Securities Code 3487

Financial Results Briefing for the 6th Period
Ended June 2019 (January 1, 2019 to June 30, 2019)

LogiSquare Kasukabe
The property is in close vicinity to National Route 16 and National Route 4 (Koshigaya-Kasukabe Bypass), which are major
highways, and is located around 1.8 km from the Showa Interchange, where these two highways intersect. The property is
expected toCopyrightbecome evenwith theplannedof Reserved.
National Route 4 (Higashi-Saitama Road).
(C) more
2019convenient
CRE Logistics
REIT,
Inc.extension
All Rights

August 15, 2019
CRE REIT Advisers, Inc.

Contents
Contents

GLOSSARY
Term

1. First Capital Increase by Public Offering andAsset Acquisitions

2

2. Financial Results and Forecasts

7

3. Growth Strategies

12

4. Characteristics of CRE Logistics REIT, Inc.

20

5. Market Environment

34

6. Appendix

41

Definition

Appraisal value

The appraisal value or an investigated value as of the end of the period is stated based on theCertificate of Incorporation of the Investment Corporation and the Regulation on Accountings ofInvestment Corporations (Cabinet Office Order No.47 of 2006 including subsequent revisions)

Unrealized gains(Appraisal value) - (Book value) as of the end of the period

LTV(Outstanding balance of interest-bearing debt) / (Total Assets)

LTV based on
appraisal value(Outstanding balance of interest-bearing debt) / (Total assets + Unrealized gains)

NAV per unit

(Net assets + Unrealized gains - Total amount of distributions) / Total number of investment units
outstanding

Acquisition price

Acquisition price is the purchase agreement price for each of the trust beneficiary rights stated in
the sales agreement and does not include national and local consumption taxes or salescommission and other expenses that are incurred in the acquisition.

NOI yield

Ratio of actual NOI of the portfolio assets to their acquisition priceAppraisal NOI yield

Ratio of appraisal NOI of each asset to the acquisition price (refers to appraisal NOI based on theappraisal report with June 30, 2019 as the date of the value opinion in the case of each asset held
and appraisal NOI based on the appraisal report with May 31, 2019 as the date of the value
opinion in the case of newly acquired assets)

CRE

CRE, INC.

CRE Group

CRE, INC. and its subsidiaries and affiliates•

This material is not a disclosure material under the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations or the
Securities Listing Regulations of the Tokyo Stock Exchange.

•

The purpose of this material is to provide information and not to offer, solicit the purchase of or sell certain products. When you make an investment, please do so at
your own discretion and risk.

•

The market price of investment securities of the Investment Corporation will be affected by the demand and supply of investors at an exchange and will fluctuate
under the influence of the interest rate environment, economic conditions, the real estate market conditions and other factors surrounding the market. Accordingly,
the investment securities may possibly not be sold at a higher price than the acquisition price, and investors could suffer a loss as a result.

•

The investment securities of the Investment Corporation need to be purchased and sold through a securities company with which you undertake business. At thattime, please read the contents of the document provided before concluding the contract (or a prospectus) carefully.

•

While this material contains forward-looking statements and results forecasts, these statements do not guarantee the future results and financial conditions of theInvestment Corporation.

•

In this material, amounts are rounded off to the unit and ratios are rounded to the nearest one decimal place, unless otherwise noted. Any average or ratio pertaining
to assets is the weighted average based on the acquisition price, unless otherwise noted.
Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

11. First Capital Increase by Public Offering and Asset Acquisitions

LogiSquare Kawagoe
The property is in a good location because it is close to National Route 254 and National Route 16, which are major trunk roads, and because it provides
good access to National Route 17 Shin-Omiya Ageo Road. Surrounded by numerous warehouses and factories, the property is located in the exclusive
Copyright(C) 2019
CRE Park
Logistics
Inc.24All
RightsReserved.
industrial districtin Kawagoe
Industrial
and isREIT,
operablehours
a day.

2

1. First Capital Increase by Public Offering and Asset Acquisitions

Summary of First Capital Increase by Public Offering
Acquire properties at appropriate price from Sponsor
M-7 LogiSquare Kawagoe

Pursue appropriate LTV control and long-term debt

M-8 LogiSquare Kasukabe

End of 6th Period

Liabilities(Ended June 2019)

2 properties

Acquisition price

6,390 million yen

Average appraisal
NOI yield

Averageproperty age

Occupancy rate

Average remaining leaseterm

1.1 years

100.0%

5.0%

9.1 years

Maintain high quality portfolio through investment in LogiSquare

Number of properties
Acquisition price
Average appraisal NOI yieldEnd of 6th Period(Ended June 2019)

After acquisition ofassets7 properties

9 properties

47,725 million yen

54,115 million yen

4.9%

4.9%

Average property age

2.5 years

2.3 years

Occupancy rate

100.0%

100.0%

Average remaining lease term

6.6 years

6.9 years

Tokyo Metropolitan Area

94.0%

94.7%

Estimate for June 30, 2020

LTV

47.9%

Ratio of fixed interest rates

88.7%

100.0%

Average borrowing rate

0.533%

0.510%

Average duration ofinterest-bearing debt(Note 2)

2.1 years

3.1 years

Increase in borrowing

2,899 million yen

47.7%

Realize external growth that contributes to improvement in
distributions per unit and NAV per unit
Before the Issue
NAV per unit
Net assets

AssetsNumber of properties

After theBorrowing(Note 1)

Distributions per unit

Number of new investment
units to be issued
Total issue value
Form of offering

June 30, 2019

118,187 yen
Previous estimate for
period ending December
2019(Note 3)

2,940 yen

After the Issue
After the Issue

119,557 yen (+1.2%)
Current estimate for period
ending December 2019 (Note4)

2,990 yen (+1.7%)

Estimate for period ending
June 2020(Note 4)

3,029 yen (+3.0%)

28,100 units(12.2% of total issued and outstanding investment units)

3,196 million yen
Domestic offering

Note 1: The Borrowing refers to borrowing executed on July 16, 2019 to finance the acquisition of the newly acquired assets and expenses incidental thereto, the repayment of a loan that fell due on July 31, 2019 and borrowing executed on July 31, 2019 forsuch repayment.
Note 2: “Average life of interest-bearing debt” both at the end of the 6th Period and after the Borrowing indicates the weighted average of the period from July 31, 2019 to the repayment date of each interest-bearing debt weighted based on the balance of eachinterest-bearing debt.
Note 3: Based on Summary of Financial Results for the 5 th Period Ended December 31, 2018” dated February 18, 2019.
Note 4: Based on Summary of Financial Results for the 6 th Period Ended June 30, 2019” dated August 13, 2019.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

3

1. First Capital Increase by Public Offering and Asset Acquisitions

Enhance unitholder value through external growth that contributes to improvement in
DPU and NAV per unit
Effect of increasing DPU

Appropriate LTV control

Effect of increasing NAV per unit
DPU

+3.0%
3,500

+1.7%

3,000

2,990

3,029

365

365

2,9402,952

2,940

372 372372

NAV per unit
+1.2%

130,000

120,000

117,317

118,18750%

119,55749%

48.2%

110,000

2,500

48%

47.9%

100,000

2,5682,580

2,664

2,5682,625

1,500

(yen)

47.9%
47.7%

47.7%

47%

2,000

1,000

47.9%

90,00046%

80,000Previous Results
第６期
estimate

Previous Current
第７期
estimate estimate

6th period
月期）(ended June 2019)

7th period
12月期）(ending December 2019)（2019年6（2019年

Earnings per unit (EPU)

第８期

Current
estimate

70,000（2020年68th period
月期）(ending June 2020)

OPD per unit(yen)

End of 5th Period End of 6th Period(ended December (ended June 2019)2018)

After the Issue (Note 2)

45%

6th Period
7th Period(ended June 2019) (ending December2019) estimate

8th Period(ending June2020) estimate

Summary of Financial Results dated August 13
As of announcement on June 27

Note 1: “DPU” indicates distributions per unit (including OPD), and “EPU” indicates distributions of earnings per unit.
Note 2: NAV per unit” after the Issue is calculated by the equation shown below.
NAV per unit after the Issue = (NAV at end of 6th Period (ended June 30, 2019) + Total issue value + Sum total of appraisal values of newly acquired assets - Sum total of acquisition prices of newly acquired assets）/ Total issued and outstanding
investment units of CRE-REIT after the Issue

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

4

1. First Capital Increase by Public Offering and Asset Acquisitions

Ensure same high quality as that of existing portfolio

6th period

After acquisition of
newly acquired assets

Newly acquired assets(2019/6)

7 properties

2 properties

9 properties

Acquisition price

47,725 million yen

6,390 million yen

54,115 million yen

Appraisal value (Estimated value)

50,480 million yen

6,870 million yen

57,350 million yen

Average appraisal NOI yield

4.9%

5.0%

4.9%

Average appraisal NOI yield

3.7%

Average property age(Note 2)

2.5 years

Occupancy rate

100.0%

100.0%

100.0%

Average lease term

8.9 years

10.0 years

9.0 years

Average remaining lease term(Note 3)

6.6 years

9.1 years

6.9 years

10

2

12

100.0%

100.0%

100.0%

Number of properties

after depreciation(Note 1)

Number of tenants
Ratio of properties developed by
CRE

+

4.1%
1.1 years=

3.8%
2.3 years

Note 1: “Average appraisal NOI yield after depreciation” is the ratio of the sum total of the appraisal NOI of each asset less forecast depreciation to the sum total of the acquisition price of each asset.
Note 2: “Average property age” indicates the weighted average (rounded to one decimal place) of the ages (refers to number of years from date of registration of new construction of each property in real property register to June 30, 2019) of each asset.
Note 3: “Average remaining lease term” indicates the weighted average of the periods from June 30, 2019 to the expiration date of the lease agreement stipulated in the lease agreement of each asset.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

51. First Capital Increase by Public Offering and Asset Acquisitions

Ensure same high quality as that of existing portfolio

Newly acquired
assetsNo.

Property nameLocation(Planned)
Appraisalacquisition price value(Note 1)(million yen)(million yen)Appraisal
NOI yield(%)

Total floor
Age
Numberarea(Note 2) (m2) (years) of tenants

BTS(Note 3)

Occupancy
ratio
(%)

Developer

M-1

LogiSquare Kuki

Kuki-shi,
Saitama

9,759

10,3004.8

40,907.13

3.1

1 BTS

100.0

CRE

M-2

LogiSquare Hanyu

Hanyu-shi,
Saitama

6,830

7,070

4.9

33,999.61

3.0

1 BTS

100.0

CRE

M-3

LogiSquare Kuki II

Kuki-shi,
Saitama

2,079

2,170

5.1

11,511.22

2.4

1 BTS

100.0

CRE

M-4

LogiSquare Urawa Misono

Saitama-shi,
Saitama

13,06013,900

4.7

48,738.29

2.3

3

―

100.0

CRE

M-5

LogiSquare Niiza

Niiza-shi,
Saitama

6,960

7,280

4.9

25,355.82

2.3

1

―

100.0

CRE

M-6

LogiSquare Moriya

Moriya-shi,
Ibaraki

6,157

6,630

5.1

32,904.90

2.2

2

―

100.0

CRE

M-7

LogiSquare Kawagoe

Kawagoe-shi,
Saitama

1,490

1,570

5.0

7,542.56

1.4

1

―

100.0

CRE

M-8

LogiSquare Kasukabe

Kasukabe-shi,
Saitama

4,900

5,300

5.1

21,315.54

1.1

1 BTS

100.0

CRE

O-1

LogiSquare Tosu

Tosu-shi,
Saga

2,880

3,130

5.2

16,739.40

1.4

1 BTS

100.0

CRE

54,11557,3504.9

239,014.47

2.3

12

100.0

―

Total/Average―

Note 1: Appraisal value with May 31, 2019 as the date of the value opinion in the case of newly acquired assets.
Note 2: For “Total floor area,” the total floor area of each property presented in the real estate register is stated. It also includes the floor area of annex building.
Note 3: “BTS” stands for build-to-suit. It is logistics real estate developed by incorporating a specific company’s demands in its specifications.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

6

2. Financial Results and Forecasts

LogisSquare Hanyu
From the selection of the land, the facility was developed based on the needs of the tenant, which is a leading logistics company, and has a floor load
capacity of 2.0t/m2 to withstand heavy loads.
(C) 2019
Logistics
RightsReserved.
The low-riseCopyrighttwo-story facility
has CRE
dual-sided
berthsREIT,
on theInc.
firstAllfloor
for highly
efficient loading and unloading.

72. Financial Results and Forecasts

Highlights on the 6th Period―Achieved better-than-anticipated results due to stable management
Distributions per unit

NAV per unit
2,952 yen

6th period Results(2019/6)(Compared to forecast: Up 12 yen, Up 0.4%)

7th period Forecasts

2,990 yen

8th period Forecasts

3,029 yen

(2019/12)(2020/6)

Forecasts
Results
2,540

3,297 3,351
2,940

2,585

(yen) 4th period

5th period

2,952

6th period

Portfolio

6th period Results(2019/6)

114,936

118,187 yen(up 870 yen,up 0.7% from 5th
period)118,187

117,317

3,029

2,990

7th period(yen) 4th period

8th period

Asset

5th period

6th period

Debt
6th period(2019/6)

Compared to
5th period

Appraisal value

50,480 million yen― million yen

Unrealized gains

3,460 million yen+287 million yen

Unrealized gains ratio

7.4%

NOI yield

7 properties 47.7 billion yen

Occupancy rate

100.0%

Average remaining
lease term

6.6 years

Average property age

2.5 years

Ratio of fixed-termleases100.0%

Ratio of fixed-rate rents

100.0%

Equity6th period(2019/6)

Interest-bearing
debt

Portfolio size

Compared to
5th period

6th period(2019/6)

106,169 yen-771 yen

27,319 million yen+201 million yen

NAV per unit

118,187 yen+870 yen

Total number ofinvestment units
outstanding

231,150 units― units

23,820 million yen― million yen

LTV

47.9%

+0.2%

NAV

+0.7%

LTV based on
appraisal value

44.8%

-0.0%

4.9%

-0.4%

Ratio of fixedinterest debt

88.7%

―%

NOI yield after
depreciation

3.7%

-0.4%

Ratio of long-term
debt

100.0%―%

Repair expense

0 million yen-0 million yen

0.533%+0.001%

Capital expenditure―million yen-0 million yen

Averageborrowing interest
rate

Note: As of June 30, 2019, before the capital increase by public offering

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Compared to
5th period

Net assets per unit

One characteristic of logistics facilities is that the ratio of building value to landis typically high, and so depreciation expense tends to be higher than for otherasset classes. Since unrealized gains are the difference between appraisal
value at end of period and book value after deduction of depreciation expense,
CRE-REIT, which holds fairly new properties and has minimal capital
expenditure, tends to record increasing unrealized gains because, at the endof each period, the sum of depreciation expense and any increase in appraisal
value at the end of the period is added to unrealized gains at the end of theprevious period.

8

2. Financial Results and Forecasts

Results for the 6th Period (Ended June 2019)
Unit: million yen

Difference vs.
Difference vs.
Previous
Forecast
period(C) - (B)(C) - (A)

5th period(2018/12)
Results (A)

6th period(2019/6)
Forecasts (B)

6th period(2019/6)
Results (C)

1,413

1,410

1,411

1

-1

6

+1

145

246

245

2

+99

7

-0

1,267

1, 163

1, 166

-100

+2

287

287

287

―

―

980

876

879

-100

+2

168

160

160

-8

-0

811

716

718

-92

+2

Non-operating income

3

―

0

4

-3

+0

Non-operating expenses

125

121

121

5

-3

-0

Ordinary income

689

594

597

-91

+2

Net income

688

593

596

-92

+2

Operating revenues
Leasing expenses (excluding
depreciation)

NOI
Depreciation
Net leasing revenues (NOI Dep.)
General and administrative
expenses, etc.
Operating income

3

Major factors fordifference<Vs. previous period>
1 Operating revenues -1• Decrease in utilities income -1

2 Leasing expenses +99• Reduction of facility management
expenses -2• Decrease in utilities expenses -2• Increase due to the expensing of fixed
asset taxes and city planning taxes on 5
properties acquired in the 4th period +104

3 General and administrative expenses,
etc. -8• Decrease in asset management fees -8

4 Non Operating revenues -3• Non-occurrence of interest on tax refund-3

5 Non-operating expenses -3• Decrease in interest expenses -2, etc.

6Distributions per unit (yen)

3,351

2,940

2,952

-399

+12

Earnings per unit (yen)

2,979

2,568

2,580

-399

+12

372

372

372

―

―

OPD per unit (yen)Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

<Vs. forecast>
Operating revenues +1• Increase in utilities income +1

7 Leasing expenses -0• Decrease in repair expenses -1

92. Financial Results and Forecasts

Forecasts for the 7th and 8th Periods (Ending December 2019 and June 2020)
Unit: million yen

6th period(2019/6)
Results (A)

7th period(2019/12)
Forecasts (B)Difference(B) - (A)

8th period(2020/6)
Forecasts (C)

1,411

1,578

+166

1,591

4

+13

245

254

+8

270

5

+16

1, 166

1,324

+157

1,321

-3

287

316

+29

316

―

Net leasing revenues (NOI - Dep.)

879

1,008

1

+128

1,004

-3

General and administrative
expenses, etc.

160

184

2

+24

179

718

823

+104

825

+1

Non-operating income

0

―

-0

―

―

Non-operating expenses

121

141

+20

133

Ordinary income

597

681

+84

691

+10

Net income

596

680

+84

690

+10

Distributions per unit (yen)

2,952

2,990

+38

3,029

+39

Earnings per unit (yen)

2,580

2,625

+45

2,664

+39

372

365

-7

365

―

Operating revenues
Leasing expenses (excluding
depreciation)

NOI
Depreciation

Operating income

OPD per unit (yen)Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

3

Difference(C) - (B)

6

7

-4

Major factors fordifference<7th period>
1 Net leasing revenues +128

• Increased due to 2 newly acquired
properties +131, etc.

2 General and administrative
expenses, etc. +24• Increase in asset management fees +16• Occurrence of expenses related to capitalincrease by public offering +2• Occurrence of expenses for General
Meeting of Unitholders, etc. +5

3 Non-operating expenses +20• Increase in loan-related expenses +10• Increase of interest expenses +7• Occurrence of expenses related to issue
of investment units +3, etc.

<8th period>
4 Operating revenues +13• Increase due to full-period contribution of 2
newly acquired properties +14, etc.

-8

5 Leasing expenses +16• Increase due to the expensing of fixed
asset taxes and city planning taxes on 2
newly acquired properties +18, etc.

General and administrative
6 expenses, etc. -4• Non-occurrence of expenses for General
Meeting of Unitholders -5, etc.

7Non-operating expenses -8• Decrease in loan-related expenses -2• Non-occurrence of expenses related toissuance of investment units -3, etc.

10

2. Financial Results and Forecasts

Comparison between Each Period
3,500

3,000

2,952

2,940
Increase in
NOI

Others+10

Increase in
SGA, etc.

Increase in
non-operating
expenses

2,990

Increase inoperatingrevenues

Increase in
Leasing
expenses

Decrease in
SGA, etc.

-64

+18

Decrease in
non-operating
expenses

365

372

372
2,500

Increase in
Net leasing
revenues

+1

+85

-18

+51

-21

3,029
365

+32

2,000

2,568

2,580

2,625

2,664

6th第６期period6th第６期period
Ended
Jun.
2019
2019年6月期
Results
実績

7th第７期periodEndingDec.
2019
2019年12月期
Forecasts
予想

8th第８期periodEndingJun. 20202020年6月期
Forecasts
予想

1,500

1,000

(yen) Ended
Jun. 20192019年6月期

Forecasts
予想

Earnings per unit (EPU)

OPD per unit

Note 1: Calculated on the assumption that the total number of investment units issued and outstanding at the end of the 6 th Period is 231,150 units and the total number of investment units issued and outstanding at theend of the 7th and 8th Periods is 259,250 units.
Note 2: The components do not add up to the difference between each period because the components are rounded off to the nearest one yen.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

11

3. Growth Strategies

LogiSquare Ageo (Property with first refusal right)
The property fronts onto Ageo Road (National Route 17) and further improvement of convenience is expected, with the announcement of the start of a project to extend the Metropolitan
Expressway Saitama Omiya Route from the Yono Interchange to the vicinity of the development site.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

12

3. Growth Strategies

Strengthening of Governance (1) Revision of Asset Management Fee Structure More
Aligned with Unitholder Interests
Overview of Revisions to Asset Management Fee Structure• Plan to submit proposal for amendment of Articles of Incorporation to the General Meeting of Unitholders on September 27, 2019 and to revise fee
structure from the Period ending June 2020
• Introduce fee structure more aligned with unitholder interests by decreasing management fees based on total assets and income before income taxes
and establishing a new management fee based on earnings per unit to increase linkage with earnings per unit
• Repeal existing fee on sale to prevent fee charged even in the case of the sale of property that is detrimental to the interests of unitholder interests
because a loss on sale is recognized
Before Changes

After Changes

Management fee 1

Total assets  0.4% (Upper limit)

ReduceTotal assets  0.325% (Upper limit)

Management fee 2

Income before income taxes  5.0% (Upper limit)

ReduceIncome before income taxes  4.0% (Upper limit)

Newly
establish

Earnings per unit  10,000

Management fee 3
Fee on acquisition
Fee on sale―
Acquisition cost  1.0% (Upper limit)

Acquisition cost  1.0% (Upper limit)(0.5% (Upper limit) in case of transactions with interested party)(0.5% (Upper limit) in case of transactions with interested party)

Sale price  0.5% (Upper limit)

Comparison based on 8th period(Ending June 2020) Forecasts

150

140

140

28

27
22

100

111

50
0

―

Repeal

8th Period Before Changes(ending June 2020)

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Management fee 3
Management fee 2

90Management fee 1

8th Period After Changes(ending June 2020)

13

3. Growth Strategies

Strengthening of Governance (2) Holding of Investment Units by Management ofSponsor and the Asset Management Company Respectively
Holding of Investment Units by Management of Sponsor and the Asset Management Company Respectively• At the time of the first capital increase by public offering, the management of the sponsor and the Asset Management Company
respectively acquired investment units held by the sponsor, strengthening their commitment to CRE-REIT.
Representative Director and President of CRE

500 units(Note 1)

Tadahide Kameyama

Before theTransaction

After theTransaction

33,100 units

28,790 units

14.3%

11.1%(Note 2)• Almost all officers and employees of the Asset Management Company holdinvestment units of CRE-REIT based on adoption of a cumulative
investment system (purchases started in October 2018) and internal
regulations.

Title

Name

Tsuyoshi Ito

1,078 units

Managing Director

Takeshi Oka

32 units

8 out of 9 other employees hold investment units

1,058 units• Given that the Asset Management Company was established as anindependent asset management company, almost all its members areproper employees and CRE is not involved in their recruitment or
personnel evaluation.

Units held

Tsuyoshi Ito

58 units(Note 3)

Independence of the Asset Management Company

Category(August 13, 2019)

Representative Director andPresident

710 units

Executive Director of the Investment Corporation
Representative Director and President of AssetManagement Company

1,000 units(Note 1)

Holding of Investment Units by Officers and Employees of theAsset Management Company

210 units

Number of
persons

Standing directors

2

Employees

9(Of which, employees temporarily transferred from CRE)

Total

1(Note 4)11Note 1: The investment units were sold for the same amount as the issue price in the Issue.
Note 2: The number of units decreased by 2,810 units because all greenshoe options granted by CRE in connection with secondary offering through over-allotment were exercisedby SMBC Nikko Securities Inc.
Note 3: As of May 31, 2019
Note 4: The employee is in charge of IR in the Planning Department and is not involved in the examination of property acquisitions, etc.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

14

3. Growth Strategies

The Investment Corporation’s Approach to Property Acquisitions/CRE’s Approach toProperty Sales and Development
The Investment Corporation’s Approach to Property Acquisitions• Acquisition of property without dilution of distribution per unit/NAV per unit is a prerequisite for the improvement of unitholder value.
Acquisition cap rate standard is higher than the implied cap rate, suggesting that the above is possible.

• Achieve flexible external growth, taking investment unit price into consideration, including utilizing the bridge function.

CRE acquired three properties from leasing companies at IPO. CRE also acquired one property from leasing company at capital increase by public offering and the timing of theSponsor’s property sales and the REIT’s acquisitions can be adjusted.

• Acquisition of medium-sized properties and acquisition of quasi co-ownership interests using funds on hand is also possible.

Properties with total floor area of 5,000 m2 or larger are the investment targets and the acquisition of properties ranging from several hundred million yen to several billion yen ispossible using funds on hand equivalent to depreciation expense.

• Achieve medium-term asset size target of 100 billion yen alongside improvement in unitholder value rather than focusing on early
achievement.

Take investment unit price into consideration when achieving target asset size two or three years after listing stated in materials for Financial Results Briefing for the 4th Period(June 2018), rather than focusing on early achievement as stated above.

CRE’s Approach to Property Sales and Development

Stable operation of CRE-REIT over medium and long term is
CRE’s top priority
CRE’s Positioning of Asset Management Business

The Asset Management Company is involved from the time ofsite acquisition to implement development with discipline
Leasing
Development• Grow asset management business into second pillar of stockbusiness.
Asset Management• Continuously earn asset management fees and property
management fees by selling properties developed by CRE to CREREIT.

Construction
Management
Leasing

Source: Prepared by the Asset Management Company based on the Long-term Management Policy(September 12, 2016) of CRE, Inc.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Rent assessment (scoring of location,road access, etc.)
Formulation of plan incorporating
development risks
Sharing of level of cap rates onacquisitions in REIT market
Appropriate cost control
Attraction of tenants

Generation of higher profits than planned

15

3. Growth Strategies(1) Completion month and year (planned)(2) Total area (planned)(3) Location
Newly acquired assets
Properties with first refusal right

A Pipeline Exceed the Existing Portfolio has Already Been Secured

Continue to promote property acquisitions at a reasonable price, aiming for continuous growth in distributions, based oncooperation with the CRE Group companies
Pipeline(Note 1)

Existing Portfolio

9 properties Total floor area 309,976.36
LogiSquare Chitose(1) November 2017(2) 19,760.00 m2(3) Chitose-shi,Hokkaido

LogiSquare Kawagoe II(1) June 2019(2) 14, 786.36 m2(3) Kawagoe-shi,Saitama

9 properties

Total floor area 239,014.47 m2
Total acquisition price 54.1 billion yen

m2
LogiSquare Ageo
(1) April 2019(2) 19,142.84 m2(3) Ageo-shi, Saitama

LogiSquare Hanyu

LogiSquare Kuki II

LogiSquare Urawa Misono

LogiSquare Niiza

LogiSquare Moriya

LogiSquare Tosu

LogiSquare Kawagoe

LogiSquare Kobe nishi(1) April 2020(2) 16,000 m2(3) Kobe-shi, Hyogo

Sayama Hidaka IC
Development Plan(provisional)(1) June 2020(2) 84,132 m2(3) Hanno-shi,Saitama

LogiSquare Miyoshi(1) June 2020
(2) 40,752 m2(3) Miyoshi-machi,
SaitamaLogiSquare Osaka Katano(1) January 2021
(2) 80,226 m2(3) Katano-shi,Osaka

LogiSquare Miyoshi II(1) January 2021
(2) 18,096 m2(3) Miyoshi-machi,
Saitama

Suminoe Logistics Center(1) January 1992
(2) 17,081.16 m2(3) Osaka-shi,Osaka

LogiSquare Kuki

new!

As a general rule, CRE-REIT isgiven the opportunity to acquire
all logistics facilities developed
and owned by CRE(Note 2)
LogiSquare Kasukabe

Note 1: As of August 13, 2019, CRE-REIT has not engaged in specific negotiations with the CRE Group companies on this pipeline, nor does it have any plan to acquire them at the present time or guarantee futureacquisition. This slide shows the pipeline as of August 13, 2019 but first refusal rights will be granted at any time on other properties besides these properties and CRE Group companies will proceed at any
time with the development of other properties besides these properties.
Note 2: Unless the grounds for exclusion from application stipulated in the Sponsor Support Agreement apply.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

16

3. Growth Strategies

Efficient Cash Management
Efficient use of funds on hand from depreciation for maximization of distributions and expansion of financial reserve

300,000

Repayment ofloans payable

200,000

Repayment
before maturity,
200,000
Depreciation,
287,097

Appropriation topropertyacquisitions
201,110Depreciation,
287,097

Funds on hand
221,480

Acquisition of properties
or quasi co-ownershipinterests amounting toseveral hundred millions
or billions of yen

Depreciation,
316,107

Maximizationof distributions

100,000

Surplus cash
distribution,
85,987
0(Thousand yen)

Reduction of
LTV

Surplus cash
distribution,
94,626

Surplus cash
distribution,
85,987

Capitalexpenditures, 682

5th period(December 2018)

6th period(June 2019)

Target ongoingsurplus
distributions
equivalent to
30% of thedepreciation
expenseOngoing surplus
distributions every period,in principle, subject toexamination of otheroptions

After acquisition of
newly acquired assets

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

17

3. Growth Strategies

Promote Stable Financial Operations through Borrowing from New Lenders, Long-term
Debt and Distribution of Repayment Dates Over the Period
Borrowing from Sumitomo Mitsui Trust Bank for theFirst Time

Promotion of Long-term Debt
After theBorrowing(Note 3)

Difference

26,719 million yen(Note 1) 47.7%+2,899 million yen
-0.2%

88.7%

100.0%+11.3%

100.0%

100.0%―%

0.533%

0.510%-0.023%

2.1 years

3.1 years+1.0 years

6th period(2019/6)

23,820 million yen
47.9%Interest-bearing debt
LTV
Ratio of fixed interest
debt
Ratio of long-termdebt(Note 2)
Average borrowinginterest rate
Average life of interestbearing debt

(as of July 31, 2019)

Bank Formation after the Borrowing
Sumitomo Mitsui Trust
New!
Bank, Limited
2.0%

The Nishi-Nippon
City Bank, Ltd.
10.3%
Development Bank ofJapan Inc.
13.1%

Resona Bank, Limited.
14.0%

Note 1: Forecast for end of Period ending June 2020
Note 2: Current portion of long-term debt is included in long-term debt.
Note 3: The Borrowing refers to borrowing executed on July 16, 2019 to finance the acquisition of the newly acquired
assets and expenses incidental thereto, the repayment of a loan that fell due on July 31, 2019 and borrowing
executed on July 31, 2019 for such repayment.

Promotion of Distribution of Repayment Dates Over the Period

Refinancing of loans on July 31, 2019
8,000

Existing loans

6,680
3,700

3,574 3,680

2,400

3,680

2,900

3,680

3,105

2,000
0

2019/122020/62020/122021/62021/122022/62022/122023/6

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

MUFG Bank, Ltd.
15.7%

•

CRE-REIT’s LTV is set at around 45% and the upper limit of
LTV is 50% in principle.

•

The above level is slightly higher than that of other logistics
REITs but since cash flow is stable due to long-term
contracts, CRE-REIT has the option to make effective use ofloans.

•

CRE-REIT conducts financial operations with emphasis on
long-term stability by taking out long-term loans with fixedinterest rates.

•

After examining using funds on hand for property
acquisitions, CRE-REIT examines using them to repay
loans in order to increase financial strength and reduceborrowing costs.

The Borrowing

6,000
4,000

2023/122024/6

Mizuho Bank,
Ltd.
20.2%

Approach to Liabilities

Refinanced loans in July 2019 in addition to borrowing associated with asset acquisitions.

(Million yen)

Sumitomo Mitsui
Banking Corporation
24.8%

2024/1218

3. Growth Strategies

Initiatives for ESG
All properties have acquired BELS certification and 80% of properties have acquired CASBEE certification (based on acquisition price).

Newly acquired
assetsProperty name

BELS

CASBEE

Installation of Solar Panels

Sandwich Panels

LED Lights

CRE-REIT leases roof top
space and the lessees
contribute to the creation ofrenewable energy throughphotovoltaic power generation.

All the properties use sandwich
panels with outstanding design
and a high heat insulating effectfor their exterior walls to reduce
the thermal load when
refrigerating and heating
equipment is installed.

The use of LED lights contributes
not only to energy savings and the
reduction of CO2, but also the
reduction of electric bills, which
are to be paid by tenants, alongwith the replacement cost oflighting and an improvement in theworking environment.

All properties have acquired BELS
certification.

80% of properties have acquired
CASBEE certification (based on
acquisition price).

M-1 LogiSquare Kuki★★★★★

Saitama Prefecture Rank A







M-2 LogiSquare Hanyu★★★★★

Saitama Prefecture Rank B+







M-3 LogiSquare Kuki II★★★★★

Saitama Prefecture Rank A







M-4 LogiSquare Urawa Misono★★★★★

Saitama Prefecture Rank A

―





M-5 LogiSquare Niiza★★★★★

Saitama Prefecture Rank A







M-6 LogiSquare Moriya

★★★★★

―







M-7 LogiSquare Kawagoe

★★★★

―

―





M-8 LogiSquare Kasukabe★★★★★

Saitama Prefecture Rank A







O-1 LogiSquare Tosu

★★★★★

―

―





Wall greening
Wall greening has the effect of reducing the surface temperatureof the building and contributes to the reduction of CO2.

Installation of roof sprinkler systems
Roof sprinkler systems using well water are installed, which
contributes to the reduction of the temperature inside thewarehouse.

Reduction of paper used to print prospectus forfirst capital increase by public offering
Helped protect the environment by omitting the pages printed incolor below the front cover of the prospectus, which varies
depending on the transactions but equates on average to 23.6
pages(Note).

Note: The average number of pages printed in color below the front page of the prospectus of other REITs is calculated based on the number of pages printed in color for capital increases by public offering of J-REITs completed in the
period from January 1, 2018 to the end of December 2018 in relation to which a securities registration statement based on the reference format stipulated in Article 11-3 of Cabinet Office Ordinance on Disclosure of Information,etc. on Regulated Securities (Ordinance of the Ministry of Finance No. 22 of 1993, including subsequent amendments) was submitted. CRE-REIT prepared the prospectus that omitted the pages printed in color below its front
cover to help protect the environment. After the period above, one other prospectus omitting pages printed in color has been produced by another J-REIT (as of the end of May 2019).

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

19

4. Characteristics of CRE Logistics REIT, Inc.

LogiSquare Moriya
The property is located in the Moriya-shi Matsunami land rezoning project area, within walking distance of Moriya Station on the Tsukuba Express
Line and has great advantages in terms of securing employees.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

20

4. Characteristics of CRE Logistics REIT, Inc.

Character-istics

Characteristics/Advantages of CRE-REIT
1. Portfolio focused on LogiSquare

2. Long-term, stable asset management

3. Distinct external growth strategy

High-quality portfolio(1) Stable cash flow
(2) Long-term contracts withdiverse tenants

Advantages(3) Good location

Occupancy rate

Ratio of fixed-term leases

Ratio of fixed-rate rents

Average lease contract term

Average remaining lease term

Ratio of single-tenantfacilities

100.0%

9.0 years

Ratio of Tokyo Metropolitan Area

94.7%

100.0%

6.9 years

100.0%

64.5%

Average mileage
to interchange

Within 10 mins’ walk of
public transportation

3.6 km96.2%

Sponsor is real estate company specializing in logistics properties(1) Leasing capability

Companies that have concluded
lease contracts with CRE directly

Leasing by CRE on its own

154 properties

Holding of private viewings, including
for other listed REITs(2) Property management (PM)capability

1,575 properties 4,850,000 m2

Managed floor area

PM entrusted by other companies

PM entrusted by other listed REITs(3) Development capability

1,070 companies

Approx.７0%

910,000 m2• Tenant requirements obtained through day-to-day management and leasing activities are fully reflected in facility
development.
• Has been developing suitable properties for REIT since 2006 when real estate securitization first appeared in Japan.

Capable of flexibly acquiring properties, taking consideration into investment unit price• Able to utilize bridge function. Already acquired three properties at IPO and one property at the first capital increase by public offering by utilizing thebridge function.
• Also able to acquire mid-sized properties and quasi-co-ownership interests using cash on hand.
• Already secured pipeline of nine properties with total floor area of 300,000 m2 which exceeds portfolio after acquisition of newly acquired properties.
Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

21

4. Characteristics of CRE Logistics REIT, Inc.

High-quality Portfolio (1) Stable cash flow
Plan to maintain average occupancy rate of 100.0% through to the end of April 2021
Contract expiry dates
that will come at the endof April 2021 at theearliest

Changes in Average Occupancy Rate
Forecast

Actual100%

Form of contract that enables stable operation••

Tenants who cancel early before the end of the contract term are required to pay the equivalent ofrent for the whole remaining lease term as a penalty for breach of contract.
Intention for renewal or termination is ascertained a year before contract expiry.

Ratio of fixed-term lease contracts

Ratio of fixedterm lease
contracts
100.0%

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Dec 2021

Oct 2021

Nov 2021

Sep 2021

Jul 2021

Aug 2021

Jun 2021

Apr 2021

May 2021

Mar 2021

Jan 2021

Feb 2021

Repair expenses remain low due to inclusion ofrelatively new properties•

Repair expenses during the first six periods (to 6th Period ended June2019) for portfolio assets have remained at a low level of less than 1
million yen each period due to the inclusion of relatively new properties.

Ratio of fixed-rate rents

Ratio of fixedrate rents
100.0%

Dec 2020

Oct 2020

Nov 2020

End of 10th Period
June 2021

Sep 2020

Jul 2020

Aug 2020

Jun 2020

Apr 2020

May 2020

Mar 2020

Jan 2020

Feb 2020

Dec 2019

Oct 2019

Nov 2019

End of 8th Period
June 2020

Sep 2019

Jul 2019

Aug 2019

Jun 2019

Apr 2019

May 2019

Mar 2019

Jan 2019

Feb 2019

Dec 2018

Oct 2018

Nov 2018

Sep 2018

Jul 2018

End of 6th Period
June 2019

Aug 2018

Jun 2018

Apr 2018

May 2018

Mar 2018

0%

Listing in February
2018

Feb 2018

50%

Average age

3 years or more but
less than 5 years
30.7%

Average age

2.3 years

Less than
3 years
69.3%

22

4. Characteristics of CRE Logistics REIT, Inc.

High-quality Portfolio (2) Long-term contracts with diverse tenants
Diverse tenants from mid-size enterprises to large enterprises conclude long-term contracts and use
properties as dedicated centers.
Average lease contract term

Average remaining lease termLess than 5 years
12.9%

Average

10 years or more andless than 15 years
70.4%

9.0 years

10 years or more andless than 15 years
3.8%

Average

5 years or more andless than 10 year
16.7%

Multi-tenant
35.5%

6.9 years

Exclusive
usage

64.5%

5 years or more andless than 10 year
71.9%

Property nameTenant name

Sector

Exclusive
usage
64.5%

Main business

Listed market

LogiSquare Kuki

Sangetsu Corporation

Wholesale

Development and sale of total interior goods

TSE 1st Section

LogiSquare Hanyu

Major large logistics company

Land transportation

General logistics business and related businesses

Not disclosed

LogiSquare Kuki II

FUSOGOSEI Co., Ltd.

Manufacturing

Manufacture and sale of building interior materials and interior
products―

Nippon Express Co., Ltd.

Land transportation

General logistics business and related businesses

TSE 1st Section

Tobu Delivery Co., Ltd.

Land transportation

General motor truck transportation and freight forwarding
businesses―

INNOMEDICS Medical Instruments, Inc.

Wholesale

Purchase, sale, design and lease of medical equipment, andother products and repair and maintenance thereof―

Building Book Center Co., Ltd.

(Wholly-owned subsidiary of KADOKAWA Corpoation)

Warehousing andTransportation

Receipt, inventory management and shipment business of
publications―

Lixus Co., Ltd.

Land transportation

Motor truck transportation and freight forwarding businesses―

CyberStep, Inc.

Information andcommunications

Development of network entertainment software

TSE 2nd Section

LogiSquare Kawagoe

Tokyo Logistics Factory Co., Ltd.

Land transportation

Motor truck transportation handling business―

LogiSquare Kasukabe

Koizumi Logistics Service Corporation

Land transportation

Consigned freight forwarding business―

LogiSquare Tosu

Nippon Express Co., Ltd.

Land transportation

General logistics business and related businesses

TSE 1st Section

LogiSquare Urawa Misono(Wholly-owned subsidiary of Tobu Railway Co., Ltd.)(Wholly-owned subsidiary of ORIX Corporation)

LogiSquare Niiza

LogiSquare Moriya

Newly acquired
assetsLess than
5 years
24.2%

Tenant composition

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

23

4. Characteristics of CRE Logistics REIT, Inc.

High-quality Portfolio (3) Good location
Properties are mostly in locations suited to logistics facilities where strong demand is expected, withtenants’ need to secure labor also taken into consideration.
Ratio in Tokyo Metropolitan Area
Outside Tokyo
Metropolitan Area
5.3%

Over 5 km
11.8%

Ratio in Tokyo
Metropolitan
Area
94.7%

Time required from public transportation
facilities

Mileage to an interchange

Over 3 km
and less than 5 km
16.5%

Less than 1 km
24.1%

Walk more than 10 mins
Within 20 mins
3.8%

Walk within
10 mins
96.2%

Average
3.6 kmOver 1 km
and less than 3 km
47.6%

Tokyo
Metropolitan Area
94.7%

Walk
within 10 mins
96.2%

Example: LogiSquare Urawa Misono
The property is located approximately 700 m from Urawa IC (Tohoku Expressway) and approximately 450 m and a six-minute walk from Urawa Misono Station on the Saitama
Rapid Railway Line.
A large-scale community development project is underway in the surrounding area, which will allow a close proximity between work and the home and be a potential
advantage in securing employee.

Urawa IC

700 m

450 m
6 mins walk

Urawa Misono Station

LogiSquare Urawa Misono
Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

24

4. Characteristics of CRE Logistics REIT, Inc.

Features of LogiSquare
LogiSquare is the brand name of high-quality logistics facilities developed by CRE to meet tenant needs.
Semi-flexible pavement is used toinhibit rutting.

Sandwich panels are used on exterior walls to reduceheating and cooling loads and to
give the exterior an attractive appearance.

Facility has roof spraying system that uses well
water to reduce the internal temperature.
The facility has a total of 44 truck berths on
the first and third floors to allow the docking
of up to 44 large trucks simultaneously.

Berth depth 13.5 m

Truck berths are large enough to fit awhole 40ft container truck.

The facility has truck berths on the first and third floors.
To prevent congestion and accidents, the facility is designed to separate traffic flows and equipped withdedicated gates for the first/second floor tenants and the third/fourth floor tenants, respectively.
Note: The logistics facility shown above is an example of the features of LogiSquare. Not all facilities held by CRE-REIT have the features shown above.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Wooden deck

Bicycle parking
0

LogiSquare Urawa Misono

Rest area with wooden deck25

4. Characteristics of CRE Logistics REIT, Inc.

Features of LogiSquare
LogiSquare not only improves the efficiency of warehouse operations, creates a pleasant working environment for tenants
but helps reduce costs in the future for CRE-REIT.
Fireproof partition walls are
made of fire-resistant heatinsulating panels that haveexcellent insulation
properties, seismic resistanceand an aesthetically pleasing
appearance.

LED lighting throughout helps
save energy.

Openings in fire partitions are
as wide as possible.
6.0 m

Pillar span 10.3 m  10.35 m

10.3 m10.35 mFloor loading 1.5 t/m2

LogiSquare Urawa Misono

The facility has an effective
ceiling height of 6.0 m, or
5.5 m if cooling panels are
installed.
Internal signage is designed
to visually communicate
warehouse functions.

Windows

Interior walls between offices and the warehouse
space have windows in them to facilitatecommunication.

The women’s restroom has lockers anddesigned to make female employees feel comfortable.

Note: The logistics facility shown above is an example of the features of LogiSquare. Not all facilities held by CRE-REIT have the features shown above.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

To help reduce costs in the future, the facility already has windows
and ventilation built in to ensure compliance with laws and regulations
in case it is necessary to expand office areas in the future.

26

4. Characteristics of CRE Logistics REIT, Inc.

Sponsor is Real Estate Company Specializing in Logistics Properties
CRE, which sponsors CRE-REIT, has a track record of more than 50 years in the field of logistics real estate in Japan.
Launch of asset management business/Listing of CRE-REIT in February 2018
Participation in development business / Management of large-sized facilities
Small- and medium-sized warehouse asset utilization proposals / Building of relationships with tenants

1964

2005

1980
Established in 1980

Commercial RE

Established in 1964

Tenko Souken

2014

2010:
Businesstransfer
2011:
Absorptiontype merger

2014:
Acquisition

Established in 20062018:
Acquisition

Involvement of All Employees in Logistics Properties

Proven Track Record in Providing Services to Other Companies

Number of employees on a consolidated basis (as of July 31, 2018) (Note 1)

CRE-REIT can draw on knowhow gained through management of 4,850,000 m2

142

11
19
36

Property Management: 25
Leasing: 21
Construction/Design: 26

CRE-REIT
4%
Masterlease
30%

Property management
Logistics investment
Asset management
Administration

Other listed
REITs
19%

Management ofproperties held by othercompanies: 3,190,000 m2

Area managed

1,575 properties
4,850,000 m

2

Private fund,
etc.
47%

Total 208
Note 1: Prepared by the Asset Management Company based on Annual Report for Fiscal 2018 of CRE, Inc.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Note 2: As of April 30, 2019. Includes results under property management and master lease agreements forproperties other than logistics-related facilities.

27

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Leasing Capability―Accumulation of Information Through Many Leasing Opportunitiesc
Instantly understands rent trends, including actual rents paid
and rent increases and decreases, through the conclusion ofcontracts directly with diverse tenants not just logistics service
providers.
• CRE can gain an understanding of rent levels by entering contracts
with tenants directly as master tenant under a master leasearrangement• CRE builds relationships with tenants from a variety of industries not
only logistics operators.

Total Number of Master Lease Tenants(Note 1)
Other
Transportation
services

Customer services
Corporation services
Total Number ofMaster Lease Tenants

Retail

1,070 companies

Real estate andconstruction

Manufacturing

Around 70% of tenants are
not logistics operators

Newly acquired
assetsWhole sale

Mitigation of Vacancy Risk through CRE’s Leasing Capability
Time of Leasing Completion of Properties Held by CRE-REIT
Tenants

BTS

Time of leasing
completion

M-1
LogiSquare Kuki

1

BTS

Before thecompletion of
construction

M-2
LogiSquare Hanyu

1BTS

At the time of landacquisition

M-3
LogiSquare Kuki II

1

BTS

At the time of landacquisition

M-4
LogiSquare Urawa
Misono3―

Six months after
the completion of
construction

M-5
LogiSquare Niiza

1―

Before thecompletion of
construction

M-6
LogiSquare Moriya

2―

Seven months after
the completion of
construction

M-7
LogiSquare Kawagoe

1―

Four months after
the completion of
construction

M-8
LogiSquare Kasukabe

1

BTS

Before thecompletion of
construction

O-1
LogiSquare Tosu

1

BTS

Before thecompletion of
constructionLandacquisition

Completion of
construction

Note 1: As of July 31, 2018. Includes tenants of properties other than logistics-related facilities.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

28

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Leasing Capability―Information Gathering as a Leading Real Estate Company
Publication of LogiSquare Market Report
Every quarter, CRE publishes a report summarizing market trends in major areas, with afocus on large rental logistics facilities (10,000 m2 or larger). Besides information onlarge logistics facilities, the report also includes information on small and medium-sized
rental logistics facilities (less than 3,300 m2/only those managed by CRE) based on
CRE’s database of master lease properties.

Publication of LogiSquare Map (map of large logistics facilities)
Map showing major large rental logistics facilities that have been built over the past 10
years or are planned for development. Published once a year.

Holding of CRE ForumThe purpose of the CRE Forum is to share logistics issues facing
companies. Since 2013, CRE has organized a total of 61 meetings,
with a total of 3,677 participants.(Note 1)

Participating Companies (excerpt)(Note 2)• Nittsu Research Institute and Consulting, Inc.
• Hitachi, Ltd.
• Sunstar Group• Tanita Corporation• JD.com Jingdong Japan Co., Ltd.
• Toyota Industries Corporation• Sapporo Group Management Ltd.
• CBcloud Co., Ltd.
• KBS Kubota Corporation• Office FA.com Co., Ltd.
• MUJIN Inc.

Note 1: As of May 31, 2019
Note 2: Prepared by the Asset Management Company based on the LogiSquare logistics facility information site.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

29

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Management Capability―Diverse Customers Including Other Listed REITs
Management of Properties for Other Listed REITs, Private Funds, etc.
Major Customers• LaSalle LOGIPORT REIT
• Star Asia Investment Corporation• Kenedix Retail REIT Corporation• United Urban Investment Corporation• Japan Logistics Fund, Inc.

Ranks Third Among Logistics Facilities-centered PM
companies• FORTRESS INVESTMENT GROUP
JAPAN• Ichigo Estate• Yamato Home Convenience Co. Ltd.
• TAKARA-SANGYO Co., Ltd.

• Industrial & Infrastructure Fund Investment • Tokyu Land Capital Management Inc.
Corporation• UIG Asset Management Co., Ltd.
• Mitsubishi Estate Logistics REIT Investment • UNIVERSE DEVELOPMENT Co., Ltd.
Corporation• CRE REIT Advisers, Inc.
• Daiwa House REIT Investment Corporation • Strategic Partners Co., Ltd..
• CRE Logistics REIT, Inc.
(No particular order)• Takara Asset Management Co., Ltd.

6

5.5

5.2

5
4

5.0
3.4

3

• Diamond Realty Management Inc.
• ESR LTD.
• Kokyo Asset Management Co., Ltd.
• Sumisho Realty Management Co., Ltd.
• SUMITOMO CORPORATION• Challenger Limited• Morgan Stanley Capital K.K.
• Daiei Real Estate & Development Co., Ltd.
• LC Partners, Inc.
• Tozai Asset Management Co., Ltd.
• Mitsui & Co., Realty Management Ltd.

2

0.8

1
0
(million m2)

Daiwa
House
Property
Management

GLP

Prologis

SG Realty• IDERA Capital Management Ltd.
• PGIM Real Estate (Japan) Ltd.
• Mitsubishi Jisho Investment Advisors, Inc

Note 1: CRE Inc.’s Summary of Financial Statements for the 3rd Quarter of the Fiscal Year Ending July 31, 2019

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Note 2: “Logistics facilities-centered PM companies” refer to property management companies with 70% or more of their
entrusted areas those of logistics facilities. “Entrusted areas” include the management areas of real estate otherthan logistics facilities.
Note 3: Prepared by the Asset Management Company based on Monthly Property Management magazine (November
2018 edition).
Entrusted areas are as of August 31, 2018.

30

4. Characteristics of CRE Logistics REIT, Inc.

Development Capability―Development Incorporating Tenant Requirements While Ensuring Versatility
Realization of Long-term Contracts and Mitigation of Tenant Risk by Incorporating Tenant Requirements
While Ensuring Versatility= High-quality logistics facilities developed by CRE to meet tenant needs
Versatility=

Location+

Basic
Specification+

Expandability+

Comfort+Tenant’s unique requirements

Improvement of Convenience Through Full Reflection of Requirements Learned Through Day-to-Day Management andLeasing Activities in Development Plans

Improvement of convenience/
Reduction of future costs

Development / CM teamReflection of requirements and management
status in development plans

Leasing teamProperty management teamCommunication

Tenant companies and potential tenants

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

31

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Development Capability―Development Giving Tenant Convenience Highest Priority
Development based on optimal plan for characteristics of location, giving tenant convenience the highest priority
Low-type

Slope-type

Box-type

For tenants that attach importance to operational
efficiency

For tenants who attach importance to location andoperational efficiency

For tenants who attach importance to storage
function

Facility with one or two floors for more convenient loading
and unloading.
Ideal for both storage and distribution and suited to tenants
who attach importance to operational efficiency.

Facility situated in location with strong tenant demand andhaving three or four floors to utilize the floor-area ratio.
Facility also has a slope, enabling trucks to access thethird floors directly and allowing them to be used in same
way as the first and second floors.
Ideal for both storage and distribution and suited to tenants
who attach importance to both location and operational
efficiency.

Facility in strategic location with strong tenant demand andclose to city center and having three or four floors to utilize
the floor-area ratio.
Ideal for storage, which is standard function for a logistic
facility, and suited to tenants who attach importance tostorage of personal items.

Example: LogiSquare Hanyu

Example: LogiSquare Urawa Misono

Example: LogiSquare Niiza

2 floors
Truck berths on bothsides of first floor

The facility is designed to direct vehicles to move in one direction,with separate entrance and exit gates.

4 floors
Truck berths on one side offirst and third floors

The facility is designed to separate traffic flows and equipped withdedicated gates for the first/second floor tenants and thethird/fourth floor tenants, respectively.

Storage space on three floors
Truck berths on one side of first floor

The facility is designed to direct vehicles to move in one direction,with separate entrance and exit gates.

All facility types are designed to prevent congestion and accidents.
Traffic flow
Truck berths

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

32

4. Characteristics of CRE Logistics REIT, Inc.

CRE’s Development Capability

Cumulative total floor area

―Development Since the Start of Real Estate Securitization in Japan

Total floor area of properties developed or to be developed during the period

Properties developed by Commercial RE

Properties developed by CRE

Properties jointly developed by Commercial RE and Kenedix

Properties to be developed by CRE (planned)

Properties held by other REITs

Assets owned by CRE-REIT

Newly acquired assets

Properties with first refusal right

CRE has been developing logistics properties since real estate securitization started in Japan and has built up
knowhow on the development of properties suitable for REITs.
Track record of development of 30 properties and around 570,000 m2
LogiSquare Kobe Nishi

LogiSquare Chiba Kita II

LogiSquare Kuki II

LogiSquare Chitose

LogiSquare Misato

LogiSquare Urawa Misono

LogiSquare Tosu

LogiSquare Ageo

LogiSquare Niiza

LogiSquare Kawagoe

LogiSquare Kawagoe II

LogiSquare Moriya

LogiSquare Kasukabe

Sayama Hidaka IC Development Plan(provisional)

LogiSquare Miyoshi II

LogiSquare Miyoshi

LogiSquare Osaka Katano(thousand m2)

900
LogiSquare Mizuho A

LogiSquare Yachiyo

800

717

700

LogiSquare Mizuho B

LogiSquare Kazo II

LogiSquare Tosu II

LogiSquare Kuki

600
LogiSquare Matsuzaki I

LogiSquare Ichikawa-tajiri

LogiSquare Sagamihara

LogiSquare Soka

LogiSquare Yashio

LogiSquare Hidaka

LogiSquare Hanyu

477

500
400

LogiSquare Tosu I

LogiSquare Matsuzaki II

300
Yokohama Fukuura Logistics Center

200

118

100

LogiSquare Kazo I

80

FP2006/3

Timing of listingof logistics
REITs

Note:

815

167
49

220
53

248
29

267
19

542
65

141

119

358

LogiSquare Tokorozawa

576
34

98

283
16

75

FP2015/7

FP2016/7

110
FP2007/3

May 2005

FP2008/3

FP2009/3

FP2013/7
Dec. 2012

Listing of first REIT specializing
in logistics facilities

FP2014/7
Feb. 2013

FP2017/7

Feb. 2016 Aug. 2016

FP2018/7

FP2019/7

Sep. 2017

Feb. 2018

FP2020/7(Plan)

FP2021/7(Plan)

Sep. 2018

CRE-REIT listed

While the above also includes other assets besides portfolio assets, CRE-REIT has not engaged in specific negotiations with the CRE Group companies on any of the above assets that are not portfolio assets, nor does it have any plan to acquire them at the present
time or guarantee future acquisition. The above also includes properties that have already been sold to third parties. Furthermore, with respect to properties to be developed by CRE (planned), as of August 13, 2019, development is not complete and theconceptional drawing, total floor area and development completion timing are based on plans as of August 13, 2019 and may change in the future. The building completion dates of the above properties are stated as the development completion dates.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

33

5. Market Environment

LogiSquare Kuki
The property is located approximately 2.6 km from the Kuki Interchange on the Tohoku Expressway and approximately 2.8 km from the Shiraoka Shobu Interchange on the Ken-o Expressway.
Located in the exclusive industrial zone in Kuki Shobu Industrial Park, the property is surrounded by many warehouses and factories, enabling tenants to operate 24 hours. The north side of the property(C)which
2019covers
CRE Logistics
All Rights
adjoins KukiCopyrightShobu Park,an area of REIT,
aroundInc.
40 hectares
andReserved.
can be accessed through a pedestrian gate, providing a space for employees to relax.

34

5. Market Environment

Summary of Market Trends
Recent Market Trends
Vacancy rate: 2.44%, QoQ: Improved slightly (-0.94%)

Tokyo Metropolitan Area
Pages 36 and 37

Demand remained strong, exceeding 200,000 tsubo for the third consecutive quarter.
Vacancy rate: 6.09%, QoQ: Improved (-1.09%)

Osaka Area
Page 36

Vacancy rate hit record low, reflecting absorption of large supply in the past.

Rising Demand for Rental Logistics Facilities(1) Reconstruction Demand for
Logistics Facilities

Page 38

Around 30% of logistics facilities in the Tokyo Metropolitan Area are 40 to 50 years old.

3PL Market Size

EC Market Size/EC Ratio

2009(2) Expansion of 3PL Market and EC
Market2017

2.8 trillion yen
1.2 trillion yen
2.2-fold increasein 8 years

Page 39

2010

2018

7.8 trillion yen

18.0 trillion yen

2.8%

6.2%

2.3-fold increasein 8 years(3) Rising Importance of Logistics
Network Strategy

Page 40

The most important cost reduction measure to be implemented is a
restructuring of logistics facilities.

Note: Please refer to pp 36-40 later in this report for details of calculation methods, etc.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

35

5. Market Environment

Market Trends(1) Tokyo Metropolitan Area and Osaka Area (from LogiSquare Market Report)
Tokyo Metropolitan Area
Strong demand exceeding 200,000 tsubo continued for the three consecutive quarter.

Vacancy rate: Less than 5%
Vacancy rate: 5% or more and less than 10%
Vacancy rate: 10% or more

Vacancy rate: 2.44%

QoQ: Improved slightly

Total demand was slightly below 200,000 tsubo, remaining at a high level for the three consecutive quarter. The vacancy rate improved
to 2.44%, remaining below 3%.
A large property with approx. 90,000 tsubo in the Kanagawa Bay area was fully occupied, and the Chiba Tokatsu area continues toabsorb demand for large properties. An upward trend of contract rents has been observed in areas where the vacancy rate is below 5%.
Supply at the same level as the first half of 2019CY is scheduled for the second half. The current reservation rate is approx. 70%; given
the strong demand, the vacancy rate is expected to remain low.
1,800

9%

1,600

8%

1,400

7%

1,200

6%

1,000

5%

800

4%

600

3%

400

2%

200

1%

0
(Ten thousand m2)

201606201609201612

201703

201706

Total area

201709201712

201803

Vacant area

201806201809201812

201903

2019060%

Vacancy rate

Osaka Area
Record low vacancy rate achieved after the digestion of a large number of properties
supplied in the past

Vacancy rate: 6.09%
QoQ: Improved

Since the surveys started in Q2 of 2016CY, new properties of approx. 800,000 tsubo have been supplied, and the market size has
doubled.
A large number of properties were digested thanks to high demand since 2018CY1Q, and the vacancy rate hit a
new record of 6.09%, the lowest since the surveys started in 2016CY2Q. While the vacancy rate is rapidly rising in the Inland Kobe areain this moment, some of the tenants have been reserved. All new properties supplied in the second half of 2019CY have reportedly been
reserved, and the vacancy rate is expected to decrease further.
However, large properties are scheduled to be supplied in 2020CY, and the situation remains unpredictable.
600

18%
16%

500

14%

400

12%
10%

300

8%

200

6%
4%

100
0

(Ten thousand m2)

2%
201606201609201612

201703

201706

Total area

201709201712

Vacant area

201803

201806201809201812

201903

2019060%

Vacancy rate

Source: “LogiSquare Market Report on Warehouses and Logistics Properties June 2019” of CRE, Inc.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

36

5. Market Environment

Market Trends(2) Individual Areas of Tokyo Metropolitan Area (from LogiSquare Market Report)
Urawa MisonoSouthern Saitama Area

Saitama Kan-Etsu and Tohoku Expressway Area

Vacancy rate: 0.00% QoQ: Stagnant

Vacancy rate: 7.61% QoQ: Improved
The vacancy rate improved 1.61 points from the previous Q, to 7.61%. The
vacancy rate improved thanks to the steady digestion of existing properties and thefull occupancy of one of three properties completed in the current Q. New supply ofslightly less than 60,000 tsubo is scheduled in the latter half of 2019CY, approx.
70% of which is reserved; the vacant area, however, is still approx. 70,000 tsubo,
nearly twice that in 2017CY, suggesting that the uncertain conditions willcontinue.
3,000
15%

1,500

15%

1,000

10%

2,000

10%

500

5%

1,000

5%

0
(thousand m2)

201606 201609 201612 201703 201706 201709 201712 201803 201806 201809 201812 201903 201906

Total area

Vacant area

0%

千

千

The vacancy rate was 0%, remaining at an extremely low level as in the previous Q.
New supplies in the current Q were completed with full occupancy, and thevacancy rate remained 0% for five consecutive quarters, confirming strong demandin the area. While the reservation rate of new supply with approx. 15,000 tsubo in
the remainder of 2019CY is only approx. 50%, the impact on the vacancy rate is
likely limited, given large stocks and high demand.

0(thousand m2)

Vacancy rate

201606201609201612

201703

201706201709Total area

201712

201803

Vacant area

Breakdown: Saitama Kan-Etsu and Tohoku Expressway Area
Niiza

Kawagoe

Vacancy rate: 4.02%

2,000

Saitama Tohoku Expressway Area
20%

千

千

Saitama Kan-Etsu Expressway Area

201806201809201812

201903

201906

Vacancy rate

Kuki

Hanyu

Kuki II

Kasukabe

Vacancy rate: 11.47%

2,000

0%

20%

1,500

15%

1,500

15%

1,000

10%

1,000

10%

500

5%

500

5%

0
(thousand m2)

201606 201609 201612 201703 201706 201709 201712 201803 201806 201809 201812 201903 201906

Total area

Vacant area

Vacancy rate

0%0

(thousand m2)

201606 201609 201612 201703 201706 201709 201712 201803 201806 201809 201812 201903 201906

Total area

Vacant area0%

Vacancy rate

Source: “LogiSquare Market Report on Warehouses and Logistics Properties June 2019” of CRE, Inc.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

37

5. Market Environment

Rising Demand for Rental Logistics Facilities(1) Reconstruction Demand for Logistics Facilities• About 30% of logistics facilities in the Tokyo Metropolitan Area were constructed during the period of high economic growth or the economic
bubble, and they are 40 to 50 years old.
• Given that the useful life of logistics facilities under the tax code is 38 years(Note 1), demand for reconstruction in pursuit of functionality appears to
be increasing.
Percentage of logistics facilities in the Tokyo Metropolitan Area by year of construction
100%

To 1969

Distribution of locations by the number of facilities

10%

80%

18%

60%

23%

1970 - 1979
1980 - 1989
1990 - 1999
From 2000

40%

24%

About 30% of logistics
facilities are more than
40 to 50 years old.

These facilities are
20 to 40 years old andwill reach demand forreconstruction in the
future.

10-29 facilities

20%

25%
0%

Construction from 2000, when
foreign-affiliated developers
began development in Japanand advanced logistics
facilities began being
constructed.

30-59 facilities
60 facilities or more
Expressway, etc.

Note 1: Steel-reinforced concrete or reinforced concrete structures
Note 2: Tokyo Metropolitan Area includes Tokyo, Kanagawa, Saitama, Chiba, central and southern Ibaraki, southern Tochigi and southern Gunma
Note 3: Prepared by the Asset Management Company based on data from Tokyo Metropolitan Transportation Planning Association

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

38

5. Market Environment

Rising Demand for Rental Logistics Facilities(2) Expansion of 3PL Market and EC Market• The market for third-party logistics (3PL) is growing as increasingly
companies are tending to comprehensively outsource their logistic
operation.

• The EC market is expanding year by year. However, in Japan, theEC rate is low compared with other advanced economies and there
is still much room for expansion.

3PL (Third-Party Logistics) Market Size

Growth in the BtoC e-commerce market size in Japan
U.S.

3.0
2.5

1.78

2.0

1.27

1.5

1.88

2.04

2.25

2.59

2.48

2.85

25.0
20.0
15.0

1.46

1.0
0.5

4.3%

4.7%

5.2%
9.5

8.5

10.0

7.8

5.0

3.4%
2.8% 3.2%

5.8%

6.4%
12.8

11.2
3.9%

4.4%

8.1%

7.3%

8.9%
16.5

15.1

13.8

5.4% 5.8%

4.8%

9.6%

10%
9%

18.0
6.2%

Japan

8%
7%
6%
5%
4%
3%
2%
1%

0.0
(trillion yen)

2009

2010

2011

2012

2013

2014

2015

2016

2017

0.0
(year)

Source: “The monthly Logistics Business” September 2018 issue(trillion yen)

2010

2011

2012

2013

E-commerce market size in Japan (left axis)
E-commerce rate in the U.S. (right axis)

2014

2015

2016

2017

2018

E-commerce rate in Japan (right axis)

0%(year)

Note 1: Prepared by the Asset Management Company based on data of the Ministry of Economy, Trade and Industry for the
BtoC e-commerce market size and the e-commerce rate in Japan and data of the United States Census Bureau for the
e-commerce rate in the U.S.
Note 2: The ratio of the e-commerce market size to the amount of all commercial transactions (the commercial transaction
market size). The e-commerce rate in BtoC e-commerce refers to the value in the field of product sales.

• In 2014, warehouses overtook retail in terms of the floor space of new construction starts.
Trends in Floor Space of New Construction Starts
20,000RetailWarehouses

15,00010,0005,000

0(thousand m2)

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

(Fiscal Year)

Note: Prepared by the Asset Management Company based on the Japan Construction Starts Report by the Ministry of Land, Infrastructure, Transport and Tourism.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

39

5. Market Environment

Rising Demand for Rental Logistics Facilities(3) Rising Importance of Logistics Network Strategy• A majority of companies mention a review of logistics bases as animportant cost-cutting measure that needs to be implemented.

Important Cost-cutting Measures to be Implemented

Warehouse Rents as Percentage of COGs at Major Logistics Companies（Note 2）（Note 3）

29

Review of logistics bases
Reduction of inventories

15

Tie-up in transportation and delivery

14

Improvement of loading ratio

14

Company A

12

Review of delivery frequency
Review of transportation anddelivery channels

10Modal shift

10

Review of outsourcing fees

7

Introduction of logistics information
system7(Number of answers)• Warehouse rents account for less than 10% of the cost of goods sold of major
logistics companies, which is a small percentage compared to other costs suchas labor costs.
• There is perhaps much room to reduce and curb costs from the viewpoint of
employment and transportation, even if warehouse rents do rise, by reviewing
logistics bases.

0

20

40

Note 1: Prepared by the Asset Management Company based on the “Fiscal 2017 Research Report on Logistics
Costs” of JILS

Company B

Warehouse rents as % of COGs

6.8%

10.0%

Labor cost as % of COGs

22.4%

10.7%

Note 2: Listed companies that are not affiliated with electric railway companies are excluded from the 20 largest listed companies interms of revenue that belong to the “land transportation industry” (middle classification) among the sectors in the Appendix of
the Sector Classification Handling Guidelines published by the Securities Identification Code Committee and then information isprovided about two listed companies (i) for which details of non-consolidated COGs figures are stated in their annual reportsand (ii) which the Asset Management Company, upon consideration of their non-consolidated and consolidated COGs figures,
judged to be core companies of the Groups to which they belong. The table shows the trend in relation to two specific leading
logistics companies and the same trend does not necessarily apply to other major logistics companies.
Note 3: Created by the Asset Management Company based on the annual reports of each of the above companies for the fiscal year
ended March 31, 2019.

Network strategy will become increasingly importantdue to driver shortages, difficulties securing warehouse workers and rising fuel prices.
Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

40

6. Appendix

LogiSquare Kuki II
CRE-REIT leases the roofs of six out of the nine properties it owns to a solar power company, thereby helping generate renewable energy.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

41

6. Appendix

Overview of Appraisal

60,000

5th period(2018/12)

6th period(2019/6)

Compared toprevious period

47,59350,13047,30650,480

6.7%

40,00047,01950,480

7.4%

12.0%

8.0%

5.3%

Appraisal value

50,480 million yen 50,480 million yen― million yen

20,0000Book value

47,306 million yen 47,019 million yen-287 million yen(million yen)

4.0%

4th period(2018/6)

5th period(2018/12)

Book value

Unrealized gains
and losses

6th period(2019/6)

0.0%

Appraisal value

Ratio of unrealized gains

3,173 million yen

3,460 million yen+287 million yen
150,000

Unrealized gains

NAV per unit

6.7%

7.4%

+0.7%

117,317 yen

118,187 yen+870 yen

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

117,317

118,187

4th period(2018/6)

5th period(2018/12)

6th period(2019/6)

100,000

50,0000
One characteristic of logistics facilities is that the ratio of building value to land is typically high, and so
depreciation expense tends to be higher than for other asset classes. Since unrealized gains are thedifference between appraisal value at end of period and book value after deduction of depreciation expense,
CRE-REIT, which holds fairly new properties and has minimal capital expenditure, tends to record increasing
unrealized gains because, at the end of each period, the sum of depreciation expense and any increase inappraisal value at the end of the period is added to unrealized gains at the end of the previous period.

114,936(yen)

NAV per unit42

6. Appendix

Overview of Appraisal

Newly acquired
assetsNo.

Property nameAt the end of the
At the end of theBook value
6th period(Note)
5th period
Changes
Unrealized
Ratio of
Acquisition Acquisition at the end of(June 30, 2019)(December 31, 2018)
gains and unrealized
month andprice
the 6thAppraisal
DirectAppraisal
DirectAppraisal
Directlossesgains
year(million yen)periodvalue
capitalization
value
capitalization
value
capitalization (million yen)(%)(million yen)(million yen) rate (%) (million yen) rate (%) (million yen) rate (%)

M-1

LogiSquare Kuki

Jul. 2016

9,759

9,419

10,300

4.5

10,300

4.5

―

―

880

9.3

M-2

LogiSquare Hanyu

Jul. 2016

6,830

6,594

7,070

4.7

7,060

4.7

+10

―

475

7.2

M-3

LogiSquare Kuki II

Feb. 2018

2,079

2,067

2,170

4.8

2,170

4.8

―

―

102

5.0

M-4

LogiSquare Urawa
MisonoFeb. 201813,06013,025

13,900

4.4

13,900

4.4

―

―

874

6.7

M-5

LogiSquare Niiza

Feb. 2018

6,960

6,925

7,280

4.6

7,270

4.6

+10

―

354

5.1

M-6

LogiSquare Moriya

Feb. 2018

6,157

6,125

6,630

4.7

6,630

4.7

―

―

504

8.2

O-1

LogiSquare Tosu

Apr. 2018

2,880

2,862

3,130

4.7

3,150

4.7

-20

―

267

9.3

End of 6th Period
Total/Average―

47,72547,01950,480―50,480

―

―

―

3,460

7.4

For Reference: After Acquisition of Newly Acquired Assets (as of July 16, 2019)
M-7

LogiSquare Kawagoe

Jul. 2019

1,490

―

1,570

4.6

―

―

―

―

80

5.4

M-8

LogiSquare Kasukabe

Jul. 2019

4,900

―

5,300

4.5

―

―

―

―

400

8.2

After acquisition of newly
acquired assets
Total/Average―

54,115―57,350

―

―

―

―

―

3,940

7.4

Note: Based on the appraisal report with May 31, 2019 as the date of the value opinion in the case of newly acquired assets

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

43

6. Appendix

Location of Assets Held, Newly Acquired Assets and Assets in Pipeline

Portfolio
Newly acquired assets
Exclusive Negotiation
Rights Granted
Under Development

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

44

6. Appendix

Newly Acquired Assets(1) M-7 LogiSquare Kawagoe

Low-Type
SingleTokyo
Metropolitan
Area

LogiSquare property located in an industrial park, enabling tenants to operate 24 hours

Ken-O Expressway, Kan-etsu
Expressway, National Route 254,
National Route 16

BELS
★★★★

Location

2-8-45 Yoshinodai,
Kawagoe-shi, Saitama

AccessApproximately 6.9 km from
Kawajima interchange on
Ken-O Expressway, andapproximately 10 km from
Kawagoe interchange on
Kan-etsu Expressway

Structure

Steel construction, alloy
coated steel sheet roof, twofloorsTotal floor area

7,542.56 m2

Total leasable area

7,542.56 m2

Planned acquisition
price1,490 million yen

Appraisal value

1,570 million yen

Appraisal NOI yield

5.0%

Completion dateFebruary 2018

Occupancy rate

100.0%

Lease term
Property Features• The property has a good location, approximately 6.9 km from Kawajima
interchange on Ken-O Expressway and approximately 10 km from Kawagoe
interchange on Kan-etsu Expressway. It is also in close vicinity to National
Route 254 and National Route 16, which are major highways, and offers
excellent access to Route 17 Shin-Omiya Ageo Road. Convenience will be
improved still further through the opening of the Kawagoe Northern Circular
Route.
• Located in the exclusive industrial zone in Kawagoe Industrial Park, theproperty is surrounded by many warehouses and factories, enabling tenants tooperate 24 hours.
• The property is equipped with earthquake early warning system and AED,
which are fitted as standard in LogiSquare facilities. In addition, the fire alarmsystem has an isolator to prevent fire shutters from short-circuiting andmalfunctioning in the event of a fire and to prevent the fire from spreading.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

10.0 years
Tokyo Logistics Factory Co.,Ltd.

TenantBasic specifications
Berth depth
Effective ceilingheight13.5 m or more
1F 6.15 m, 2F 6.0 m

Pillar span

10.0 m × 8.8 m

Floor loading

1.5 t/m2

Sandwich panels〇

45

6. Appendix

Newly Acquired Assets(2) M-8 LogiSquare Kasukabe
LogiSquare facility in an excellent location for securing labor,
located within walking distance of station

Box-type
BTS-Single

Tokyo
Metropolitan
Area

Tohoku Expressway,
National Route 16,
National Route 4

CASBEE
SaitamaPrefecture
A ranking

BELS
★★★★★

Location

2126 Mukai-dori, Naganuma,
Kasukabe-shi, Saitama

AccessApproximately 15 km from
Iwatsuki Interchange on
Tohoku Expressway

Structure

Reinforced concrete, steel
construction, alloy coatedsteel sheet roof, three floors

Total floor area

21,315.54 m2

Total leasable area

21,315.54 m2

Planned acquisition
price

4,900 million yen

Appraisal value

5,300 million yen

Appraisal NOI yield

5.1%

Completion dateJune 2018

Occupancy rate

100.0%

Lease term

10.0 years
Koizumi Logistics Service
Corporation

TenantBasic specifications

Property Features• The property is in close vicinity to National Route 16 and National Route 4(Koshigaya-Kasukabe Bypass), which are major highways, and is locatedaround 1.8 km from the Showa Interchange, where these two highways
intersect. The property is expected to become even more convenient with theplanned extension of National Route 4 (Higashi-Saitama Road).
• The property is also in an excellent location for securing labor as it is withinwalking distance (approximately 1.1 km) from Minami-Sakurai Station on the
Tobu Urban Park Line.
• The facility has truck berths on two sides (the northeast side and northwestside) of the first floor, with 26 truck berths in total. To prevent congestion andaccidents, the facility is designed to have the traffic flow in one direction andis equipped with an entry-only gate and an exit-only gate.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Berth depth
Effective ceilingheight13.4 m + eaves 4.0 m
6.0 m

Pillar span

10.7 m (10.8 m in parts)×10.5 m

Floor loading

1.5 t/m2

Sandwich panels〇

46

6. Appendix

High-quality Portfolio (4) Competitive Advantage of Mid-sized Facilities
Many enterprises want to share a mid-sized logistic facility with a small number of other tenants and there is strong tenant demand forthe logistics facilities developed by CRE.
Usage area per logistics base in the Tokyo
Metropolitan Area
Approximately 80% of logistics bases used byconsignors or logistics operators in the Tokyo
Metropolitan Area are less than 16,500 sq.m. in sitearea(Note 1).

1

4% 3%

Less than 3,300 sq.m.

11%
41%
21%

20%

2

3

Desirable tenant mix

Approximately 75% prefer exclusive usage offacilities with up to 2 other tenants if they are to leaselogistics facilities in the future.

Respondents who prefer single-tenant facilities quoted
the flexibility in terms of usage and layout, the necessityof enhanced information management and security
system, and the availability of long-term lease contract.

Prefer
Exclusive Usage(single-tenant facility)）24%

Prefer multi-tenant facility(with over 3 other tenants)
25%

Over 3,300 sq.m. less than
9,900 sq.m.
Over 9,900 sq.m. less than
16,500 sq.m.
Over 16,500 sq.m. less than
33,000 sq.m.
Over 33,000 sq.m. less than
50,000 sq.m.

Flexibility in terms of usage
and layout

Basically prefer
exclusive
usage, but accept
1 or 2 other tenants
51%

Approximately 80% of logistics bases usedhave site area less than 16,500 sq.m.

73%

Necessity of enhanced
information management
and security system

39%

Availability of long-termlease contract

38%

75% prefer single tenancy

n = 655 buildings
Source: Sumitomo Mitsui Trust Research Institute Co., Ltd.

n＝145 companies
Source: Sumitomo Mitsui Trust Research Institute Co., Ltd.

4

Reason for selecting single-tenant facilityn = 94 companies
Source: Sumitomo Mitsui Trust Research Institute Co., Ltd.

Vacancy rate per facility size in the Tokyo Metropolitan Area
Generally, logistics facilities with an area of less than 50,000 sq.m. have lower vacancy rates than multi-tenant logistics facilities with an area over 50,000 sq.m.(Note 2),
suggesting a high level of demand.
20%

Over 50,000 sq.m. multi tenant type15%

Less than 50,000 sq.m.

10%
5%
0%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: CBRE K.K
Note 1: Figures calculated based on a survey conducted by Sumitomo Mitsui Trust Research Institute Co., Ltd. from August to September 2017 (hereinafter the “Survey”) are presented. In the Survey, a questionnaire was sent to 3,022 shipping andlogistics companies, and the answers obtained from 199 companies are aggregated. Hereinafter the same applies to statements sourced by the surveys of Sumitomo Mitsui Trust Research Institute Co., Ltd. in this material.
Note 2: “Multi tenant-type” in “Vacancy rate per facility size in the Tokyo Metropolitan Area” refers to logistics facilities that were planned and designed on the premise of being used by multiple tenants at the development stage in principle.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

47

6. Appendix

High-quality Portfolio (4) Competitive Advantage of Mid-sized Facilities
Since there is no change in the average leased space per tenant regardless of the size of the building, mid-sized facilities are very
convenient for tenants who want to share with a small number of other tenants.
Correlation between leased area of each property and average leased area per tenant in case oflogistics REITs(Note 1)(Note 2)

Average Leased Area for CRE-REIT
Multi-tenantfacilities

1

Single-tenant facilities account for 60% of all properties.

2

Tenants able to lease an entire facility of 50,000 sqm or more account for 2.3% of all
tenants.

Average leased area of property

29,939 m2

40,430 m2

3

At multi-tenant facilities with 2 or more tenants, the average leased area per tenant
is less than 20,000 sqm regardless of the size of the building.

Average leased area per tenant

20,957 m2

16,172 m2

All properties

Illustration of average multi-tenant facility in case of CRE-REIT

100,000

1
90,000Occupied by 2.5 tenants in thecase of multi-tenant facility

2

Average leased area per tenant

80,000

One tenant’s usage

70,00060,000

Average Leased Area for Logistics REITs

Average leased space per tenant
in a multi-tenant facility

10,999 m2

50,000All properties

40,000Multi-tenantfacilities

Average leased area of property

42,264 m2

66,162 m2

Average leased area per tenant

14,764 m2

10,999 m2

30,000Illustration of average multi-tenant facility in case of Logistics REITs

3
20,00010,0000(m2)

020,00040,00060,00080,000 100,000 120,000 140,000 160,000 180,000 200,000(m2)

Leased area in each property

Note 1: The size of the bubble represents the number of tenants.
Note 2: Created by the Asset Management Company based on the most recent financial results of Japan Logistics Fund, Inc., GLP J-REIT,
Nippon Prologis REIT, Inc., LaSalle LOGIPORT REIT, Mitsui Fudosan Logistics Park Inc., Mitsubishi Estate Logistics REIT Investment
Corp., ITOCHU Advance Logistics Investment Corp. and CRE-REIT.

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

Occupied by 6 tenants in thecase of multi-tenant facility
One tenant’s usage

48

6. Appendix

Status of Investors
Major investors

Number of investors by type of owner
Name

Number ofinvestment
units(units)

Ratio(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

44,503

19.3

CRE, Inc.

33,100

14.3

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

25,967

11.2

Fukuoka Jisho Co., Ltd.

10,000

4.3

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

5,128

2.2

Kyushu Leasing Service Co., Ltd.

5,000

2.2

Other domestic
corporations
141persons 1.9%

Foreigners
59persons 0.8%

Financial
institutions
35persons 0.5%

Securities
companies
20persons 0.3%

7,264
persons
Individuals/others
7,009persons 96.5%

Number of investment units by type of owner
Kinki Sangyo Credit Union

4,380

1.9

GOLDMAN,SACHS&CO.REG

3,381

1.5

An individual

3,340

1.4

Aozora Bank, Ltd.

Total

3,204

1.4

138,003

59.7

Individuals/others
Other domestic corporations
At the end of the
6th period(June 30, 2019)22.0%
50,821At the end of the
5th period(December 31,
2018)

25.2%
58,214At the end of the
4th period(June 30, 2018)21.3%
49,12842.8%
99,024

41.6%
96,232

42.1%
97,214

Financial institutions
Foreigners
25.2%
58,3407.7% 2.2%
17,780 5,185

26.1%
60,395

6.0% 1.0%
13,984 2,325

26.4%
61,122

9.7% 0.6%
22,361 1,325

Note: As of June 30, 2019

Copyright (C) 2019 CRE Logistics REIT, Inc. All Rights Reserved.

49