Mitsubishi Estate Logistics REIT Investment : Summary of Financial Results for the Fiscal Period Ended February 28, 2022 (REIT)

Summary of Financial Results for the Fiscal Period Ended February 28, 2022 (REIT)

April 15, 2022

Name of Issuer:	Mitsubishi Estate Logistics REIT
Investment Corporation ("MEL")
Stock Exchange Listing:	Tokyo Stock Exchange
Securities Code:	3481
Website:	https://mel-reit.co.jp/en/
Representative:	Ken Takanashi, Executive Director
Asset Management Company:	Mitsubishi Jisho Investment Advisors, Inc.
Representative:	Tetsuya Masuda, President & CEO
Inquiries:	Ken Takanashi, Executive Officer, General Manager,
Logistics REIT Management Department
Tel. [phone]

Scheduled Date of Filing of Securities Report:	May. 30, 2022
Scheduled Date of Commencement of Distributions Payments:	May. 20, 2022
Supplementary Materials for Financial Results:	Yes
Investors and Analysts Meeting:	Yes
(Values are rounded down to the nearest million yen)

1. Financial Results for the Fiscal Period Ended February 28, 2022 (11th Fiscal Period) (from Sept. 1, 2021 to Feb. 28, 2022)

(1) Operating Results

(Percentages indicate change from the previous period)

Operating revenues	Operating income	Ordinary income	Net income
Fiscal period ended	Millions of yen	Millions of yen	%	Millions of yen	%	Millions of yen	%
Feb. 28, 2022	5,028	2,640	3.3	2,541	6.7	2,540	6.7
Aug. 31, 2021	2,555	15.9	2,382	14.9	2,381	14.9

% 1.5 17.8

4,953

Net income per unit	Return on unitholders' Equity	Ratio of ordinary income to total assets	Ratio of ordinary income to operating revenues
Fiscal period ended Feb. 28, 2022 Aug. 31, 2021	Yen 6,495 6,108	% 2.2 2.2	% 1.4 1.4	% 50.5 48.1

Note: MEL issued new investment units of 41,000 units and 1,898 units on Mar. 5, 2021 and Apr. 6, 2021, respectively. For the fiscal period ended Aug. 31, 2021, net income per unit is calculated by dividing net income by the day-weighted average number of investment units outstanding during the period 389,872 units.

(2) Distributions

Distributions per unit (excluding surplus cash distributions ("SCD"))	Total amount of distributions (excluding SCD)	SCD per unit	Total amount of SCD	Distributions per unit (including SCD)	Total amount of distributions (including SCD)	Payout ratio	Ratio of distributions to net assets
Fiscal period ended Feb. 28, 2022 Aug. 31, 2021	Yen 6,495 6,089	Millions of yen 2,540 2,381	Yen 679 675	Millions of yen 265 264	Yen 7,174 6,764	Millions of yen 2,806 2,645	% 100.0 100.0	% 2.2 2.1

Notes:

• 1. Total amount of SCD are the refund of investment, which falls under the distributions through reduction in unitholders' capital under taxation law.

• 2. The ratio of net asset value attributable to a reduction in unitholders' paid-in capital for the fiscal periods ended Aug. 31, 2021 and Feb. 28, 2022, is 0.003 and 0.002, respectively. The payment of SCD is deemed a return of capital. This calculation methodology is pursuant to Article 23, Paragraph 1, Item 4 of the Act on Special Measures Concerning Taxation.

• 3. With the issuance of new investment units conducted in the fiscal period ended Aug. 31, 2021, the payout ratio is calculated using the following formula.

Payout ratio = Total amount of distributions (excluding SCD)/Net income ×100

(3) Financial Position

Total assets	Net assets	Unitholders' equity to total assets	Net assets per unit
Fiscal period ended Feb. 28, 2022 Aug. 31, 2021	Millions of yen 180,403 181,206	Millions of yen 116,305 116,410	% 64.5 64.2	Yen 297,352 297,621

(4) Cash Flows

Cash flows from operating activities	Cash flows from investing activities	Cash flows from financing activities	Cash and cash equivalents
Fiscal period ended Feb. 28, 2022 Aug. 31, 2021	Millions of yen 4,273 4,252	Millions of yen (154) (28,171)	Millions of yen (3,545) 26,090	Millions of yen 12,217 11,643

2. Forecasts for the Fiscal Periods Ending Aug. 31, 2022 (from Mar. 1, 2022 to Aug. 31, 2022) and Feb. 28, 2023 (from

Sept. 1, 2022 to Feb. 28, 2023)

(Percentages indicate change from the previous period)

Dsisptreirbuutniiotn Distributions

Operating revenues Operating income Ordinary income

Net income

(includingper unit (excluding

SCD

SCD)

SCD)Fiscal period ending

Aug. 31, 2022

Feb. 28, 2023

Millions of yen 6,198 6,224

%

23.3 0.4

Millions of yen 3,332 3,279

%

26.2 (1.6)

Millions of yen 2,958 3,101

%

16.4 4.8

Millions of yen 2,957 3,100

%Yen

YenYen

16.4 4.8

7,307 7,628

6,574 6,890

733 738

(Reference) Forecasted net income per unit for the fiscal period ending Aug. 31, 2022: 6,574 yen

Forecasted net income per unit for the fiscal period ending Feb. 28, 2023: 6,890 yen

*Other
(1) Changes in accounting policies, accounting estimates, or restatements
(a) Changes in accounting policies due to revisions to accounting standards and other regulations:	Yes
(b) Changes in accounting policies due to other reasons:	None
(c) Changes in accounting estimates:	None
(d) Restatements:	None
(2) Total number of investment units issued and outstanding

• (a) Total number of units issued and outstanding at the end of the fiscal period (including treasury units)

  As of Feb. 28, 2022 391,135 units As of Aug. 31, 2021 391,135 units

• (b) Number of treasury units at the end of the fiscal period

As of Feb. 28, 2022

0 units As of Aug. 31, 2021

0 units

Note: Please refer to "Notes Concerning Per Unit Information" on page 23 for the based calculation for the forecasted net income per unit.

*Implementation Status of Statutory Audit

At the time of this financial report, the audit procedures for the financial statements pursuant to the Financial Instruments and Exchange Act have not been completed.

*Explanation on the Appropriate Use of the Forecast of Financial Results and Other Matters of Special Consideration

The forward-looking statements in this material are based on information currently available to us and on certain assumptions that we believe are reasonable. Actual operating performance may differ substantially due to various factors. Furthermore, those statements shall not be deemed a guarantee or any commitment of the amount of future distributions and SCD. Please refer to "Forecast Assumptions for the Fiscal Periods Ending Aug. 31, 2022 and Feb. 28, 2023" on page 7 for assumptions regarding forward-looking statements.

Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Index

• 1. Results of Operations

  (1) Results of Operations ...................................................................................................................................................................... 2

  (A)Overview of the Current Fiscal Period … ....................................................................................................................................... 2

  (i) Major Operational Results of MEL ........................................................................................................................................... 2

  (ii) Investment Environment and Operational Results of the Current Fiscal Period ……………………………………….......................... 2

  (iii) Overview of Financing ............................................................................................................................................................ 3

  (iv) ESG Initiatives ………………......................................................................................................................................... 3

  (v) Overview of Financial Results and Distributions .................................................................................................................... 4

  (B) Outlook for the Next Fiscal Period ........................................................................................................................................ 4

  (i) Future Management Policies ………………................................................................................................................................... 4

  (ii) Significant Subsequent Events ................................................................................................................................................ 5

  (iii) Earnings Forecast ................................................................................................................................................................... 6

  (2) Risk Factors …….. ………………….......................................................................................................................................................... 9

• 2. Financial Statements

  (1) Balance Sheet .................................................................................................................................................................................. 10

  (2) Statement of Income and Retained Earnings .................................................................................................................................. 12

  (3) Statement of Changes in Net Assets ................................................................................................................................................ 13

  (4) Statement of Cash Distributions ...................................................................................................................................................... 14

  (5) Statement of Cash Flows ................................................................................................................................................................. 15

  (6) Notes Concerning Going Concerns Assumption .............................................................................................................................. 15

  (7) Notes Concerning Significant Accounting Policies … ....................................................................................................................... 16

  (8) Notes on Changes in Accounting Policies ……………........................................................................................................................... 17

  (9) Notes on Changes in Display method …… ......................................................................................................................................... 17

  (10) Notes Concerning Financial Statements ........................................................................................................................................ 17

  (11) Change in Number of Investment Units Issued and Outstanding .................................................................................................. 25

• 3. Reference Information

  (1) Composition of MEL's Assets .......................................................................................................................................................... 27

  (2) Investment Assets …………................................................................................................................................................................ 27

  (A) Major Components of Investment Securities ………………………………… .. …………………………………………………………………………………… 27

  (B) Investment Properties ………………………………… . ………………………………… .. …………………………………………………………………………………… 27

  (C) Other Major Investment Assets ……………………………………………………… .. …………………………………………………………………………………… 27

  (i) Overview of Portfolio ................................................................................................................................................................. 28

  (ii) Overview of Properties ……………………………… . ……………………………………………………………………………………..................................... 30

(iii) Overview of Tenant Agreements ……………… ..……. …………………………………................................................................................. 32

(iv) Overview of Appraisal Reports …… .......................................................................................................................................... 34

(v) Information Regarding Major Real Estate Properties ……… ....................................................................................................... 36

(vi) Information Regarding Major Tenants …………………………………………………………………………......................................................... 36

(vii) Property Distribution ……………………………………………………………………………………………………....................................................... 37

(viii) Details of Collateral ……... ……………………………………………………………………………………………....................................................... 39

(ix) Capital Expenditure for Owned Properties……….. …………………………………………………………......................................................... 39

(x) Overview of Property Leasing and Status of Operating Income ….. …………………………………....................................................... 40

-1-

1. Results of Operations (1) Results of Operations

(A)Overview of the Current Fiscal Period (i) Major Operational Results of MEL

Mitsubishi Estate Logistics REIT Investment Corporation ("MEL") was established on July 14, 2016 under the "Act on Investment Trust and Investment Corporation" ("Investment Trust Law"), and was listed on the REIT Securities Market of the Tokyo Stock Exchange on September 14, 2017 (securities code: 3481).

Mitsubishi Estate Co., Ltd. ("MEC"), one of the largest comprehensive developers in Japan, acting as a sponsor. MEL focuses on investing in logistics facilities. MEL's asset management company, Mitsubishi Jisho Investment Advisors, Inc. ("Asset Management Company" or "MJIA") has boasting an extensive track record in real estate fund management since its establishment in 2001. Through "HYBRID" (Note) utilization of the strengths of both companies, MEL aims for maximization of unitholder value by striving for the building of a high-quality portfolio and steady and stable asset management as a listed real estate investment corporation investing mainly in logistics facilities. Focusing on "location", "building features" and "stability," we aim to build a long-term and stable portfolio through selective investments in highly competitive logistics facilities that meet tenant needs.

Furthermore, MEL announced its management policy based on the "Three Pillars" on April 17, 2019, as a management plan designed to maximize unitholder value in the medium- to long-term. The management policy is intended to gather the entire MEC Group to work together and improve unitholder value of MEL, focusing on the following three pillars: Alignment (align interest with unitholders), Discipline (disciplined growth) and Hybrid (enhance MEL's unique strategy, the hybrid model).

MEL owned 22 properties (aggregate acquisition price: 170,404 million yen), at the end of the reporting fiscal period (Feb. 28, 2022).

Note: "HYBRID," as in the English term "hybrid" meaning a combination of two things, is used in the context of utilization of the strengths of MEC and MJIA to refer to the strengths of both companies being utilized creatively and at times combined depending on the situation and thereby making the most of these in the management of MEL.

(ii) Investment Environment and Operational Results of the Current Fiscal Period

During the reporting fiscal period ended February 2022, the Japanese economy began to recover from the full cancellation of the state of emergency for COVID-19 at the end of September 2021. However, the economic recovery kept getting better and then worse again as a result of rising resource prices, anticipation of higher interest rate and a rapid expansion of highly infectious variant: "Omicron". Although the economy is expected to slowly recover as economic activities are resuming with the progress in COVID-19 vaccination, it is necessary to closely monitor trends in geopolitical risks such as the situation in Ukraine and trends in the financial and capital markets going forward. The actual GDP (gross domestic product) for the fourth quarter of 2021 (from Oct. to Dec.) recorded a positive growth for the first time in two quarters with 4.6% increase on an annualized basis backed by the increase in personal consumption and corporate capital investment, etc.

In the real estate transaction market, domestic and overseas investors remain willing to invest due to factors such as the size of one of the largest markets in Asia and lower funding rates compared to other countries, and transactions are also active even in the COVID-19 pandemic. In addition, we will need to closely monitor the interest rate trends. However, investors continue to look for potential investment opportunities and cap rates of logistics facilities remain low due to stable cash flow. Recently, long-term bond yields have been fluctuated with a temporary decline related to geopolitical risks such as the situation in Ukraine. Nevertheless, attention should continue to be paid to long-term interest trends associated with inflation and uncertainty about the outlook for the economy as a whole.

Although J-REIT market remained weak due to concerns about the deterioration of the credit market due to the China Evergrande liquidity crisis and rising domestic long-term interest rates from September to November 2021, it recovered in a positive response to long-term interest rates that remains steady at a low level in December 2021. Since the beginning of 2022, the market has continued to show heavy upward pressure due to the spread of the Omicron variant and concerns over a rise in domestic and overseas interest rates. Within 2021, the trend of TSE REIT Index was from 2,000 points to around 2,100 points. From the beginning of 2022, however, it temporarily fell below 1,800 points due to concerns about the quantitative tightening of U.S. finances. Since February of this year, volatility has been rising due to the deterioration of the situation in Ukraine. Although the adjustment since the beginning of 2022 has come to a pause recently, we believe it will be necessary to continue to closely monitor the increase in volatility associated with the deterioration of the real estate leasing market, risk-off caused by geopolitical risks, and changes in the interest rate environment.

In the logistics facilities market, a rapid increase of e-commerce use has drawn attention and further increase in demand for logistics facilities is expected, driven by the increased online-based consumption and inventories. Under these circumstances, the demand for logistics facilities continues to be strong and vacancy rates remainlow, despite a large volume of new supply. Although the trend of new supply is expected to continue, tenant leasing activities for properties under development are proceeding well, and no significant impact is expected on MEL's portfolio.

As of the end of the reporting fiscal period (Feb. 28, 2022), MEL owned 22 properties (aggregate acquisition price: 170,404 million yen) and the occupancy rate remained high, at 99.6%.

(iii) Overview of Financing

During the reporting fiscal period (Feb. 28, 2022), MEL successfully refinanced short-term loan of 500 million yen with a repayment date of Sept. 1, 2021 and long-term loan of 2,211 million yen with a repayment date of Sept. 14, 2021. Moreover, MEL prepaid short-term loan of 900 million yen with cash on hand including consumption tax refund for the properties acquired during fiscal period ended Aug. 31, 2021 on Dec. 9, 2021.

As of the end of the reporting fiscal period (Feb. 28, 2022), the balance of MEL's interest-bearing debt was 58,374 million yen and MEL's loan-to-value ratio (the ratio of aggregate balance of interest-bearing debt to MEL's total assets, hereinafter "LTV") was 32.4%.

MEL's credit rating as of the end of the reporting fiscal period (Feb. 28, 2022) was as follows:

Rating Agency	Rating Object	Rating	Outlook
Japan Credit Rating Agency, Ltd.	Long-term issuer rating	AA-	Positive

(iv) ESG Initiatives

MEL is committed to endeavoring to enhance consideration towards the environment, social contributions and corporate governance to improve the sustainability of society. We recognize that this is an important social responsibility for a listed enterprise to assume, and also believe that it is essential for maximizing our unitholder value. In addition, MJIA established the Sustainability Committee in February 2019 with the aim of improving sustainability and enhancing unitholder value on a company-wide basis. In January 2022, it was raised to a formal committee, and in April 2022, the Sustainability Management Office was established to appoint person in charge. In these ways, our commitment to sustainability has been enhanced and clarified further.

In December 2021, MJIA expressed support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) (Note 1) and joined the TCFD Consortium, a group of domestic companies that support TCFD recommendations. MEL will continue to share the sustainability objectives, and continues to embed sustainability into our business with MJIA.

In December 2021, MEL identified important issues (materiality) related to ESG that need to be addressed in sustaining its business model in order to achieve sustainable growth and increase corporate value over the medium to long term, and established policies, targets, and key performance indicators (KPIs) for each materiality. MEL recognizes that risks and opportunities related to climate change are of paramount importance to its business, and is promoting efforts to reduce carbon emissions and further information disclosure. In January 2022, we published our first Sustainability Report. MEL's main KPIs and targets in key materiality and the progress is as follows.

Targets (by FY 2030)	Achievement status
CO2 emissions intensity (t-CO2/m2)	30% reduction (based on FY 2017)	21.3% reduction (FY2020)
Energy consumption intensity (kWh/m2)	15% reduction (based on FY 2017)	9.7% reduction (FY2020)
Water consumption intensity (m3/m2)	No increase (based on FY 2017)	18.9% reduction (FY2020)
Waste recycling rate	70% or more	63.4% reduction (FY2020)
Green building certification (Note 2) acquisition rate (Note 3)	100%	87.6% (As of March 4, 2022)

Our efforts for sustainability were highly evaluated in the 2021 survey of the Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment (Note 4), and it received the highest "5 Stars" for the second consecutive year and the "Green Star" for the third consecutive year. Furthermore, in the 2021 GRESB Disclosure Assessment, which measures the level of enhancement of ESG information disclosure, we received an "A" rating, the highest level for two consecutive years, in recognition of our excellence in disclosing information on environmental considerations and sustainability initiatives.

Notes: 1. "TCFD(Task Force on Climate-related Financial Disclosures" is an international initiative established by the Financial Stability