%

24.5%
23.4%

Balance ofinterest-bearing debt
at end of period
LTV ratio
at end of period *3

Debt

21.6%

17.0 billion yen
20%

21.6%

Averageborrowing interest rate
at end of period

0.29%

5,493
5,346
5,198
5,000

5,346 yen

EquityNAV per unit *5

End of 3rd fiscal period
Forecast

5,500(Stable)*4

End of 2nd fiscal period
ActualDistribution per unit (yen)AA-

Credit rating(JCR)

Distribution per unit

End of 1st fiscal period
Actual291,724 yen

*1:
*2:
*3:
*4:
*5:

1st fiscal period
Actual

2nd fiscal period
Actual

3rd fiscal period
Forecast

Appraisal value at IPO is as at March 31, 2016.
“Occupancy rate at end of period” is the occupancy rate on a contract basis.
LTV ratio at end of period = Balance of interest-bearing debt ÷ Total assets
Including distribution in excess of earnings.
NAV per unit =(Net assets + Unrealized gain on appraisal basis) ÷ Number of investment units issued and outstanding
For the figures of each item, please refer to “5. Appendix.”9

2-2. 2nd Fiscal Period (Ended July 31, 2017) P/L(Unit: million yen)

Operating revenue
Operating expenses
Of which, Depreciation

Announced
Mar. 16, 2017

1st period
Actual(a)

2nd period
Forecast

2nd period
Actual
(b)

2,383

2,531

2,548

1,075
553

1,400
560

1,367
560

Main breakdown of difference

Difference(b)-(a)165
291
6Operating revenue
Increase due tofull-period operation of all 9 properties, etc.

+111

Increase inphotovoltaic power generation facilities rent revenue+56

Decrease in other operating revenue-2

Operating expenses
Operating income

1,307

1,131

1,181

-126

Non-operating income

-

-

1

1

Non-operating expenses

196

30

30

-165

Increase due to
expensing of fixed asset tax, city planning tax, etc.

+246

Increase due tofull-period operation of all 9 properties, etc.

+26

Increase in other operating expenses+19

Non-operating income
Ordinary income

1,111

1,101

1,152

40

Interest on refund of consumption taxes

Profit (Net income)

1,110

1,100

1,151

41

Non-operating expenses+1

Absence of organization related expenses-56

Absence of investment unit issuance related expenses-104

Decrease in other non-operating expenses

Distribution per unit (DPU) (yen)Of which,
Distribution of earnings per unit (EPU) (yen)Of which,
Distribution in excess of earnings per unit (yen)Distribution in excess of earnings
expressed as a percentage of depreciation

5,198
4,955
243
9.8%

5,190
4,913
277
11.1%

5,346
5,142
204
8.2%

-5

148
187
-39
-

<Reference>
Formula for distribution per unit based on FFO *FFO=Profit(Net income)Source offunds for
distribution

=

① FFO

Distribution
per unit=* For details of the formula for distribution per unit based on FFO, please refer to also “Method of calculation of cash distribution based on FFO” on p. 45 of this presentation material.

② Source offunds for
distribution+ Depreciation, etc. …①
×

70%

…②

Number ofunits÷ investment
issued andoutstanding10

2-3. 3rd Fiscal Period (Ending January 31, 2018) Earnings Forecast(Unit: million yen)

Operating revenue
Operating expenses
Of which, Depreciation

Operating income

2nd period 3rd period
ActualForecast Difference(a)(b)(b)-(a)
2,548
1,367

2,629
1,435

81
68

560

595

35

1,181

1,193

12

Main breakdown of difference
Operating revenue<Reference>
4th period
Forecast
2,623

Increase due to
newly-acquired MFLP Komaki+98

Decrease in photovoltaic power
generation facilities rent revenue-48

Increase in other operating revenue

+31

1,434

Operating expenses

596
1,189

Increase due to
newly-acquired MFLP Komaki+39

Increase in other operating expenses+29-

Non-operating income

1

-

-1

Non-operating expenses

30

30

0

Ordinary income

1,152

1,163

10

1,160

Profit (Net income)

1,151

1,162

10

1,159

Distribution per unit (DPU) (yen)

5,346

5,493

147

5,486

Of which,
Distribution of earnings per unit (EPU) (yen)

5,142

5,187

45

5,177

Of which,
Distribution in excess of earnings per unit (yen)

204

306

102

309

Distribution in excess of earnings
expressed as a percentage of depreciation

8.2%

11.5%

-

11.6%

29

Non-operating income
Interest on refund of consumption taxes-1112-4. Distribution Trends
For the 2nd fiscal period,
achieved distribution per unit of 5,346 yen, which is 148 yen higher than the 1st fiscal period distribution per unit
For the 3rd fiscal period,
distribution per unit is projected to be 5,493 yen, which is 147 yen higher than the 2nd fiscal period distribution per unit
While distribution of earnings per unit (EPU) is 100% distribution of the profit increase or decrease,
distribution per unit (DPU) is limited to distribution of 70% of increase or decrease in FFO,
Distribution
including the profit increase or decrease, etc.

5,493 yen
Distribution

5,346 yen
Distribution

5,198 yen
Distribution
in excessof earnings
243 yenIncrease in
distributionof earnings+187 yen

Decrease in
distribution
in excessof earnings-39 yenDistribution
in excessof earnings
204 yen[Increase in profit]
Increase in operating revenue+738 yen
Increase in operating expenses-1,302 yen(Of which, Increase in
fixed asset tax and city planning tax -1,096 yen)
Increase in non-operating income+8 yenDecrease in non-operating expenses+743 yen

Increase in
distributionof earnings+45 yenIncrease in
distribution
in excessof earnings+102 yen

Distribution
in excessof earnings
306 yen[Increase in profit]+362 yen
Increase in operating revenue-308 yen
Increase in operating expenses
Decrease in non-operating income -9 yen

Distributionof earnings
4,955 yen

Distributionof earnings
5,142 yen

Distributionof earnings
5,187 yen

1st fiscal period
Actual

2nd fiscal period
Actual

3rd fiscal period
Forecast

12

3. Management Status of MFLP-REIT
3-1. Portfolio Status
3-1-1. Location
3-1-2. Quality
3-1-3. Balance

3-2. External Growth3-3. Internal Growth3-4. Financial Strategy
3-5. Unitholder Relations13

3-1. Portfolio Status (List) (As at End of August 2017)
Stable portfolio with investment focused on MFLPs—leading-edge logistics facilities
developed by Mitsui Fudosan—of relatively young building age
Total acquired assets

Stabilized NOI yield *1

Average building age *2

Average occupancy rate *3

10 properties / 78.7 billion yen

5.4% (after depreciation: 3.9%)

3.6 years

100%

Category

Logistics
facilities

Propertyno.

Property name

L-1

GLP/MFLP Ichikawa Shiohama

L-2

MFLP Kuki

L-3

MFLP Yokohama Daikoku

L-4

Acquisition price Appraisal value *4 Total floor area *5(million yen)(m2)
(million yen)
105,019

Building
age *2(years)Occupancy
rate *3
(%)

3.6

100

3.2

100

8.4

100

Ichikawa, Chiba

15,50016,600Kuki, Saitama

12,50013,400

Yokohama, Kanagawa

10,10010,500MFLP Yashio

Yashio, Saitama

9,650

10,40040,728

3.4

100

L-5

MFLP Atsugi

Aiko, Kanagawa

7,810

8,350

40,942

2.5

100

L-6

MFLP Funabashi Nishiura

Funabashi, Chiba

6,970

7,490

30,947

2.6

100

L-7

MFLP Kashiwa

Kashiwa, Chiba

6,300

6,710

31,242

1.8

100

L-8

MFLP Sakai

Sakai, Osaka

4,500

4,930

3.0

100

L-9

MFLP Komaki

Komaki, Aichi

3,249

3,260

0.6

100

-

76,57981,6403.6

100

Inzai, Chiba

2,180

2,440

3.5

Not disclosed-

78,75984,0803.6

100(50% quasi co-ownership interest)(50% quasi co-ownership interest)(20% quasi co-ownership interest)(40% quasi co-ownership interest)

Subtotal or Average
Industrial
real estate

Location

I-1

MFIP Inzai(20% quasi co-ownership interest)
Total or Average(52,509)

73,153
100,530(50,265)

125,127(25,025)

40,597(16,239)588,289(361,053)

40,478(8,095)

628,767(369,149)

Reference: As at end of 2nd fiscal period (before acquisition of MFLP Komaki)
Logistics facilities (Property no. L-1 to L-8)
Total (Property no. L-1 to L-8, and I-1)

Subtotal-

73,33078,380547,691(344,814)

-

-

-

75,51080,820588,170(352,910)--*1: Stabilized NOI yield is the figure arrived at when the NOI assumed in the earnings forecast for the 3rd fiscal period, less the amount of fixed asset tax, city planning tax, etc. included in the cost of acquisition of MFLP Komaki, is
divided by acquisition price.
*2: “Building age” is the building age from the date of new construction of the main building in the register to August 31, 2017, rounded to one decimal place. “Subtotal” and “Total” are the weighted averages based on acquisition price.
*3: “Occupancy rate” is the occupancy rate on the basis of contracts entered as at August 31, 2017.
*4: “Appraisal value” figures are the figures with June 30, 2017 as the date of value in the case of MFLP Komaki and with July 31, 2017 (end of 2nd fiscal period) as the date of value in the case of the other properties.
*5: “Total floor area” figures in parentheses are the figures after taking into consideration the ownership interest.

14

3-1-1. Location (1)Acquired assets
Rampway MFLP Facilities
Slope MFLP Facilities
Box MFLP Facilities
MFIP Facilities
Right of first look and preferential
negotiation properties defined in
the right of first look andpreferential negotiation agreement
Rampway MFLP Facilities
Slope MFLP Facilities
Box MFLP Facilities
Properties developed by
Mitsui Fudosan
Rampway MFLP Facilities
Slope MFLP Facilities
Box MFLP Facilities

Access point

Mitsui Fudosan’s
strategic area15

3-1-1. Location (2)Geographically diversified portfolio
Location offering excellent access to transport nodes
Location taking into consideration convenience in terms of commuting to work for employees
Access (distance) tonearest expressway interchange

Investment areaTokyo
metropolitan
area

Other
areas

Kansai
area

4.2%

5.9%

89.9%

Within 5 km,
but 3 km or more
12.6%

Tokyo
metropolitanarea
andKansai area

5km or more
4.2%

Within 1 km
23.2%

Access (time) tonearest train station
By bus(30 min. or less,but more than 20 min.)10.2%

Withinwalking distance(20 min. or less)
41.9%

Within 5 km

20 min. or less

95.8%

89.8%

Within 3 km,
but 1 km or more
60.0%

By bus(20 min. or less)
47.9%

95.8

%

Ken-O
Expressway

26.5%
National
Route 16

8.2%

Tokyo-Gaikan
Expressway

Shuto Expressway
Wangan Line

42.5%

12.6%
* The pie graphs above are the figures calculated on an acquisition price basis.

16

3-1-2. Quality
MFLP-REIT focuses investment in “leading-edge logistics facilities with Mitsui Fudosan quality”
realized by applying Mitsui Fudosan’s know-how as a comprehensive developer
Mitsui Fudosan quality
Basic specifications of leading-edge logistics facilities
Storage space

Large-sized site

Effective ceiling heightAt least 5.5 m[Total floor area]
At least 10,000 m2

Column spacing
At least 10 m
Floor load capacity
At least 1.5 tons/m2 MFLP SakaiHigh performance

Disaster prevention[Column spacing]
At least 10 m
[Effective ceiling height]
At least 5.5 m[Floor load capacity]
At least 1.5 tons/m2

Equipped with• Seismic isolation• Quake-resistance• Emergency
power generation…etc.

＆ Worker

Adoption of seismic isolation

Emergency power generator

MFLP Sakai

MFLP Kashiwa＆ Tenant
Tenant company
Staffing
company

Cafeteria, shops

Parcel pickup
lockers

Bicycle rentals

LaLaport
discount tickets＆ Community

Car sharing

BCP measures

Staffing company
on-site service＆ Earth
Employees
working
at MFLPSpace for exchange

Commuter shuttles

Promotionof useNeighborhood
storesDiscount
service etc.

Childcare facilities Promotion of use of nearby stores

Solar panels

LED lights* Photos are for illustrative purposes only. An MFLP facility or each portfolio asset is not necessarily equipped with all of the abovementioned standard specifications and features.
Some of the specific examples include also those of properties not held by MFLP-REIT.

17

3-1-3. Balance
Securing growth and stability by building a balanced portfolio through acquisitionof MFLPs developed in consideration of land characteristics and tenant needs
Logistics facilities

Industrial real estate

Investment ratio: 80% or more

Investment ratio: 20% or less

Logistics
needs

Shipping needs

Tenanttype

Multi-tenant type

Storage needs
Single tenant type

Data center, etc.

Rampway
38.2%

Data center
2.8%
Box
29.1%

Mainly long-term BTS type
MFIP

Rampway MFLP

Slope MFLPBox MFLP(Mitsui Fudosan Industrial Park)

GLP/MFLP
Ichikawa Shiohama

MFLP Kuki

MFLP Yashio

MFIP Inzai

Multi

Investment ratio
by property type

Slope
Multi

Multi

29.9%

* Acquisition price basis

BTS

Investment ratio
by tenant type
MFLP Sakai
Multi

MFLP Yokohama Daikoku
Multi

MFLP Atsugi
SingleMFLP Komaki
SingleBTS
2.8%

MFLP Funabashi NishiuraSingleMFLP Kashiwa

Multi
66.3%

Single30.9%* Acquisition price basis

Single18

3-2. External Growth (1)Stable growth utilizing the growth potential and extensive pipeline of Mitsui Fudosan’s logistics facilities business

Construction
completion in
fiscal 2013 or before

Construction
completion in
fiscal 2014

Construction
completion in
fiscal 2015

Construction
completion in
fiscal 2016

Construction
completion in
fiscal 2017

Construction
completion in
fiscal 2018

Construction
completion in
fiscal 2019
NEW

Partially acquired
一部取得済

MFLP
Yokohama Daikoku

MFLP Hino

MFLP Sakai(80%)*3

MFLP Fukuoka I(81%)*3

MFLP Inazawa

MFLP Kashiwa

MFIP Inzai(80%)*3

MFLP Hiratsuka
Partially acquired

MFLP Yashio

MFLP Osaka I

NEWPartially acquired

GLP/MFLP
Ichikawa Shiohama

NEW

MFLP Kawaguchi I

MFLP Atsugi II

Construction
completion in
fiscal 2020 or after

MFLP Kuki

MFLP Komaki(60%)*3

MFLP Ibaraki

MFLP Haneda

MFLP Atsugi III

NEW

MFLP Tsukuba

Tokyo Rail Gate
EAST

NEW

MFLP
Prologis Park Kawagoe

MFLP Kawasaki I
NEW

MFLP Atsugi

MFLP
Funabashi Nishiura

MFLP Funabashi I

MFLP Funabashi II

Other data centers (2 properties)

Properties defined in “Right of first look and preferential negotiation agreement”

9 properties 790,000 m2*4<Of which, Stably-operated properties 390,000 m2 *4>

Further expansion ofproperties defined in “Right of first lookand preferential negotiation agreement”

Properties held by MFLP-REIT

10 properties 360,000 m2 78.7 billion yen

Continuous external growth*1: Based on materials released by Mitsui Fudosan on July 20, 2017.
For details, please refer to “About major properties developed/operated by Mitsui Fudosan” on p. 45 of this presentation material.
*2: Properties with construction completion slated for fiscal 2017 or after are those planned and are subject to change without prior notice.
*3: The percentage figure in parentheses is the percentage of quasi co-ownership interest subject to the “Right of first look and preferential negotiation agreement.”*4: The floor area subject to the “Right of first look and preferential negotiation agreement” (after taking into consideration the quasi co-ownership interest).

Properties held by
MFLP-REIT
Properties defined in“Right of first look andpreferential negotiationagreement”

NEW

Further development of Mitsui Fudosan’s logistics facilities business

Mitsui Fudosan’s major development/operation track record 28 facilities 400.0 billion yen 2,400,000 m2 in total floor area *1

Properties newly-announced by
Mitsui Fudosan on July 20, 201719

3-2. External Growth (2)Specific examples of properties defined in “Right of first look and preferential negotiation agreement”: MFLP HinoHigh property competitivenessOne of Japan’s largest logistics facilities
1 (Japan’s largest at time of construction completion)
2 Floors can be flexibly divided into partitions in line with demand
3

Superiority of a ready supply of workers with a staffing company on-site and also
being in close proximity to Toyoda Station on the JR Chuo Line

4 High convenience for tenants and workers with Mitsui Fudosan quality

Location

Hino, Tokyo

Total floor area

213,435 m2

AccessApprox. 3.5 km from Hachioji IC of Chuo Expressway

Nearest train station

Within walking distance of Toyoda Station on JR Chuo Line

Leasing by Mitsui Fudosan

Now stable occupancy

Construction completion October 2015

Specific examples ofdevelopment of logistics facility by Mitsui Fudosan
MinamiFunabashi
Station

IKEA

Development of MFLP Funabashi II (total floor area: approximately 225,000 m2)
announced on July 20, 2017
~Development of urban-development-type logistics parkfor creation of neighborhood that “matures with age”~

Greenery space(planned)
Gate building(new construction)

Rendering of completed
MFLP Funabashi II

LaLaport
TOKYO-BAY

MFLP Funabashi
III(planned)

LaLaport
TOKYO-BAY
parking lot

MFLP
Funabashi
I■Funabashi area where Mitsui Fudosan has long been engaged in development,such as LaLaport TOKYO-BAY■Realizing next-generation logistics park of approximately 184,000 m2 in total site area
■Offering a lot of space for neighboring residents and workers• Vast greenery space of approx. 20,000 m2 (equivalent to approximately 76 tennis courts)• Establishment of cafeteria, day-care center, etc. at Gate building planned

MFLP Funabashi
II(new construction)
Greenery space

Gate building (daycare center)

Gate building (cafeteria)203-2. External Growth (3)Well-balanced acquisition of MFLP and MFIP facilities utilizing the comprehensive strengths ofMitsui Fudosan
Acquiring properties through proposal of
corporate real estate (CRE) strategies, etc. by Mitsui Fudosan

Acquiring logistics facilities developed by third parties

Mitsui Fudosan stimulates the potential needs of client firms in thearea of real estate and offers advisory services on CRE strategies,
such as providing solutions for real estate development and sales
that meet the needs of its client firms.

In addition to acquiring facilities developed by Mitsui Fudosan,
MFLP-REIT plans to aggressively acquire logistics facilities developedby third parties. In doing so, it will use the Mitsui Fudosan Group’s
network as well as the Asset Management Company’s channels.

By seeking close cooperation with Mitsui Fudosan, MFLP-REIT
believes that it can achieve external growth as well as the further
diversification and stabilization of its portfolio.

Investing in MFIP (Mitsui Fudosan Industrial Park) facilities

Investing in overseas real estate
MFLP-REIT makes it possible to acquire overseas real estatepursuant to the Articles of Incorporation to meet medium- to long-term
global needs.
Client firm’s various CRE needs
Re-establishment ofcorporate logistics

Utilization ofidle land

Although MFLP-REIT focuses on logistics facilities, in order to takeadvantage of the current trend in which IT has rapidly gained a
supporting role in the development of logistics facilities and industrial
real estate, MFLP-REIT will utilize property information on real estatedevelopment or sales, etc. delivered via Mitsui Fudosan’s client network
to invest in also industrial real estate, diversify its portfolio and improve
growth. As a first step, MFLP-REIT acquired MFIP Inzai, a data center
developed by Mitsui Fudosan, and currently operates the facility.
Proposal of
CRE strategies

Trimming down ofbalance sheet

Sale ofreal estate, etc.
Development ofcorporate infrastructure

Establishment ofoverseas sites

21

3-3. Internal Growth (1)Stable management utilizing the platform (business foundation) and client network of the Mitsui Fudosan Group
Utilizing the Mitsui Fudosan Group’s know-how in property
management operations
In principle, MFLP-REIT entrusts the property management of portfolio assets to
the Mitsui Fudosan Group.

Effectively utilizing the Mitsui Fudosan Group’s client network in leasing
MFLP-REIT believes that it can stably manage its portfolio by utilizing the broad andstrong network that the Mitsui Fudosan Group has developed.
Occupied by an abundant number of tenants that share a relationship with Mitsui Fudosan

Scenes of the “MFLP Thanks Party”
held by Mitsui Fudosan for MFLP tenant firms
in seek of establishing strong relationships with tenants

3PL operator

Lease agreement

End userOwner oflogistics facility

Lease agreement

Logistics firm
(3PL operator, etc.)

Logistics
agencyagreement

End userCan directly approach logistics firms andend users regardless of contract type

Retail tenant, E-commerce

Fully leveraging the Mitsui Fudosan Group’s broad client network
Office building business
Client network:
Approx. 3,000 firms *Retail facility business
Client network:
Approx. 2,300 firms *Strong relationships withleading 3PL operators* As at March 201722

3-3. Internal Growth (2)Specific examples of utilizing the platform (business foundation) and client network of the Mitsui Fudosan GroupSpecific examples in 2nd fiscal period

Property management Reached agreement for re-contract with existing tenant

 Maintained occupancy rate at 100%

 Reached agreement for early contract renewal with large tenant Switched to LED lights

 Reduced electricity charges through revision of electricity supply agreement

Case example of Mitsui Fudosan at properties defined in “Right of first look and preferential negotiation agreement”
Utilization of client network
Mitsui Fudosan
introduces to logistics firm

Leaseagreement

Logistics firm
(3PL operator, etc.)

Entrustmentof operations,etc.

End userEnd user secured by logistics firm
End user

Advantages
 Enhanced
occupancy rate

Win-winEnd user

Advantages

Advantages
 Increased entrustment with
operations from end user
 Greater efficiency oflogistics operations

End user

Win-win Move into
MFLPs (leading-edge
logistics facilities)23

3-3. Internal Growth (3)Steady internal growth through provision of solutions-based asset management andmaintaining relationships with tenants over the medium to long term
Key points of future asset management plans

Status of tenant diversification
FOREVER 21,
and others

Hitachi Transport System

Challenges facing logistics firms

H&M
Suzue Corporation
Sagawa Global Logistics

Tenantdiversification

NIPPON EXPRESSSun Toshi
TatemonoLabor shortage

Addressing
BCP, etc.

Increasing
the efficiency
of operations

Domestic major apparel
DAIWA Co.

Kimura Unity

End user

Domestic 3PL
Rakuten

Status of lease agreements

MFLP-REIT

KOKUBU
E-LogiT

Logistics firm
(3PL operator, etc.)

Average contract period

Remaining lease contract period

Ratio of fixed-term building lease contracts

5.7 years

Average 3.5 years

100%

Sense offuture rises indelivery costs

Status of staggering of contract expiration periods

12.4%

12.9%
11.5%

Specific examples of solutions-based asset managementby Mitsui Fudosan Group
11.8%

 Consulting support to help tenant companies secure staff
 Matching of 3PL operators and end users

6.9%

 Establishment of comfortable environment for thoseworking within facilities (further upgrading of amenities,
grant of incentives at Mitsui Fudosan retail properties, etc.)

3.8%
1.9%

1.1%
4th FP
ending
2018/07

5th FP
ending
2019/01

6th FP
ending
2019/07

7th FP
ending2020/01

8th FP
ending2020/07

9th FP
ending2021/01* Each graph above is on the basis of leased area as at August 31, 2017.

10th FP
ending2021/07

11th FP
ending2022/01

12th FP
ending2022/07～～

3rd FP
ending
2018/01

Responding toautomation

22.2%

10.0%
5.7%

End user13th FP
ending2023/01

17th FPorafter

 Proposal of capital investment within warehouses*FP: fiscal period243-4. Financial Strategy (1)Financial management with an emphasis on stability
MFLP-REIT will aim to establish a stable bank formation centered on funding from major domestic financial institutions.
In addition, plans are to engage in debt financing with due consideration of also
such factors as lengthening of borrowing periods and staggering of maturities.

Status ofdebt financing

Total interest-bearing debt

Average time to maturity

17.0 billion yen

Average borrowing interest rate

7.0 years

MizuhoTrust &
Banking

0.29%

TheBank of
Fukuoka* As at July 31, 2017

Interest-bearing debt maturity ladder(million yen)

5,000

4,600

4,000

5.9

20.6%

%

7.6%
7.6%

Sumitomo
Mitsui
Banking
Corporation

Status ofborrowings

Development
Total amount for all 8
Bank of12.4 financial institutions
17.0 billion yen 20.6
%
Japan
%

3,000

2,400

2,200

2,000

2,400
2,000

12.4%

1,900
1,500

MizuhoBank

3rd FP
ending
2018/01

～
～

1,000
0

NipponLife
Insurance
Company

13th FP
ending2023/01

14th FP
ending2023/07

15th FP
ending2024/01

16th FP
ending2024/07

17th FP
ending2025/01

18th FP
ending2025/07

19th FP
ending2026/01

20th FP
ending2026/07

21st FP
ending2027/01*FP: fiscal period

12.9%
Mitsubishi UFJ
Trust andBanking
Corporation

Sumitomo
Mitsui
Trust
Bank

Status of LTV
End of 2nd fiscal period

End of 3rd fiscal period (Forecast)Medium- to long-term stabilized level

21.6%

23.4%

40% to 50% range

Credit rating assignment* As at July 31, 2017

Credit rating agency

Rating details

Remarks

Japan Credit Rating Agency, Ltd. (JCR)

Long-term issuer rating: AA-

Rating outlook: Stable25

3-4. Financial Strategy (2)Efficient cash management
Based on the characteristics of logistics facilities, such as the ratio of building value to land value being typically high, MFLP-REIT intends
to make cash distributions, including distributions in excess of earnings, on an ongoing basis each term from a perspective of securing
stable distribution levels while managing cash efficiently.

Diagram of cash distribution based on FFO
Leasingbusiness
expenses,
SG&A, etc.

Key points of cash distribution in excess of earnings
Level of distribution

Pay distributions
based on a threshold of
70% of FFO

For the time being, we intend to pay distributions (including distributions in excess ofearnings) calculated at an amount equivalent to approximately 70% of FFO (excluding
gain or loss on sale of real estate, etc.) for the relevant fiscal period on an ongoing basis
each term, in principle.

FFO

Securing long-term building maintenance expenditures
Rentalrevenue

Depreciation

Distributions in excess of earnings will be paid to the extent that an amount can beretained that is more than double the six-month average of capital expenditures statedin the engineering report for each operating period.

Distributions
in excessof earnings

Profit *(Net Income)Distributionsof earnings

Targeted at
70%* Gain or loss on sale of real estate, etc. is not included in “Profit (Net income)” in the above chart.

Securing financial stability
Distributions in excess of earnings will not be made if appraisal LTV ratio* exceeds 60%
for each operating period.

* Appraisal LTV ratio =Interest-bearing debt ÷ (Total assets - Book value of portfolio real estate, etc. + Appraisal value)26

3-5. Unitholder Relations
Maximization of unitholder value through establishment of strong relationship of trust with unitholders

Asset management fee structure consistent with the interests of unitholders
The aim is to keep the interests of MFLP-REIT’s unitholders consistent with the interests of the Asset Management Company.

Asset
management
fee I

Total assets × 0.1% (maximum)

Asset
management
fee II

Operating income (before deduction of asset management fees and depreciation) × 5.5% (maximum)

Asset
management
fee III

Pre-tax earnings (before deduction of asset management fees) × Pre-tax EPU (before deduction of asset management fees)
× 0.001% (maximum)

Same-boat investment in MFLP-REIT by Mitsui Fudosan
MFLP-REIT receives 12.9% investment in capital from Mitsui Fudosan. (As at July 31, 2017)
Receiving certain investment in capital leads to alignment of the interests of MFLP-REIT’s unitholders and Mitsui Fudosan and asset managementthat pursues mutually greater interests.

12.9%

27

4. Logistics Market Overview

28

4-1. Logistics Market Overview (1)Supply-demand balance and vacancy rate
Greater Tokyo area

New supply

Net absorption

Greater Osaka area
Forecast(thousand m2)

Forecast

11.0%

7.0%

11%

1,500

3.0%

1,000

7%

2010

2011

2012

2013

2014

2015

2016

2017

2018

-1.0%

500

3%

0

2010

2011

2012

2013

2014

2015

2016

-1%

2017

2018 (year)(thousand m2)

750

8%

750

14%

6%

250

1.5%

5.0%
500

3.0%
1.0%

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

16%
14%
12%

500

8%

4%

10%
8%

6%
250

4%

2%

250

2.6%

1.1% 2%
0

Q3

Q4

2015

Q1

Q2

Q3

2016

Q4

Q1

Q2

2017

0%

0

-1.0%
(year)

17.1% 18%

750

12%
10%

500

3.4%

7.0%

(thousand m2)

11.6%

500

9.0%
1,000

1%

(year)(thousand m2)

11.0%

1,500

5%

1.0%
0

13.0%

9%

5.0%
500

15.0%

2,000

13%

9.0%
1,000

Forecast(thousand m2)
15%

2,000

13.0%
1,500

Vacancy rate(logistics facilities 1 year old or older)Greater Nagoya area

(thousand m2)
15.0%

2,000

Vacancy rate

Q3

Q4

2015

Q1

Q2

Q3

2016

Q4

Q1

Q2

2017

0%

6%
4%
2%

0

Q3

Q4

2015

Q1

Q2

Q3

2016

Q4

Q1

Q2

0%

2017

*1: Source: CBRE K.K. (including forecast figures)*2: The survey is of rental logistics facilities that are held by real estate investment companies, real estate development companies, etc. and have total floor area of 5,000 m2 or more.
*3: Q1 is from January to March, Q2 is from April to June, Q3 is from July to September, and Q4 is from October to December.

29

4-1. Logistics Market Overview (2)Supply-demand balance and vacancy rate by submarket
Greater Osaka area

Greater Tokyo area
Tohoku/Ken-O
Expwy area

Osaka
inland area
Kan-Etsu/Ken-O
Expwy area

National Route 16
area

Osaka bay /Kobe area

Narita area

Greater
中部圏 Nagoya area
Tokyo-Gaikan
Expwy area

Hachioji area

Chiba
inland area
Greater Nagoya
area
Kanagawa
inland area
Greater Tokyobay area: New supply in 2016 and first half (January to June) of 2017
: Net absorption in 2016 and first half (January to June) of 2017
= 100 thousand m2: Vacancy rate 0–5%

: Submarket areas: Vacancy rate 5–10%: Mitsui Fudosan’s strategic areas: Vacancy rate 10%–
* As at end of June 2017
*1: Source: CBRE K.K. (numerical figures only)*2: The survey is of rental logistics facilities that are held by real estate investment companies, real estate development companies, etc. and have total floor area of 5,000 m2 or more.

30

4-1. Logistics Market Overview (3)Japan’s logistics facilities stock

Mounting demand due to 3PL businessand e-commerce market size expansion

Stock of logistics facilities in 2015
Logistics facilities over 40 years old
Approx. 24.2%(million m2)

Analysis of Japan’s logistics facilities stock

Expanding 3PL market and e-commerce market

600

25.0%

500

20.0%

400

15.0%

300

10.0%

200
100

5.0%

0

0.0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (year)
Estimate for logistics facilities
Estimate for logistics facilities
Leading-edge logistics facilities
築40年以上の推計値
築40年未満の推計値
先進的物流施設
40 years old or older
less than 40 years old
築40年以上のシェア
先進的物流施設シェア
Share of logistics facilities
Share of leading-edge logistics facilities

20,000100,000

15,00010,00050,0005,000
002006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (year)
Net sales of 3PL operators
Net
sales of e-commerce
Eコマース売上高(左軸)3PL事業者売上高（右軸）(right axis)(left axis)

40 years old or older* Estimates by CBRE K.K. based on “Building Starts” (Ministry of Land, Infrastructure, Transport and Tourism) and“Summary Report on Prices, etc. of Fixed Assets” (Ministry of Internal Affairs and Communications).
For details, please refer to “About analysis of Japan’s logistics facilities stock” on p. 45 of this presentation material.

* The figures compiled by CBRE K.K. based on the data of “Monthly Logistics Business (LOGI-BIZ)” andthe Ministry of Economy, Trade and Industry.

Tenants / End users of logistics facilities

25,000

Manufacturing(thousand m2)

Long-term data on building starts of logistics facilities (nationwide)

Other

72%

10%

10,000Retail

5,000

12%

9%

Logistics

Wholesale

15,000Logistics

3%

3%

20,00025,000150,000(100 million yen)

Leading-edge logistics facilities
Approx. 3.1%

Share by
入居テナントのtenant
業種別シェアbusiness type

Other

4%

Retail36%

Manufacturing

42%

Share by

エンドユーザーのend userbusiness type
業種別シェア

2016

2013

2010

2007

2004

2001

1998

1995

1992

1989

1986

1983

1980

1977

1974

1971

1968

1965

1962

1959

0
Wholesale10%(year)

Source: CBRE K.K.

Source: CBRE K.K.

* The figures calculated as the sum total of the floor area of structures with “warehouse” as the use category
and “steel-framed structure,” “reinforced concrete structure” or “steel-framed reinforced concrete structure” asthe structure type.

* The survey is of rental logistics facilities that are held by real estate investment companies, real estatedevelopment companies, etc. and have total floor area of 5,000 m2 or more as at the end of December 2016.

31

4-1. Logistics Market Overview (4)[Reference] Specific examples of broader demand for leading-edge logistics(including properties defined in “Right of first look and preferential negotiation agreement”)
Rise of Omni channel in commerce business operators

Capturing logistics demand generated from diversificationof drug store businessConventional

Selling only medicine

Trends inrecent years

More diversified items other than medicine,such as fresh food and drinks→ Necessity for large-scale base-type logistics facilities
with a certain amount of inventory

Actual store
Commerce business
operator

Consumer
Logistics base

Attracting delivery bases of convenience stores
Case example of logistics bases consolidation and subdivision
within a logistics facility, and attracting delivery center equippedwith store-by-store sorting function and chiller
Convenience store

Integration of logistics bases
 Reducing shipping time and cost
Benefits ofintegration

Wholesaler

Manufacturer

Store

Consolidation of logistics bases

Warehouse forfinishedproducts

Consolidation of separately locatedwarehouse for parts, assembly plant andwarehouse for finished products into one base

Convenience store
Manufacturer
Afterconsolidation

Delivery center
Manufacturer

Store

After
integration

Transport

MFLP

Transport

Conventional

Assemblyplant

Transport

Wholesaler

Transport

Warehousefor parts

Wholesaler

Retail stores / Consumers

Wholesaler Improving work efficiency through consolidation to one floor Reducing required manpower, etc.

Manufacturer
Conventional

 Increasing production lines by space efficiency

32

5. Appendix

33

Statement of Income and Balance Sheet
Balance sheet

Statement of income(Unit: million yen)

(Unit: million yen)

1st fiscal period
Item(ended Jan. 31, 2017) (ended July 31, 2017)

ActualOperating revenue
Lease business revenue

2,383

2,548

74

91

1,075

1,367

Expenses related to rent business

801

1,071

Asset management fee

219

223

Asset custody and administrative service fees

13

19

Directors’ compensations

9

5

Other operating expenses

30

47

1,307
196

1,181
1
30

Interest expenses

24

24

Deferred organization expenses

56-

Investment unit issuance expenses
Other offering costs associated withissuance of investment units
Other

47

-

56

-

Operating income
Non-operating income
Non-operating expenses

Ordinary income
Profit before income taxes
Income taxes
Profit (Net Income)Unappropriated retained earnings

11

6

1,111
1,111
1
1,110
1,110

1,152
1,152
0
1,151
1,151

Current assets
Cash and deposits
Cash and deposits in trust
Consumption taxes receivable
Other current assets
Non-current assets
Property, plant and equipment
Investments and other assets
Total assets
Current liabilities
Operating accounts payable
Short-term borrowings
Accounts payable – other
Income taxes payable
Accrued consumption taxes
Advances received
Non-current liabilities
Long-term borrowings
Tenant leasehold and security
deposits in trust
Total liabilities
Total unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital, net
Surplus
Total net assets
Total liabilities and net assets

2nd fiscal period(ended Jan. 31, 2017) (ended July 31, 2017)

Actual2,456Operating expenses

Item

Actual2,308

Other lease business revenue

1st fiscal period

2nd fiscal period

Actual

6,204

3,860

1,066
2,018
3,076
43

2,365
1,415
79

75,49474,95175,472
21

74,93020

81,69878,811

3,796

913

131
3,000
262
1
400

58
272
0
159
421

18,441

18,45017,00017,000

1,441

1,450

22,23859,46019,36359,44758,35058,3501,110

58,350(54)
58,296
1,151

59,46081,69859,44778,81134

2nd Fiscal Period Individual Property Income Statement(Unit: million yen)

GLP/MFLP
Ichikawa
Shiohama

MFLP
Kuki

MFLP
Yokohama
Daikoku

MFLP
YashioMFLP
Atsugi

MFLP
Funabashi
Nishiura

MFLP
Kashiwa

MFLP
Sakai

MFIP
Inzai

Portfolio
total

181 days

181 days

181 days

181 days

181 days

181 days

181 days

181 days

181 days-

Lease businessrevenue

458

449

311

160

2,456

Other
lease businessrevenue

29

28

16

9

91

Total

487

478

327

169

2,548

Outsourcing
expenses

35

32

22

Utility expenses

16

20

15

8

68

Repair expenses

2

2

32

0

41

Property-related
taxes

37

43

39

17

245

Other expenses

1

2

1

0

10

Total

92

101

111

-

-

-

-

36

-

511

Depreciation

79

107

84

62

63

50

49

43

18

560

Operating income (loss)
from real estate leasing

315

269

131

201

165

138

123

89

42

1,477

NOI from real estate leasing[Operating income (loss) fromreal estate leasing + Depreciation]

395

376

215

264

229

189

173

132

61

2,037

Number of days ofasset management

Operatingrevenuefromreal estateleasing

Operatingexpensesfromreal estateleasingNot
disclosed *Notdisclosed *Notdisclosed *Notdisclosed *10

Notdisclosed *146* Not disclosed, because consent has not been obtained from the lessee.

35Period-End Appraisal Summary(Unit: million yen)

Acquisitiondate

Acquisition
priceBook value
at end of
2nd
fiscalperiodEnd of
1st fiscal period(End of Jan. 2017) (a)End of
2nd fiscal period(End of July 2017) (b)Appraisal
value

Appraisal
value

CR*

CR*

Change(b)-(a)Appraisalvalue

Main factors ofchangeCR*

CR*

GLP/MFLP
Ichikawa Shiohama

2016/0915,50015,44315,8004.4%

16,600

4.2%

+800

-0.2

○

MFLP Kuki

2016/08

12,50012,363

13,2004.9%

13,400

4.8%

+200

-0.1

○

MFLP
Yokohama Daikoku

2016/08

10,10010,005

10,3004.7%

10,500

4.6%

+200

-0.1

○

MFLP Yashio

2016/08

9,650

9,581

9,990

4.7%

10,400

4.5%

+410

-0.2

○

MFLP Atsugi

2016/08

7,810

7,743

8,120

4.8%

8,350

4.7%

+230

-0.1

○

MFLP
Funabashi Nishiura

2016/08

6,970

6,908

7,210

4.8%

7,490

4.6%

+280

-0.2

○

MFLP Kashiwa

2016/08

6,300

6,249

6,570

4.7%

6,710

4.6%

+140

-0.1

○

MFLP Sakai

2016/08

4,500

4,447

4,810

4.8%

4,930

4.7%

+120

-0.1

○

MFIP Inzai

2016/08

2,180

2,179

2,400

4.9%

2,440

4.8%

+40

-0.1

○

Total or Average-

75,51074,921

78,4004.7%

80,8204.6%+2,420-0.1-* CR = Capitalization rate based on direct capitalization method (NCF basis)Amount of difference = Unrealized gain
5,898 million yen

Other

-

36

Mitsui Fudosan’s Major Development/Operation Track Record
Fiscal year of*2completion

FY2013

FY2015FY2016FY2017FY2018100,530 m2● (50%)－

GLP/MFLP Ichikawa Shiohama

Ichikawa, Chiba

105,019 m2● (50%)－MFLP Yashio

Yashio, Saitama

40,728 m2●－

MFLP Kuki

Kuki, Saitama

73,153 m2●－

MFLP Sakai

Sakai, Osaka

125,127 m2● (20%)● (80%)MFLP Funabashi Nishiura

Funabashi, Chiba

30,947 m2●－

MFLP Atsugi

Aiko, Kanagawa

40,942 m2●－

MFIP Inzai

Inzai, Chiba

40,478 m2● (20%)● (80%)MFLP Hino

Hino, Tokyo

213,435 m2－●

MFLP Kashiwa

Kashiwa, Chiba

31,242 m2●－

MFLP Funabashi I

Funabashi, Chiba

198,390 m2－－

MFLP Fukuoka I

Kasuya, Fukuoka

32,477 m2－● (81%)MFLP Hiratsuka

Hiratsuka, Kanagawa

33,106 m2－●

MFLP Komaki

Komaki, Aichi

42,514 m2● (40%)● (60%)MFLP Inazawa

Inazawa, Aichi

73,364 m2－●

MFLP Ibaraki

Ibaraki, Osaka

241,952 m2－●

MFLP Tsukuba

Tsukubamirai, Ibaraki

25,458 m2－－

MFLP Atsugi II

Isehara, Kanagawa

54,812 m2－●

MFLP Atsugi III

Hiratsuka, Kanagawa

Approx. 43,400 m2－－

131,298 m2

MFLP Prologis Park Kawagoe

Kawagoe, Saitama－－

MFLP Kawaguchi I

Kawaguchi, Saitama

Approx. 54,100 m2－－

Ota, Tokyo

Approx. 84,400 m2

－

－

－

－

MFLP Kawasaki I

Kawasaki, Kanagawa

A: Approx. 26,900 m2
B: Approx. 14,600 m2

MFLP Funabashi II

Funabashi, Chiba

Approx. 225,000 m2－－

FY2020MFLP Osaka I

Osaka, Osaka－－

FY2021

Tokyo Rail Gate EAST *5

Shinagawa, Tokyo

Approx. 161,000 m2－－

Other data centers (2 properties)

－

－

－

－

Mitsui Fudosan’s major development/operation track record is based on materials released by Mitsui Fudosan.
In the case of MFLP Yokohama Daikoku, it is the fiscal year in which the property began to be under its operation. The fiscal year of completion of the property is fiscal 2009.
The percentage figure in parentheses is the percentage of quasi co-ownership interest in the portfolio asset.
The percentage figure in parentheses is the percentage of quasi co-ownership interest subject to the “Right of first look and preferential negotiation agreement.”
Tokyo Rail Gate EAST is a project for which Mitsui Fudosan is entrusted with the development work and performs the development plan planning, tenant leasing, etc. and,after construction completion, the master leasing, etc. There are no plans to acquire the property at this point in time.

Flow regarding provision ofright of first look information
Propertydeveloped/operatedby Mitsui Fudosan

Presentation of list of
properties defined in“Right of first look andpreferential negotiationagreement”

Prioritized provision of
information upon sale

Preferential negotiation
periodAcquisition of property
by MFLP-REIT

MFLP-REIT

Yokohama, Kanagawa

Approx. 48,300 m2

TBD
*1:
*2:
*3:
*4:
*5:

Property defined in “Right ofAcquisition by MFLP-REIT *3 first look and preferential
negotiation agreement” *4

Total floor area

MFLP Yokohama Daikoku

MFLP Haneda
FY2019Location

Mitsui Fudosan

FY2014

Propertydeveloped/operated

37

MFLP Komaki Property Overview
MFLP Komaki, a property defined in the “Right of first look and preferential negotiation agreement” concluded with Mitsui Fudosan

The property is a slope MFLP with four floors above ground. With truck berths on
the first and second floors, it is a leading-edge logistics facility offering high delivery
efficiency.
Access to National Route 19 leading to central Nagoya and National Route 155
running east to west is excellent. It can also function as a relay base not only for
urban areas of Nagoya and the entire Chubu area but also for Greater Tokyo andKinki area, by use of Komaki IC (approx. 5.3 km) on Tomei Expressway.

Acquisition priceAppraisal value

NOI yield
Stabilized basis *1

3,249 mn yen 3,260 mn yen

Appraisal basis *2

5.2% / 4.9%

*1: Stabilized NOI yield is the figure arrived at when the NOI assumed in the earnings forecast for the 3rd fiscal period, less the amount of fixed asset tax, city planning tax, etc. included in the cost of acquisition, is divided by acquisition price.
*2: Appraisal NOI yield is the figure arrived at when the NOI based on the direct capitalization method stated in the appraisal report is divided by appraisal value.

38

Initiatives for ESG– Environmental Principles and Initiatives for Environment/Society
Environmental policies of Mitsui Fudosan Group
Mitsui Fudosan Group seeks reduction of environmental load, diversified
collaboration/cooperation with various entities, improvement of peace of mind,
safety and comfort as well as securement of sustainability.
••••

A wide range ofcollaboration/cooperation with various
entities••••

Reduction of CO2(including supporting useof low-carbon
transportation)
Aquatic conservation
Reduction of harmful
substances
Resource saving andreduction of wastematerial

Co-existence with local communities
Proactive action towards tenants and owners
Collaboration/cooperation with design,
construction, energy, manufacturing firms, etc.
Further collaboration/cooperation with local
communities, government, and research
institutes including universities

Initiatives for reducing environmental load
MFLP-REIT has put forth efforts
on reducing CO2 emissions
through energy saving while
promoting efficient use of energy
at facilities it owns by introducing
LED lights, installing solar panelson the roof and such.

Solar panels

MFLP Sakai

LED lights

MFLP Kashiwa

Eco-friendly green buildings
Reduction ofenvironmental
load

Improvement of peaceof mind and safety andsecurement ofsustainability

•
•
•
•

Improvement of peace of mind and safety
Conservation and utilization of naturalenvironment (conservation of biodiversity)
Conservation and utilization of landscapeand townscape
Improvement of health and comfort

Initiatives for tenants and local communities
Utilizing the know-how of Mitsui Fudosan, the sponsor, the properties owned by
MFLP-REIT promote initiatives to offer healthy, pleasant and safe environment bygiving consideration to stakeholders such as occupying tenants, facility users,
surrounding environment and local communities.

Cafeteria, shops

Commuter shuttle

MFLP-REIT has obtained CASBEE and DBJ Green
Building Certification for the following 9 properties out of
the total of 10 properties it owns. Furthermore, MFLP
Sakai has received the Osaka Eco-friendly Construction
Award. As such, MFLP-REIT proactively incorporates
environmentally conscious green buildings.
Property name
GLP/MFLP Ichikawa Shiohama

CASBEE (New construction) Rank A *1

MFLP Kuki

CASBEE (New construction) Rank A *1

MFLP Yashio

CASBEE (New construction) Rank A *1

MFLP Atsugi

CASBEE Kanagawa Rank A *2
DBJ Green Building Certification 4 Stars

MFLP Funabashi Nishiura

CASBEE (New construction) Rank A

MFLP Kashiwa

CASBEE (New construction) Rank A

MFLP Sakai

CASBEE (New construction) Rank S
FY2015 Osaka Eco-friendly Construction Award(Commerce, other category)

MFLP Yokohama Daikoku

DBJ Green Building Certification 5 Stars

MFLP Komaki

CASBEE Aichi Rank A *2

Implemented beautification activities (cleaning)

Designated as a tsunami evacuation building(MFLP Sakai)

Evaluation/Award history, etc.

NEW

NEW

*1: Certification has already expired as at September 14, 2017.
*2: CASBEE Kanagawa and Aichi is not certified by a third-party but an assessment based on self-reporting.

39

Initiatives for ESG– Initiatives for Governance with Consideration for Unitholders’ Interests
MFLP-REIT and the Asset Management Company are working to establish proper governance through the following measures in order to build a solid relationship oftrust that aligns interests of unitholders and interests of MFLP-REIT and the Asset Management Company while giving sufficient consideration to unitholders’ rights.

Rules concerning conflicts of interestin asset management
The acquisition and transfer of assets by MFLP-REIT from related partiesare decided by the Asset Management Company via a transparent
decision-making process.

*2

Asset management with emphasis placed onrelationship of trust with unitholders
Asset management fee structure
consistent with the interests of unitholders
The aim is to keep the interests of MFLP-REIT’s unitholders
consistent with the interests of the Asset Management Company.
Asset
management
fee I

Total assets × 0.1% (maximum)

Asset
management
fee II

Operating income (before deduction of asset management feesand depreciation) × 5.5% (maximum)

Asset
management
fee III

Pre-tax earnings (before deduction of asset management fees)
× Pre-tax EPU (before deduction of asset management fees)
× 0.001% (maximum)

Same-boat investment in MFLP-REIT by Mitsui Fudosan(As at July

MFLP-REIT receives 12.9% investment in capital from Mitsui Fudosan. 31, 2017)
Receiving certain investment in capital leads toalignment of the interests of MFLP-REIT’s unitholders and Mitsui Fudosan
and asset management that pursues mutually greater interests.

Timely and proper information disclosure andsecurement of transparency*1: The above chart shows the decision-making flow when a transaction involves a
related party, which requires the approval of MFLP-REIT’s Board of Directors
under Article 201-2 of the Act on Investment Trusts and Investment Corporations.
*2: If a transaction prescribed in Article 201-2 of the Act on Investment Trusts andInvestment Corporations falls under the criteria for insignificance, the approval of
MFLP-REIT’s Board of Directors shall be omitted.

MFLP-REIT strives to make timely and proper disclosure of informationnecessary for unitholders to make investment decisions. Upon disclosure,
MFLP-REIT promotes prompt and transparent information disclosure tosecure fairness and equality, and also promotes disclosure of not only
financial information but also non-financial information concerning ESG.

40

Interest Rate Market Data
10-year Japanese government bond yield and benchmark interest rate trends
(%)
2.5

2

1.5

1

0.5

0

-0.5
2007/07/31

2008/07/31

2009/07/31

2010/07/31
10-year Japanese
国債10年物
government bond yield

2011/07/31

2012/07/31

2013/07/31

1か月円Tibor
1-monthJapanese yen TIBOR

2014/07/31

2015/07/31

2016/07/31

2017/07/31

10年SWAPレート
10-yearswap rate

41

Status of Interest-Bearing Debt
Long-term borrowings*1: Long-term borrowings are all borrowings at fixed interest rates.
*2: Repayment methods are all bullet repayments.
Amount(million yen)

LenderSumitomo Mitsui Banking Corporation

Sumitomo Mitsui Trust Bank, Limited

Mizuho Bank, Ltd.
Long-term
borrowings

Mitsubishi UFJ Trust and Banking Corporation
Mizuho Trust & Banking Co., Ltd.

(As of July 31, 2017)
Borrowing
periodInterest rate *１

Borrowing date

Maturity date *２

2,000

0.2713%

2016/09/01

2022/09/01

6 years

1,500

0.4213%

2016/09/01

2026/09/01

10 years

2,000

0.3050%2016/09/01

2023/09/01

7 years

1,500

0.3813%

2016/09/01

2025/09/01

9 years400

0.1425%

2016/08/02

2022/08/02

6 years

1,700

0.2113%

2016/08/02

2024/08/02

8 years

2,200

0.1826%

2016/09/01

2023/03/01

6.5 years

600

0.3237%

2016/09/01

2024/03/01

7.5 years

700

0.3425%

2016/09/01

2024/09/02

8 years

Development Bank of Japan Inc.

2,100

0.3125%

2016/08/02

2026/08/03

10 years

The Bank of Fukuoka, Ltd.

1,300

0.2169%2016/08/02

2024/02/02

7.5 years

Nippon Life Insurance Company

1,000

0.3125%

2016/08/02

2026/08/03

10 years

Total long-term borrowings

17,000Commitment lines
LenderRemarks

UnsecuredNon-guaranteed(As of July 31, 2017)
AmountBalance of borrowings(million yen)(million yen)Contract start date

Contract deadline

Sumitomo Mitsui Banking Corporation

3,000

0

2016/08/02

2020/08/03

Sumitomo Mitsui Trust Bank, Limited

3,000

0

2016/09/01

2020/08/31

Remarks
UnsecuredNon-guaranteed
UnsecuredNon-guaranteed

42

Investment Unit Price Trends
Investment unit price firm since IPO
Investment unit price
投資口価格（終値）(closing
price)(yen)
350,000

TSE REIT Index
東証REIT指数(indexed)

330,000

310,000

290,000

IPO issue price: 270,000 yen
270,000

250,000

230,000
2016/08/02
2016/07/31

2016/08/31

2016/09/30

2016/10/31

2016/11/30

2016/12/31

2017/01/31

2017/02/28

2017/03/31

2017/04/30

2017/05/31

2017/06/30

2017/07/31* The starting point is the price of the first trade at IPO.
* The TSE REIT Index is indexed to the August 2, 2016 opening price.

43

Status of Unitholders
Status of unitholders at end of 2nd fiscal period (end of July 2017)
Number of unitholders and number of investment units by type of unitholder
End of 2nd fiscal period (End of July 2017)
Number ofunitholders

% of
total

Number ofinvestment units

Individuals/Other

% of
total

Individuals/Other

5,313

93.2%

19,211

8.6%

Financial institutions

112

2.0%

129,687

57.9%

Other Japanese corporations

165

2.9%

36,227

16.2%

Non-Japanese

89

1.6%

37,876

16.9%

Securities companies

19

0.3%

999

0.4%

Total

5,698

100.0%

224,000

100.0%

Number ofinvestment
units
Total:
224,000 units

Financial institutions

Other Japanese corporations

Non-Japanese

Securities companies

Major unitholders at end of 2nd fiscal period
8

Number ofinvestment units

% of
total

Japan Trustee Services Bank, Ltd. (trust account)

37,516

16.7%

Mitsui Fudosan Co., Ltd.

28,900

12.9%

The Master Trust Bank of Japan, Ltd. (trust account)

26,885

12.0%

Trust & Custody Services Bank, Ltd. (securities investment trust account)

17,537

7.8%

The Nomura Trust and Banking Co., Ltd. (investment trust account)

8,574

3.8%

JPMorgan Chase Bank 385632

8,027

3.6%

127,439

56.9%

Total

Individuals/Other

Number ofunitholders
Total:
5,698 unitholders

Financial institutions

Other Japanese corporations

Non-Japanese

Securities companies

44Notes on Matters Stated in this Document[About major properties developed/operated by Mitsui Fudosan]
Descriptions of major properties developed/operated by Mitsui Fudosan in this document are based on materials released on July 20, 2017 by Mitsui Fudosan.
“28 facilities 400.0 billion yen 2,400,000 m2” includes 13 properties under development or scheduled to be developed as of the date and their (planned) investment
amounts. Properties scheduled to be developed include those targeted or planned by the Mitsui Fudosan Group as of the release date, and are subject to change
or cancellation. Furthermore, there are no details concerning the timing of completion of the aforementioned investments that had been finalized as of the release
date. Nor does MFLP-REIT guarantee or promise that the plans be materialized. Although “28 facilities 400.0 billion yen 2,400,000 m 2” includes “Tokyo Rail Gate
EAST,” Mitsui Fudosan has no plans to acquire the property as of September 14, 2017.
[Method of calculation of cash distribution based on FFO]
1. Distribution of earnings is determined based on profit (net income) for the applicable operating period.
2. FFO for the applicable operating period is calculated by adding depreciation to profit (net income) (excluding gain or loss on sale of real estate, etc.) for theapplicable operating period.
3. The amount distributable including distribution in excess of earnings is calculated based on a threshold of an amount equivalent to 70% of FFO for theapplicable operating period.
4. The amount distributable in excess of earnings is calculated by deducting the amount of distribution of earnings (excluding gain or loss on sale of real estate,etc.) from the amount distributable including distribution in excess of earnings.
5. The amount of continuous distribution in excess of earnings is determined based on a comprehensive judgment on the basis of the amount distributable inexcess of earnings.
6. The distribution in excess of earnings determined in 5. above is to be continuously made each fiscal period in principle, in addition to the distribution of earnings
determined in 1. above.
[About analysis of Japan’s logistics facilities stock]*1: The “Analysis of Japan’s logistics facilities stock” graph is of estimates by CBRE K.K. based on the Policy Bureau of the Ministry of Land, Infrastructure,
Transport and Tourism’s “Building Starts” and the Ministry of Internal Affairs and Communications’ “Summary Report on Prices, etc. of Fixed Assets.”*2: In the “Analysis of Japan’s logistics facilities stock” graph, “Leading-edge logistics facilities” is the figure of each year’s sum total of the total floor area ofleading-edge logistics facilities (refers to rental logistics facilities that have total floor area of at least 10,000 m2 and, in principle, ceiling height of at least 5.5 m,
floor load capacity of at least 1.5 tons/m2 and column spacing of at least 10 m).
*3: In the “Analysis of Japan’s logistics facilities stock” graph, “Estimate for logistics facilities 40 years old or older” is the figure of each year’s overall stock
estimate (as defined in note 5; the same shall apply hereinafter) minus the sum total of the floor area of which construction was started within the past 40 years.
*4: “Estimate for logistics facilities less than 40 years old” is the figure of the overall stock estimate minus the floor area of “Estimate for logistics facilities 40 years
old or older” and “Leading-edge logistics facilities.”*5: The overall stock estimate is the sum total of “Estimate for logistics facilities 40 years old or older,” “Estimate for logistics facilities less than 40 years old” and“Leading-edge logistics facilities.”*6: In the “Analysis of Japan’s logistics facilities stock” graph, “Share of leading-edge logistics facilities” is each fiscal year’s “Leading-edge logistics facilities”
expressed as a percentage of the overall stock estimate (total floor area basis).
*7: In the “Analysis of Japan’s logistics facilities stock” graph, “Share of logistics facilities 40 years old or older” is each fiscal year’s “Estimate for logistics facilities
40 years old or older” expressed as a percentage of the overall stock estimate (total floor area basis).
*8: “Total floor area” is compiled based on data on construction starts. In addition, estimates are on the basis of the time of construction completion being that
construction is deemed to be completed after one year has elapsed from construction start. Accordingly, total floor area may not match the floor area on thebuilding confirmation certificate, construction completion drawing or register.

45

Disclaimer
This document is provided solely for informational purpose with regard to Mitsui Fudosan Logistics Park Inc. (MFLP-REIT) and is not intended to serve as an
inducement or solicitation to trade in any product offered by MFLP-REIT.
Purchase, sale and such of MFLP’s investment units entail the risk of incurring a loss due to fluctuations of the investment unit price.
Please consult with a securities company regarding the purchase of MFLP-REIT’s investment units or investment corporation bonds. Information presented on thisdocument should not be interpreted, unless otherwise specified, as constituting disclosure documents or asset management report required under Financial
Instruments and Exchange Act or the Act on Investment Trusts and Investment Corporations.
Concerning the information provided in this document, although MFLP-REIT and Mitsui Fudosan Logistics REIT Management Co., Ltd. make every effort to provide
correct information, its accuracy, adequacy or completeness are not guaranteed regardless of the information being prepared by MFLP-REIT and Mitsui Fudosan
Logistics REIT Management Co., Ltd. or being received from third-parties.
Among the information provided in this document, statements other than those pertaining to facts in the past or present are forward-looking statements presented
by MFLP-REIT or Mitsui Fudosan Logistics REIT Management Co., Ltd. according to assumptions or judgement based on information available on the date of thisdocument (the date if specified otherwise in the document). Forward-looking statements are based on assumptions such as the investment policy of MFLP-REIT,
applicable laws and regulations, market environment, interest rate environment, business practice and other facts as of the preparation date of this document, anddo not reflect or consider changes in situations after the preparation date. Forward-looking statements include, explicit or implied, uncertainties of existing risks,
unknown risks and other factors, and may materially differ from actual performance, business results, financial status and such of MFLP-REIT.
The content of this document is subject to change or repeal without prior notice. MFLP-REIT and Mitsui Fudosan Logistics REIT Management Co., Ltd. are under
no obligation to update or publicly disclose the content of this document (including forward-looking statements).
Duplication or reproduction of any content presented in this document without the prior consent of MFLP-REIT or Mitsui Fudosan Logistics REIT Management Co.,
Ltd. is strictly prohibited.
The document is prepared solely for use by residents of Japan and is not intended for use by non-residents of Japan.

46