ITOCHU Advance Logistics Investment : Summary of Financial Results (Unaudited) for the Sixth Fiscal Period

September 15, 2021

ITOCHU Advance Logistics Investment Corporation

Summary of Financial Results (Unaudited) for the Sixth Fiscal Period (Ending July 31, 2021) (Reporting period: February 1, 2021 to July 31, 2021)

1. Financial Results and Key Indicators

					2nd fiscal period	3rd fiscal period	4th fiscal	5th fiscal	6th fiscal
					period	period	period
				Unit	From February	From August 1,	From February	From August	From February
				2019	1, 2020	1, 2020	1, 2021
					1, 2019
					to January 31,	to July 31,	to January 31,	to July 31,
					to July 31, 2019
					2020	2020	2021	2021
	Operating revenues			Millions of	1,718	1,759	2,399	2,606	3,059
			yen
(Of which, real estate			Millions of					(3,059)
leasing business	a		(1,718)	(1,759)	(2,399)	(2,606)
	yen
revenues)
	Operating expenses			Millions of	908	920	1,206	1,282	1,570
			yen
(Of which, real estate
		Millions of
leasing business	b		(676)	(683)	(877)	(935)	(1,146)
	yen
expenses)
	Operating income			Millions of	810	839	1,193	1,323	1,489
			yen
	Ordinary income	c		Millions of	733	760	1,047	1,185	1,353
		yen
	Net income	d		Millions of	732	759	1,046	1,184	1,352
		yen
	Total assets	e		Millions of	62,220	61,739	88,955	103,188	115,747
		yen
	(Change from			%	4.8	-0.8	44.1	16.0	12.2
	previous period-end)
	Interest-bearing debt	f		Millions of	24,580	23,940	36,153	35,370	47,723
		yen
	Net assets	g		Millions of	36,133	36,067	50,728	65,413	65,255
		yen
	(Change from			%	0.3	-0.2	40.6	28.9	-0.2
	previous period-end)
	Unitholders' capital	h	(Note	Millions of	35,401	35,308	49,681	64,228	63,902
	(net)	3)	yen
	Total distributions	i		Millions of	825	855	1,178	1,510	1,495
		yen
	Payout ratio		(Note	%	100.0	100.0	99.3	100.0	100.0
		4)
	Total number of
	investment units	j		Unit	357,143	357,143	486,000	600,127	600,127
	outstanding
	Net assets per unit	g/j		Yen	101,174	100,989	104,378	108,999	108,736
	Net income per unit		(Note	Yen	2,050	2,126	2,161	2,232	2,254
		5)
	Distributions per unit	i/j		Yen	2,311	2,395	2,425	2,517	2,492
	Of which,
	distributions per unit
	excluding surplus			Yen	2,050	2,126	2,138	1,974	2,254
	cash distribution
	(SCD)
	Of which, SCD per			Yen	261	269	287	543	238
	unit
	FFO per unit	(d+k)		Yen	3,302	3,421	3,465	3,143	3,558
	/j
	Ratio of ordinary		(Note	%	1.2	1.2	1.4	1.2	1.2
	income to total assets		6)
	Annualized			%	2.4	2.4	2.8	2.4	2.5
	Unitholders' equity	g/e		%	58.1	58.4	57.0	63.4	56.4

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	ratio
	(Change from			%	-2.5	0.3	-1.4	6.4	-7.0
	previous period-end)
	Return on unitholders'		(Note	%	2.0	2.1	2.4	2.0	2.1
	equity		7)
	Annualized			%	4.1	4.2	4.8	4.0	4.2
	Loan-to-value (LTV)	f/e		%	39.5	38.8	40.6	34.3	41.2
	ratio
	NOI		(Note	Millions of	1,488	1,538	2,160	2,372	2,696
		8)	yen
	Depreciation costs	k	(Note	Millions of	447	462	637	701	782
	9)	yen
	Unit price at period-	l		Yen	103,000	126,200	161,700	129,900	160,100
	end
[Other information]
	Operating days in			Days	181	184	182	184	181
	fiscal period
	Number of investment
	properties at period-			Properties	8	8	9	10	12
	end
	Occupancy rate at		(Note	%	100.0	100.0	99.9	99.9	99.9
	period-end		10)
	Capital expenditure			Millions of	2	8	13	-	23
			yen

(Note Fiscal periods of ITOCHU Advance Logistics Investment Corporation ("IAL") are from February 1 to July 31 and from August

1. 1 to January 31.

(Note Operating revenues are net of consumption taxes. Yen values are rounded down to the nearest whole number and percentages

1. are rounded off to the first decimal place (likewise below unless expressly noted otherwise).

(Note Total unitholders' capital net of deductions from unitholders' capital. Its value factors in changes in unitholders' capital due to

1. SCDs from allowance for temporary difference adjustments.

(Note Payout ratio = Distributions per unit (excluding SCD) ÷ Net income per unit × 100 The payout ratios for the fourth and fifth

1. fiscal periods were calculated by the formula below because investment units outstanding increased during the period as a result of a public offering of investment units.
   Total distributions (excluding SCD) ÷ Net income × 100

(Note Net income per unit was calculated by dividing net income by the weighted average number of investment units based on the

1. number of days during the period

(Note Ratio of ordinary income to total assets = Ordinary income ÷ (Sum of total assets' beginning and ending balances ÷ 2) × 100 6)

(Note Return on unitholders' equity = Net income ÷ (Sum of net assets' beginning and ending balances ÷ 2) × 100 7)

(Note NOI = Real estate leasing business revenues - Real estate leasing business expenses + Depreciation included in leasing business

1. expenses

(Note Depreciation is depreciation relating to leasing business expenses. 9)

(Note Occupancy rate at period-end is the ratio of portfolio properties' total leased area(Note 12) at period-end to their total leasable

1. area(Note 11) at period-end, rounded off to the first decimal place. However, if an occupancy rate is 100.0% as a result of being rounded to the first decimal place, it is presented as 99.9%, its value truncated to the first decimal place.

(Note "Total leasable area" is the total area of space deemed leasable based on the leased area and/or building floor plan specified in 11) the lease agreement(s) of the respective real estate property or trust real estate property in effect at period-end. Lease agreements for rooftop space and/or parking facilities are excluded. In the case of pass-through type master lease agreements (defined as master lease agreements structured such that rent and other charges are collected directly from end-tenants and lessees generally may collect rent only if they have actually sublet space; likewise below), leasable floor area is calculated based on the lease agreement(s) with the end-tenant(s) (likewise below). Leased (leasable) area may exceed total floor area because space not included in total floor area is sometimes included in leased area in lease agreements for portfolio properties. For logistics properties in particular, leased (leasable) area may substantially exceed total floor area if the space under eaves is counted as

leased (leasable) area.

(Note As used herein, "total leased area" means the total leased area specified in the lease agreement(s) of the respective real estate

1. property or trust real estate property in effect at period-end.
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2. Forecast of Financial Results for the Fiscal Period Ending January 31, 2022 and the Fiscal Period Ending July 31, 2022

(Percentages represent changes from the previous period)

	Operating	Operating					Distributions per	SCD per	Distributions per
	Ordinary income	Net income	unit	unit
	revenues	income		unit
						(excluding SCD)	(including SCD)
	(Millions		(Millions			(Millions		(Millions
	of yen)	%	of yen)		%	of yen)	%	of yen)	%	(Yen)	(Yen)	(Yen)
Fiscal period ending	3,172	3.7	1,532		2.8	1,396	3.1	1,395	3.1	2,325	399	2,724
January 2022
Fiscal period ending	3,171	0.0	1,509		-1.5	1,371	-1.8	1,370	-1.8	2,284	399	2,683
July 2022

(Reference) Expected net income per unit (Forecast net income ÷ Expected number of investment units at end of period) is 2,325 yen for the fiscal period ending January 2022 and 2,284 yen for the fiscal period ending July 2022.

Other

1. Changes in accounting policies, changes in accounting estimates, and retrospective statements

1. Changes in accounting policies associated with revision of accounting standards, etc.: None

(b) Changes in accounting policies associated with other than (a):	None
(c) Changes in accounting estimates:	None
(d) Restatements:	None
(2) Total number of investment units issued and outstanding

1. Total number of investment units issued and outstanding at the end of the fiscal period (including treasury investment units)
2. Total number of treasury investment units at the end of the fiscal period

Fiscal period	600,127	Fiscal period ended	600,127
ended July 2021	January 2021
Fiscal period	0	Fiscal period ended	0
ended July 2021	January 2021

Other special instructions

(Note on forward-looking statements)

Forward-looking statements presented in this document are based on information currently available to ITOCHU Advance Logistics Investment Corporation ("IAL") and on certain assumptions deemed by management to be reasonable. As such, actual operating and other results may differ materially from these forecasts as a consequence of various factors. The above forecast does not guarantee the amount of the distribution. For caveats on use of forecasts of financial results and their underlying assumptions, see "C. Forecast of Financial Results" on pages 7-10 under "2)Outlook for Next Fiscal Period " under "(1) Operating Conditions" under "1. Operating Conditions."

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3. Operating conditions

1. Operating conditions

1. Overview for the fiscal period under review

A. IAL's Background

IAL was established on May 1, 2018, by its incorporator, ITOCHU REIT Management Co., Ltd., ("the Asset Management Company") pursuant to Japan's Act on Investment Trusts and Investment Corporations (Act 198 of 1951 as amended; referred to below as "the Investment Trust Act"). Its investment units (issuer code: 3493) were listed on the Tokyo Stock Exchange (TSE) Real Estate Investment Trust (REIT) Market ("the J-REIT Market") on September 7, 2018.

One of IAL's sponsors(Note 1) is ITOCHU Corporation, a major general trading company with a strong presence in logistics- intensive consumer-related(Note2) businesses such as food and apparel. ITOCHU Corporation sponsored IAL as a publicly traded REIT with a mandate to invest mainly in logistics real estate properties (defined as properties used or usable primarily as logistics facilities). In addition to maximizing unitholder value and contributing to the J-REIT Market's sound development, IAL aims to benefit society by developing logistics infrastructure, particularly logistics real estate properties, through a collaborative growth relationship(Note 3) with the ITOCHU Group(Note 4).

In the fiscal period ended July 2021, IAL acquired i Missions Park Tokyo Adachi and i Missions Park Miyoshi (the acquisition prices(Note 5) for the two properties totaled ¥13,235 million) on April 1, 2021. As of the end of the fiscal period ended July 2021, IAL owned 12 properties in its portfolio with an aggregate acquisition price of 111,422 million yen.

(Note 1) As used herein, "sponsor" means a party that has entered into a sponsor support agreement with IAL and the Asset Management Company. IAL's sponsors as of July 31, 2021, are ITOCHU Corporation and ITOCHU Property Development, Ltd.

(Note 2) As used herein, "consumer-related" refers to ITOCHU Corporation's textiles, food, general products & realty, ICT & financial businesses, and the 8th Company. The 8th Company is a divisional company established by ITOCHU Corporation in July 2019 with the aim of cultivating new customers and developing new businesses from a market-oriented perspective. This is to be accomplished by maximally leveraging ITOCHU Corporation's diverse business infrastructure and strengths in consumer-related businesses.

(Note 3) By utilizing the ITOCHU Group's platforms (Realty & Logistics (R/L) Platform and Merchant Channel (M/C) Platform (both defined below in "a) External Growth Strategies" under "A. Portfolio Management Policies" under "2) Outlook for Next Fiscal Period")), IAL will be able to steadily grow. Meanwhile, the ITOCHU Group will be able to strengthen its own platforms through management of IAL's assets. Such a virtuous cycle of cooperation between IAL and the ITOCHU Group is referred to herein as a "collaborative growth relationship."

(Note 4) As used herein, "ITOCHU Group" refers to the corporate group consisting of ITOCHU Corporation, 200 consolidated subsidiaries and 80 equity-method affiliates (as of June 30, 2021).

(Note 5) As used herein, "acquisition price" means IAL-owned properties' respective contractual purchase prices net of consumption tax, local consumption tax and any costs incidental to the acquisition. The purchase price does not include consumption tax, local consumption tax, or expenses relating to acquisition.

B. Operational performance of fiscal period under review

In the fiscal period ended July 31, 2021, economic activity in Japan continued to be depressed by such factors as multiple declarations of states of emergency, prolongations of the same, and expansions in their geographical scope, resulting from the spread of COVID-19 and the diffusion of the highly infectious Delta variant. Economic visibility consequently remained murky.

In the initial stage of the pandemic, the TSE REIT Index plunged to a closing low of 1,145 on March 19, 2020, in response to uncertainty surrounding the severity of the pandemic's economic impact, but the episode was short-lived. As markets subsequently gained clarity on the pandemic's market impacts, the TSE REIT Index recovered, rallying back to 2,160 as of July 30, 2021.

In the logistics real estate property leasing market, demand for logistics real estate as infrastructure essential to daily life is expected to continue to grow in the wake of the e-commerce market's recent growth. The logistics real estate sales market is expected to likewise continue to enjoy buoyant demand amid continued investment by J-REITs, private REITs, private funds and others.

Against this backdrop, on April 1, 2021, IAL acquired i Missions Park Tokyo Adachi and i Missions Park Miyoshi (the acquisition prices of the two properties totaled ¥13,235 million). Additionally, IAL maintained a 99.9% occupancy rate (see Note) at July 31, 2021, across its entire 12-property portfolio (aggregate acquisition price: ¥111,422 million) by appropriately operating and managing its properties in coordination with the ITOCHU Group.

(Note) "Occupancy rate" is each property's ratio of leased area to total leasable area, rounded off to the first decimal place, at July 31, 2021. However, if an occupancy rate is 100.0% as a result of being rounded to the first decimal place, it is presented as 99.9%, its value truncated to the first decimal place.

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C. Financing

In the fiscal period ended July 2021, IAL borrowed ¥13,083 million (¥433 million short-term loan payable and ¥12,650 million long-term loan payable) on April 1, 2021, to fund the acquisition of the two properties and to partially pay expenses related to the acquisitions. On May 31, 2021, IAL repaid ¥730 million of maturing long-term loans using cash on hand and proceeds from a consumption tax refund. This ¥730 million was borrowed on November 20, 2020, the date on which time the properties were acquired. As a result, these financing transactions left IAL with ¥47,723 million of interest-bearing debt and a loan-to-value (LTV(Note 2)) ratio of 41.2% at July 31, 2021.

IAL's credit rating(Note 3) at July 31, 2021, is as follows.

Rating agency	Type of rating	Rating	Outlook
Japan Credit Rating Agency,	Long-term issuer rating	A+	Positive
Ltd. (JCR)

(Note 1) As used herein, LTV ratios are calculated by the following formula. LTV = Total interest-bearing debt ÷ Total assets × 100

(Note 2) The above rating is a rating of IAL, not its investment units (the "IAL Investment Units"). The IAL Investment Units are not subject to any credit ratings assigned or disclosed, or any pending credit ratings to be assigned or disclosed, by a credit rating agency at IAL's request.

(Note 3)

D. Earnings and Distributions

As a result of the above, IAL earned operating income of ¥1,489 million, ordinary income of ¥1,353 million and net income of ¥1,352 million on operating revenues of ¥3,059 million in the fiscal period ended July 31, 2021.

Applying Article 67-15 of Japan's Act on Special Measures Concerning Taxation (Act 26 of 1957 as amended; referred to below as the "Special Taxation Measures Act"), IAL will distribute ¥1,352,686,258 of unappropriated retained earnings to its unitholders for the fiscal period ended July 31, 2021, in accord with the distribution policy(Note 1) set forth in its Articles of Incorporation. Said distribution amount is evenly divisible by 600,127, the total number of investment units outstanding at July 31, 2021. It equates to distributions per unit excluding SCD of ¥2,254.

In addition to earnings distributions, IAL's policy is to pay out SCDs on an ongoing basis as a general rule. IAL will accordingly distribute an additional ¥142 million of surplus cash as a return of capital qualifying as a reduction in capital under Japanese tax law. Said ¥142 million is roughly the difference between ¥1,495 million, which is 70% of IAL's funds from operations (FFO(Note 2)) for the period, and the aforementioned ¥1,352 million distribution excluding SCD. It equates to an SCD per unit of ¥238.

(Note 1) To maintain a stable distribution level through appropriate cash management, IAL places priority on cash flows from operation of its portfolio properties, excluding gains/losses on the sale of portfolio properties. Its general policy is to pay out, in addition to earnings distributions, SCDs on an ongoing basis ("Ongoing SCDs") in an amount that equates the two distributions' sum to 70% of its FFO (said sum may exceed 70% of FFO in some periods, provided it does not exceed 30% of depreciation), contingent upon maintaining its portfolio properties and financial stability over the long term.

IAL and the Asset Management Company commissioned Tokio Marine dR Co., Ltd. (on July 1, 2021, Tokio Marine & Nichido Risk Consulting Co., Ltd. changed its name to Tokio Marine dR Co., Ltd., which is used here despite Tokio Marine & Nichido Risk Consulting Co., Ltd. being the name of said company at the time the engineering report was obtained), ERS Corporation and ERI Solution Co., Ltd., to prepare engineering reports on IAL's portfolio properties. The semiannual average of the engineering reports' estimates of total urgent/near-term and medium-term repair and upgrade expenses is ¥51 million. IAL decided to pay out such a distribution of cash in excess of earnings after concluding, from the standpoint of effective management of surplus funds, that the distribution is within the range consistent with long-term financial stability and maintenance of portfolio properties, taking into account the current economic environment, real estate property market prices and IAL's LTV ratio, credit rating and financial condition, among other factors. The SCD for the fiscal period ended July 31, 2021, will be deducted from unitholders' capital (gross) upon payment of the SCD.

(Note 2) As used herein, FFO is calculated by adding depreciation relating to leasing business expenses for the applicable fiscal period to net income (excluding gains/losses on the sale of real estate).

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