Semi Annual Report for the six-month period ended July 31, 2025 (The 40th Period)

For the six-month period ended July 31, 2025

November 2025

Management Discussion and Analysis

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.

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.

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

or industry, and will help diversify lease period expirations.

Portfolio Management

In renewing existing lease contracts, we strive to operate with an awareness of stabilizing and improving revenues. To stabilize earnings, we will conclude long-term lease contracts. To improve earnings, we will promote rent negotiations based on the market environment and tenant conditions. 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. In public offerings, our policy is to consider the growth of unitholder value, including the growth of distributions per unit and NAV per unit. 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.

The Japanese economy today is recovering gently, despite some weak spots, while the global economy grows modestly overall. Exports and industrial production are trending flat. Corporate earnings trends are improving, and sentiment remains positive as capital investments trend mildly upward. Recently, consumer prices (excluding fresh foods) have risen in the low 3% range year-on-year, driven by higher prices for rice and other foods as wage inflation is passed on to sales prices.

Since April 2025, equity markets have swung wildly in response to US reciprocal tariffs, while the TSE REIT Index has continued to show bottom support given expectations of dividend growth on improving fundamentals, stable revenue outlooks, and inflows of funds that position J-REITs as insulated from the impacts of tariffs. The J-REIT market has enjoyed tailwinds on both supply and demand sides. Since the previous quarter, J-REITs and their sponsors have continued to purchase investment units. Meanwhile, in May through July, funds have returned to investment trusts. As a result, by the end of July 2025, the TSE REIT Index recovered to highs not seen since September 2023. Nevertheless, the overall J-REIT market remains discounted, averaging about 0.91 times Price to NAV.

In the Tokyo Metropolitan Area logistics leasing market, newly and recently built properties filled vacancies, thanks to large-scale demand from e-commerce players, manufacturers, and wholesalers. Rents declined slightly along the outer Ken-O Expressway, while in the Tokyo Bay Area and other submarkets inside the beltway, tight supply supported rental growth. In

the Greater Osaka area, demand remained strong in the city center, while demand was also prominent in outlying areas such as Shiga and Nara. Meanwhile, leasing stalled at some existing properties located in traditional logistics areas, revealing a bifurcation in the market based on location or building specifications. In the Greater Nagoya area, the vacancy rate is projected to trend downward as large amounts of new supply gets absorbed by sustained demand from large-scale tenants in manufacturing and consumer goods. In Kyushu, limited new supply in and around Fukuoka helped existing properties lease up vacant space. Demand to store daily sundries and consumer goods on the outskirts of Fukuoka City remains strong.

Amid this environment, JLF continues to pursue stability and sustainable growth in DPU and NAVPU. JLF's unit price is trading at a discount to NAV, and MLP recognizes a recovery in JLF's unit price as an important challenge. During the period under review, we completed part of the swap transaction approved in January 2025. In March, we acquired the Inzai Logistics Center and sold the Komaki Logistics Center. And in March through June, we implemented an investment unit buyback program. In terms of portfolio operations, we have achieved strong profit growth on positive re-leasing spreads at multiple properties.

The following table illustrates the financial results of the six-month period January 31, 2025 (The 39th Period from August 1, 2024 to January 31, 2025) and the six-month period ended July 31, 2025 (The 40th Period from February 1, 2025 to July 31,

2025):

In the 40th Period from February 1, 2025 to July 31, 2025, net income increased 694 million yen from the previous period to 6,099 million yen. Major factors for the change in net income were as follows.

1. Real estate leasing business revenue + 25 million yen

   Acquisition of Kita Nagoya LC (50%), Narashino LC II (10%) and Inzai LC, etc. + 207 million yen

   Sale of Ichikawa LC II (18%), Komaki LC and Komaki LC II - 186 million yen

   Other existing properties + 4 million yen

   Rent and facility charges + 63 million yen

   Increase in rent charges + 32 million yen

   Increase due to changes in occupancy rate (Average occupancy rate: 99.2%) + 31 million yen

   Others (Disappearance of cancellation penalties, etc.) - 37 million yen

   Utilities income - 20 million yen

   Existing properties, others - 0 million yen

2. Real estate leasing business expenses (Excluding depreciation, etc.) - 88 million yen

   Acquisition of Kita Nagoya LC (50%), Narashino LC II (10%) and Inzai LC, etc. - 19 million yen

   Sale of Ichikawa LC II (18%), Komaki LC and Komaki LC II + 80 million yen

   Other existing properties - 148 million yen

   Leasing fees, etc. - 130 million yen

   Repair and maintenance costs - 21 million yen

   Utilities expenses + 19 million yen

   Taxes and dues - 9 million yen

   Existing properties, others - 6 million yen

3. G&A expenses - 164 million yen

Asset management fees - 128 million yen

Other (Non-deductible consumption taxes, etc.) - 36 million yen

As a result of the above, JLF posted operating revenue of 11,651 million yen, operating income of 6,541 million yen, ordinary income of 6,100 million yen and net income of 6,099 million yen.

Note that, in the current fiscal period, a portion of the reserve for reduction entry of special provisions of replaced property (443 million yen) recorded in prior periods was reversed due to the sale of land of the Ichikawa Logistics Center II (quasi co-ownership interest: 18%). In addition, under Article 65-7 of the Act on Special Measures Concerning Taxation regarding "special provisions for taxation in the case of replacement of specified assets," a portion of the gains (638 million yen) from the March 2025 sale of the land of the Komaki Logistics Center will be retained as reserve for tax purpose reduction entry. Accordingly, JLF decided to distribute 5,904 million yen, which is the amount remaining after deducting the 638 million yen transferred from unappropriated retained earnings (including the reversal of reserve for reduction entry of special provisions of replaced property) to the reserve for reduction entry within the limits on reserve for reduction entries stipulated in Article 65-7 of the Act on Special Measures Concerning Taxation. As a result, the distribution per unit was 2,150 yen.

In addition, pursuant to its distribution policy specified in its Articles of Incorporation, JLF, in principle, plans to continuously make distributions in excess of earnings in each fiscal period (contribution refunds that fall under distributions accompanying a decrease in capital under tax law). However, in the current fiscal period, since JLF has internal reserves (reserve for reduction entry of special provisions of replaced property and reserve for tax purpose reduction entry), it will not make distributions in excess of earnings.

Looking forward, we expect the Japanese economy to exhibit slower growth as bottom support from easy monetary policy is outweighed by the downward effects on Japanese corporate earnings from any deceleration of overseas economies impacted by international trade frictions. We must keep a close eye on persistently high uncertainties related to any economic impact and inflation stemming from international trade policies and negotiations. Also, import prices may rise due to these trade policies and any resulting disruptions to the global flow of goods. Furthermore, geopolitical factors including Ukraine and the Middle East may cause prices of natural resources and grains to fluctuate substantially. Taking a longer-term view to Japan, demographic shifts have intensified perceptions of labor shortages, fueling investments in automation and tilting the scale between labor and capital. Here, lackluster progress threatens to dampen growth rates. We need to continue to closely monitor a variety of risk factors inside and outside Japan.

In the Tokyo Metropolitan Area logistics leasing market, the vacancy rate has trended upward for more than four years since January 2021, but a recent slowdown in new builds is tempering the vacancy rate's climb. For the time being, however, the leasing market will remain harsh as large-scale multi-tenant facilities deliver in Chiba and Kanagawa. Large amounts of supply are expected to come online in the Greater Osaka and Nagoya areas, but pre-leasing is progressing, pushing higher pre-let rates and assuaging fears of elevated vacancy rates. The Greater Fukuoka area is expected to maintain a stable balance between supply and demand as leasing remains mostly strong despite new development activities.

In the logistics acquisition market, the environment is expected to remain harsh, backed by demand from investors for the defensive nature of cash flows from logistics properties and the large yield gap relative to global comparators.