Japan Logistics Fund : Semi Annual Report for the six-month period ended January 31, 2023 (The 35th Period)

Management Discussion and Analysis

Background of JLF

Japan Logistics Fund, Inc. (JLF) is Japan's first dedicated logistics REIT, founded with the aim of contributing to the Japanese economy by converging the flow of money (finance) with the flow of goods (logistics), which is the lifeblood of the economy. To that end, we leverage the history and experience of Mitsui & Co., Ltd., which as a general trading company has worked in logistics operations for long time globally.

Based on the Act on Investment Trusts and Investment Corporations of Japan (Act No. 198 of 1951; including revisions enforced thereafter) (AITIC), JLF was founded on February 22, 2005 by Mitsui & Co., Logistics Partners Ltd. (MLP) as the asset manager, and was listed on the REIT section of the Tokyo Stock Exchange on May 9 of the same year (security code: 8967).

Since JLF's initial public offering, we have applied a discerning eye for logistics sites, building specifications, tenant needs and other factors to investment decisions that are tied to real demand. In the process, we have built a portfolio that can be expected to deliver solid earnings over the medium- to long-term. As Japan's first dedicated logistics REIT entering a market of REITs invested mainly in office and residential assets, JLF became a pioneer and has since demonstrated to the market a track record of the logistics sector's ability to deliver solid cash distributions to its investors.

Basic Policy

As the pioneer dedicated to logistics properties, JLF aspires to provide "stability" and "growth" of dividends in the medium- to long-term by leveraging its unparalleled experience and expertise in logistics business and in financial markets. Logistics is a series of economic activities, such as transportation, storage, loading/unloading, packaging, labeling, sorting, or information integration, which connect manufacturers and consumers directly. We believe logistics is a vital function supporting the foundations of industry and people's life in Japan. As a consequence, demand for logistics properties is likely to be solid in the long term. These days, supply chain management which optimizes the entire logistics process is becoming widespread. It is imperative to construct logistics systems that can be flexibly adjusted based on consumers' various needs. Therefore, logistics business providers now actively seek highly versatile logistics facilities in order to build elastic logistics systems. Furthermore, consolidation of logistics functions to improve efficiency, as well as separation of ownership and use of logistics facilities to reinforce balance sheets, are growing trends in the logistics business. Given the current environment, we see great investment opportunities in this area.

Investment Policy

Acquisition of new properties

Compared with other asset types, logistics properties tend to have less liquidity in the acquisition market. We believe, therefore, that collecting a broad range of information and making precise investment decisions based on the information gathered is the only way to achieve high quality property acquisitions. In order to avoid unnecessary price competition, we strive to gain early access to property information and promote negotiated transactions by leveraging our sponsors' extensive networks and the information sourcing channels of MLP. When acquiring properties, we make investment decisions focusing on the location and versatility of properties, which are essential factors in pursuing long-term stability in managing logistics properties. As a general rule, we avoid acquiring properties with unique structural features that suit only certain types of tenants in certain industries. Instead, we prefer properties with specifications that meet broad logistical demand. To minimize fluctuations in revenue arising from factors such as rent reduction requests from tenants or unexpected tenants' departure, we acquire properties that will help reduce the risk of over-concentration of tenants by avoiding excessive dependency on a single tenant

1

or industry, and will help diversify lease period expirations.

Portfolio Management

In renewing existing lease contracts, we prefer generating solid revenue flows, such as by urging the existing tenant to renew the lease with a longer term. At the same time, we aim to increase rent revenues thorough strategic negotiations. In case that a tenant decides to move out, we conduct leasing activities based on this policy so that leases are maintained without any discontinuity and that revenues are secured, by leveraging our sponsor network, intermediary companies well versed in logistics properties and tenant information, and the network of the asset manager.

We promote the improvement of the overall satisfaction level of tenants by maintaining close contact with them. Specifically, we respond to tenants' needs with respect to expanding rental space, making functional improvements in line with tenant and industry needs, and implementing renewal of the properties. We conduct repairs and renovations of properties by keeping related costs below a certain level. In addition, we strive to maintain an optimal level of maintenance management for the properties by selecting appropriate property management companies that can provide efficient management in line with the characteristics of each property, by improving the quality of the property management control at the asset manager, and by standardizing various procedures. Furthermore, we will make additional investments in properties with locational advantage in terms of leasing and properties with OBR (Own Book Redevelopment) potential, taking into consideration tenant requests, the leasing needs of facilities, floor area ratios and other factors.

Financial strategy

We set the highest priority on stability and growth of dividends while maintaining relatively conservative LTV (Loan to Value) in financing. When pursuing debt financing, we diversify funding sources and repayment due dates. In addition, with regard to tenant leasehold and security deposits, we may use such deposits to partially fund property acquisitions for efficient cash management purpose.

Strategic and Financial Review of the six-month period ended January 31, 2023 (The 35th Period from August 1, 2022

to January 31, 2023)

During the six-month period under review, the Japanese economy gained recovery momentum, striking a balance between containing the spread of COVID-19 and promoting economic activity in the face of rising prices for natural resources. Corporate earnings continued at high levels, and business sentiment remained stable. Against this backdrop, capital expenditures rose modestly.

Furthermore, the projected inflation rate is rising as consumer prices (excluding fresh foods) rose in the low 3% range compared to last year, driven mainly by higher energy, food and durable goods prices. In terms of the financial environment, overseas countries continue to raise interest rates to head off rising prices. In December 2022, the Bank of Japan decided to review some of its yield curve control operations. As a result, Japanese interest rates rose compared to the previous period. In response, the TSE REIT Index has fluctuated.

In the logistics leasing market, the Tokyo Metropolitan Area has seen bottom support for demand for logistics space, mainly from ecommerce players, manufacturers bolstering online sales and drug stores. Nevertheless, new supply in areas along National Route 16 and the Metropolitan Intercity Expressway, in particular, has dampened the pace of absorption, creating more slack in the relationship between supply and demand than in the previous period. Meanwhile, in other parts of Japan including Osaka, Nagoya and Fukuoka, the supply and demand environment remains unchanged from the previous period. In the Nagoya area in particular, the manufacturing industry is driving demand while, overall, tenants have been active. The broader tenant base across industries has contributed to a lower vacancy rate compared to the previous period.

2

Amid this environment, JLF continues to pursue stability and sustainable growth in DPU and NAVPU. In terms of external

growth in the six-month period under review and beyond, JLF took delivery on the building of the Urayasu Logistics Center

(Acquisition price: 8,745 million yen. Appraisal NOI yield: 6.9% (Note 1)) in August 2022, following the July 2022

completion of construction on the OBR (Own Book Redevelopment) (Note 2) project that had been in progress since

September 2020. Meanwhile, portfolio operations remained favorable as the occupancy rate posted 100.0% as of the end of

the period under review. Furthermore, strong internal growth was achieved as multiple existing properties had leases that were

renewed at higher rents. Moreover, JLF made more progress on the ESG front following the acquisition of GRESB's highest

5-star rating in the 2022 GRESB (Note 3) Real Estate Evaluation. JLF acquired an AA rating, the highest rating among J-

REITs for the MSCI ESG ratings (Note 4), and was included in the MSCI Japan ESG Select Leaders Index (Note 5).

JLF expects to achieve its past run-rate DPU target of 5,000 yen under its ACTIVE Asset Management strategy, thanks to

initiatives aimed at external growth and strength in internal growth.

(Note 1) Appraisal NOI yield = Appraisal NOI* / planned acquisition price (rounded to the first decimal point)

• "Appraisal NOI" refers to the net operating income (i.e., the amount obtained by deducting operating expenses from operating revenues) using the direct capitalization approach as stated in each real estate appraisal report, and is the income before depreciation is deducted. Appraisal NOI differs from NCF, which is the amount after adding investment gain such as security deposits and deducting capital expenditures. The same applies hereinafter.

(Note 2) "OBR" (Own Book Redevelopment) is the redevelopment of properties owned by JLF itself.

"Redevelopment" refers to the act of JLF building a new building on land that JLF owns after the existing building has been demolished. JLF collaborates with players such as construction companies, who build the new building on land JLF owns. After the building is complete, JLF acquires said building at a timing of its discretion. The same applies hereinafter.

(Note 3) GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance) integration of real estate companies and funds, as well as the name of organization which runs the assessment. It was founded in 2009 by a group of major European pension funds who played leading roles in launching Principles for Responsible Investment (PRI).

(Note 4) The MSCI ESG Rating is a global evaluation metric for ESG investing that comprehensively evaluates environmental, social and governance (ESG) efforts at more than 8,500 companies worldwide and grades companies in comparison to industry peers on a seven-point scale from CCC (lowest) to AAA (highest).

(Note 5) The MSCI Japan ESG Select Leaders Index is an index where MSCI selects from among names included in the MSCI Japan IMI Index those companies that excel in ESG. It is used as an investment benchmark by Japan's Government Pension Investment Fund (GPIF).

Results of Operations

The following table illustrates the financial results of the six-month period January 31, 2023 (The 35th Period from August 1, 2022 to January 31, 2023) and the six-month period ended July 31, 2022 (The 34th Period from February 1, 2022 to July 31,

2022):

In the 35th Period from August 1, 2022 to January 31, 2023, net income increased 261 million yen from the previous period

to 4,889 million yen. Major factors for the change in net income were as follows.

3

As a result of the above, JLF posted operating revenue of 10,156 million yen, operating income of 5,324 million yen, ordinary income of 4,890 million yen and net income of 4,889 million yen.

Distributions are subject to special taxation provisions (Special Taxation Measures Law (Act No. 26 of 1957,including subsequent amendments, hereinafter referred to as "Special Taxation Measures Law"), and JLF decided to distribute the entire amount of unappropriated retained earnings for the fiscal period, excluding fractions of less than one yen per unit, in an attempt to make the maximum amount of profit distribution deductible for tax purposes, resulting in a distribution per unit of 5,235 yen.

4