Introduction

Dear Fellow Unit Holders,

We are pleased to present our Semiannual Report of Nippon Prologis REIT (NPR) for the fiscal period ended November 30, 2022. This most recent earnings marks the tenth anniversary since our inception. Over the last decade, we have significantly grown our business in terms of the size of our AUM, and, more importantly, the value for our investors.

During this fiscal period, the status of the Japanese logistics real estate market remained healthy. While the supply of high-quality logistics properties has been increasing, it has continued to be well-absorbed by unprecedented demand. Demand for high-quality logistics facilities is driven by the continued growth of e-commerce, particularly due to ongoing demographic and behavioral changes among Japanese consumers, as well as the continued reconfiguration of supply chains in Japan. As a result of these tailwinds, our portfolio continued to perform well, marked by high average occupancy of 97.8 percent and strong average rent growth of 3.6 percent during the fiscal period. Japan’s e-commerce penetration rate remains substantially behind that of other major countries, leaving room for significant growth potential over the long-term.

In terms of our continued external growth, we successfully closed our twelfth follow-on offering and acquisition of three new properties (Prologis Park Inagawa 1, Prologis Park Kobe 3 and Prologis Park Ogori) in December 2022. The offering and acquisitions were accretive for our unit holders and represented our longstanding, quality-focused investment strategy.

On the financial side, we maintain one of the strongest balance sheets in the J-REIT industry. We have mitigated our exposure to the rising interest rate environment by fixing most of our rates over the long-term at a low weighted average rate of 0.64 percent. We also maintained the loan-to-value ratio, on a basis of book value of our balance sheet, below 38 percent at the end of the fiscal period, and remain at this level following our most recent offering. With this low leverage and the size of our balance sheet, we continue to have significant additional investment capacity of approximately 200 billion yen, which allows us to retain substantial optionality in terms of sources of funds for our future acquisitions.

Lastly, we are further elevating our strong commitment to ESG. In 2022, NPR identified ESG-related materiality in connection with our business activities in Japan and has established multiple targets (KPIs), which we will strive to achieve over time. And notably, we were awarded the prestigious “5 Star” rating for the eighth consecutive year by the 2022 GRESB Real Estate Assessment. We continue to be fully committed to our ESG initiatives and achievement of KPIs.

We are proud of our accomplishments during the period and will continue working tirelessly to maximize our unit holder value over the long-term. Thank you, as always, for your continued support.

Best regards,