CRE Logistics REIT : Summary of Financial Results for the 12th Fiscal Period Ended June 30, 2022

August 15, 2022

CRE Logistics REIT, Inc.

Summary of Financial Results (Unaudited)

For the 12th Fiscal Period Ended June 30, 2022

(For the Reporting Period from January 1, 2022 to June 30, 2022)

(Translated from the Japanese original)

Corporate Information

Code: 3487 Listing: Tokyo Stock Exchange

(URL: https://cre-reit.co.jp/en/)

Representative: Tsuyoshi Ito, Executive Director

Asset management company:	CRE REIT Advisers, Inc.
Representative:	Tsuyoshi Ito, President
Person of Contact:	Hirohisa Toda, Executive Officer, Head of Corporate Planning and General Affairs
Tel:	[phone]

Scheduled date to file securities report:				September 22, 2022
Scheduled date to commence payment of distributions:		September 13, 2022
Preparation of supplementary material on financial results:	Yes
Financial report presentation meeting:				Yes (for institutional investors and analysts)
		(Amounts truncated to the nearest million yen, except for the basic earnings per unit)
1. 12th Fiscal Period ended June 30, 2022 (January 1, 2022-June 30, 2022)
(1) Operating results				(Percentages represent changes from corresponding period of previous period)
	Operating revenues		Operating income			Ordinary income		Net income
Fiscal period ended	Million yen	%		Million yen		%		Million yen		%	Million yen		%
June 30, 2022	3,871	7.7			2,119		1.5		1,828		1.6	1,827		1.6
December 31, 2021	3,595	13.8			2,088		16.0		1,799		18.2	1,798		18.2
	Net income per unit			Return on			Ordinary income to	Ordinary income on
		unitholders' equity		total assets		operating revenues
Fiscal period ended		Yen					%				%			%
June 30, 2022		3,236					2.4				1.3			47.2
December 31, 2021		3,343					2.6				1.4			50.1

(Note) CRE REIT issued 64,550 new investment units on September 15, 2021. Net income per unit for the fiscal period ended December 31, 2021 is calculated by dividing net income by the weighted average number of investment units (538,038 units) based on the number of days during the period.

(2) Distributions

	Distributions	Total			Distributions	Total
	per unit	distributions	Surplus	Total surplus	per unit	distributions		Distributions to
	(excluding	(excluding	distributions	(including	(including	Payout ratio
	distributions	net assets ratio
	surplus	surplus	per unit	surplus	surplus
	distributions)	distributions)			distributions)	distributions)
Fiscal period ended	Yen	Million yen	Yen	Million yen	Yen	Million yen	%	%
June 30, 2022	3,236	1,827	341	192	3,577	2,019	100.0	2.4
December 31, 2021	3,186	1,799	338	190	3,524	1,990	100.0	2.5

(Note 1) The entire amount of total surplus distributions is the return of contributions that falls under the distribution associated with the investment decrease for tax purposes.

(Note 2) The percentage of decreased surplus as a result of surplus distributions (the return of contributions that falls under the distribution associated with the investment decrease for tax purposes) in the fiscal period ended December 31, 2021 and the fiscal period ended June 30, 2022 was 0.003, respectively. The calculation of the percentage of decreased surplus is based on Article 23, Paragraph 1, Item 4 of the Order for Enforcement of the Corporation Tax Act.

(Note 3) The payout ratio in the fiscal period ended December 31, 2021 is calculated based on the following formula because CRE REIT issued new investment units.

Payout ratio = Total amount of distributions (excluding surplus distributions) ÷ Net income × 100

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(3) Financial position

	Total assets	Net assets	Unitholders' equity ratio	Net assets per unit
As of	Million yen	Million yen	%	Yen
June 30, 2022	140,960	75,172	53.3	133,118
December 31, 2021	140,743	75,334	53.5	133,406
(4) Cash flows
	Cash flows from	Cash flows from	Cash flows from	Cash and cash equivalents
	operating activities	investing activities	financing activities	at end of the fiscal period
Fiscal period ended	Million yen	Million yen	Million yen	Million yen
June 30, 2022	3,580	(9)	(1,989)	6,922
December 31, 2021	3,024	(22,338)	20,614	5,340

2. Forecast for the 13th Fiscal Period ending December 2022 (July 1, 2022-December 31, 2022) and the 14th Fiscal Period ending

June 2023 (January 1, 2023-June 30, 2023)		(Percentages represent changes from corresponding period of previous period)
	Operating	Operating	Ordinary	Net income	Distributions	Distributions	Surplus
	per unit (including	per unit
	revenues	income	income	distributions
			surplus	(excluding surplus
									per unit
									distributions)	distributions)
Fiscal period ending	Million	%	Million	%	Million	%	Million	%	Yen	Yen	Yen
yen	yen	yen	yen
December 31, 2022	5,718	47.7	3,772	78.0	3,494	91.1	3,493	91.2	6,186	6,186	0
June 30, 2023	3,952	(30.9)	2,126	(43.6)	1,851	(47.0)	1,850	(47.0)	3,626	3,277	349

(Reference) Forecast net income per unit (Forecast net income/ Forecast number of investment units at the end of the fiscal period) for the 13th Fiscal Period ending December 2022 is 6,186 yen and forecast net income per unit for the 14th Fiscal Period ending June 2023 is 3,277 yen.

• Other
• 1. Changes in accounting policies, changes in accounting estimates and retrospective restatements
  2. 1. Changes in accounting policies associated with revision of accounting standards, etc.: None
     2. Changes in accounting policies associated with other than 1: None
     3. Changes in accounting estimates: None
     4. Restatements: None
  3. 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

As of June 30,	564,700	units	As of December	564,700	units
2022	31, 2021
As of June 30,	0	units	As of December	0	units
2022	31, 2021

• Summary of financial results is not inside the scope of audit procedure by certified public accountants or audit corporations.
• Remarks on appropriate use of forecasts of performance and other special notes

Forward-looking statements presented in these financial results, including forecasts of performance, are based on information currently available to CRE REIT and on certain assumptions CRE REIT deems to be reasonable. As such, actual operating and other results may differ materially from these forecasts as a consequence of various factors. Moreover, the forecasts set forth herein should not be construed as a guarantee of distribution amounts.

Refer to the section on "Assumptions for Operating Forecasts for the 13th Fiscal Period ending December 2022 (July 1, 2022- December 31, 2022) and the 14th Fiscal Period ending June 2023 (January 1, 2023-June 30, 2023)" for details on the underlying assumptions for the forecasts above.

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Assumptions for Operating Forecasts for the 13th Fiscal Period ending December 2022 (July 1, 2022-December 31, 2022) and the 14th Fiscal Period ending June 2023 (January 1, 2023-June 30, 2023)

Item	Assumptions
Calculation period	- 13th Fiscal Period (Ending December 31, 2022): July 1, 2022-December 31, 2022 (184 days)
- 14th Fiscal Period (Ending June 30, 2023): January 1, 2023-June 30, 2023 (181 days)
	- CRE REIT possesses the real estate trust beneficiary rights in the total of 20 properties as of June 30, 2022
	("acquired assets before the fiscal period ended June 30, 2022"). In addition to the acquired assets before the
	fiscal period ended June 30, 2022, CRE REIT acquired the real estate trust beneficiary right in LogiSquare
Assets under	Sayama Hidaka (quasi-co-ownership interest ratio: 20%) on July 22, 2022 ("acquired asset for the fiscal
period ending December 31, 2022"), and sold the real estate trust beneficiary right in LogiSquare Chitose on
management
August 3, 2022 ("sold asset for the fiscal period ending December 31, 2022 "). Thereafter, it is assumed that
	there will be no changes (acquisition of new properties or the disposition of properties held, etc.) in the 19
	properties under management through June 30, 2023.
	- However, there may be changes due to acquisition of new properties or sale of properties held.
	- The forecasts assume that 1,774 million yen of gain on sale of the sold asset for the fiscal period ending
	December 31, 2022 will be booked in the fiscal period ending December 31, 2022.
	- Real estate leasing business revenues are calculated based on lease contracts that are in effect as of the date
	of submission of these financial results and historical results. Even though one lease contract will expire
Operating revenues	during the fiscal period ending December 31, 2022 and two lease contracts will expire during the fiscal period
	ending June 30, 2023, we concluded new lease contracts with the existing tenants. All lease contracts will be
	concluded at a fixed rent.
	- The calculations assume that there will be no delinquencies or defaults on rent payments on the part of
	tenants.
	- Regarding real estate leasing expenses, which are the main operating expenses, expenses other than
	depreciation are calculated by taking into consideration variable factors such as expenses assumed to be
	incurred (taxes and public dues, entrusted property management, property insurance, repairs, etc.) based on
	the historical results for the acquired assets before the fiscal period ended June 30, 2022, and for the acquired
	asset for the fiscal period ending December 31, 2022, based on information provided by its previous owner
	or previous beneficiary.
	- Property taxes, city planning taxes and other charges are expected to be 377 million yen at the fiscal period
	ending December 31, 2022 and 385 million yen at the fiscal period ending June 30, 2023.
	- In general, property taxes, city planning taxes and other charges levied on transacted real estate are settled at
	the time of acquisition by prorating for the period with the previous owners or the previous beneficiaries, and
	CRE REIT capitalizes the amounts equivalent to such settled amounts in the acquisition costs for properties.
Operating expenses	Therefore, property taxes, city planning taxes and other charges levied on the acquired asset for the fiscal
period ending December 31, 2022 will not be booked as expenses for the fiscal period ending December 31,
	2022, and property taxes, city planning taxes and other charges levied on the acquired asset for the fiscal
	period ending December 31, 2022 for fiscal year 2023 will be booked as expenses from the fiscal period
	ending June 30, 2023. Property taxes, city planning taxes and other charges levied on the acquired asset for
	the fiscal period ending December 31, 2022 are expected to be 10 million yen for the fiscal period ending
	June 30, 2023 and following periods. Property taxes, city planning taxes and other charges levied on the
	acquired asset for the fiscal period ending December 31, 2022, which will be capitalized in acquisition costs,
	are expected to be total 9 million yen.
	- Depreciation is calculated using the straight line method, and it is expected to be 657 million yen in the fiscal
	period ending December 31, 2022 and 657 million yen in the fiscal period ending June 30, 2023.
	- Entrusted property management fees are expected to be 210 million yen for the fiscal period ending
	December 31, 2022 and 220 million yen for the fiscal period ending June 30, 2023.
	- Non-operating expenses for the fiscal period ending December 31, 2022 are expected to be 278 million yen.
	This amount will include the payment of 261 million yen for interest and other financing-related expenses
Non-operating	and 11 million yen for the amortization of investment unit issuance costs.
expenses	- Non-operating expenses for the fiscal period ending June 30, 2023 are expected to be 275 million yen. This
	amount will include the payment of 260 million yen for interest and other financing-related expenses and 8
	million yen for the amortization of investment unit issuance costs.
	- It is assumed that total interest-bearing debt will be 60,669 million yen at the end of the fiscal period ending
Interest-bearing debt	December 31, 2022 and 60,669 million yen at the end of the fiscal period ending June 30, 2023.
- In the fiscal period ending December 31, 2022, while long-term borrowings of 2,400 million yen became due
	on July 29, 2022, of which 1,200 million yen was repaid by using free cash and the remaining 1,200 million
	－ 3 －

yen was refinanced.

• In the fiscal period ending June 30, 2023, while long-term borrowings of 3,680 million yen will become due on January 31, 2023, it is assumed that the same amount will be refinanced.
• The loan-to-value (LTV) ratio is expected to be around 43.0% at the end of the fiscal period ending December 31, 2022 and around 43.5% at the end of the fiscal period ending June 30, 2023. The following formula is

used to calculate the LTV ratio, with numbers rounded off to the first decimal place. LTV ratio = Total interest-bearing debt ÷ Total assets × 100

	- The assumptions for these forecasts are based on a total number of investment units issued of 564,700, as of
	the date of submission of these financial results. The forecasts do not factor in any assumption of a change
	in the number of investment units through June 30, 2023 due to factors such as the issuance of new investment
Investment units	units.
	- The distributions per unit (excluding surplus distributions) and the surplus distributions per unit are calculated
	based on a total number of investment units issued of 564,700 for the fiscal period ending December 31,
	2022 and the fiscal period ending June 30, 2023.
	- Distributions per unit (excluding surplus distributions) are calculated in accordance with CRE REIT's policy
Distributions per unit	on the distribution of cash as stipulated in its Articles of Incorporation.
(excluding surplus	- Distributions per unit (excluding surplus distributions) may change for a variety of reasons, including
distributions)	changes in CRE REIT's investment assets, changes in leasing revenues due to tenant movements, etc., and/or
	the occurrence of unforeseen repairs and maintenance, etc.

• Surplus distributions per unit are calculated in accordance with the policies stipulated in CRE REIT's Articles of Incorporation as well as the asset management guidelines provided in the asset management company's internal rules.
• It is assumed that there will be no specific possibility of significant deterioration in the economic environment, the real estate market conditions or CRE REIT's financial condition.
• While CRE REIT has a policy of continuously implementing surplus distribution for each fiscal period, in principle, with an amount equivalent to 30% of depreciation as a benchmark, CRE REIT has decided to implement this policy flexibly to level distributions within the range equivalent to 30% of depreciation.
• In addition, in cases where distributions per unit are expected to decline temporarily to a certain extent due

Surplus distributions	to the dilution of the investment unit value or a significant financial burden as a result of the procurement of
per unit	funds through the issuance of new investment units or for other reasons, CRE REIT may implement
	temporary surplus distributions, in addition to the continuous surplus distributions, with a view to
	standardizing the amount of distributions per unit. However, the total amount of continuous surplus
	distributions and temporary surplus distributions shall not exceed the amount equivalent to 60% of
	depreciation for the relevant fiscal period.

• The amount of surplus distributions (return of contributions) may change due to factors such as the economic environment, trends in the real estate market, the situation surrounding owned assets, and financial conditions, and the surplus distribution (return of contributions) may not be implemented as a result.
• In the fiscal period ending December 31, 2022, considering anticipated levels of increased net income from gain on sale, it is assumed that CRE REIT will not implement continuous surplus distributions.
• It is assumed that there will be no change in legislation, taxation, accounting standards, listing regulations

	imposed by the Tokyo Stock Exchange, rules and requirements imposed by The Investment Trusts
Other	Association, Japan, etc., that will impact the above forecasts.

• It is assumed that there will be no unforeseen material changes in general economic trends, real estate market conditions, etc.

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3. Financial Statements

(1) Balance Sheet

				(Thousands of yen)
			As of December 31, 2021	As of June 30, 2022
	Assets
	Current assets
	Cash and deposits		2,738,067	4,403,111
	Cash and deposits in trust	3,930,134	3,850,307
	Operating accounts receivable		145,642	128,511
	Prepaid expenses	153,526	155,892
	Consumption taxes receivable		666,276	－
	Total current assets	7,633,647	8,537,822
	Non-current assets
	Property, plant and equipment
	Buildings in trust		67,620,215	67,631,265
	Accumulated depreciation	(3,352,910)	(3,971,689)
	Buildings in trust, net		64,267,304	63,659,575
	Structures in trust	3,163,201	3,163,581
	Accumulated depreciation		(129,400)	(152,671)
	Structures in trust, net	3,033,800	3,010,909
	Tools, furniture and fixtures in trust		3,322	3,322
	Accumulated depreciation	(740)	(1,027)
	Tools, furniture and fixtures in trust, net		2,582	2,295
	Land in trust	65,374,983	65,374,983
	Total property, plant and equipment		132,678,671	132,047,763
	Intangible assets
	Other		866	2,419
	Total intangible assets	866	2,419
	Investments and other assets
	Investment securities	10,500	10,500
	Long-term prepaid expenses		338,437	297,275
	Deferred tax assets	9	13
	Leasehold and guarantee deposits		10,000	10,000
	Total investments and other assets	358,947	317,789
	Total non-current assets		133,038,485	132,367,972
	Deferred assets
	Investment unit issuance expenses		45,381	30,696
	Investment corporation bond issuance costs	26,049	23,865
	Total deferred assets		71,431	54,562
	Total assets	140,743,564	140,960,356

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