Presentation of Financial and Other Information

In this document:

• References to “Japanese GAAP” are to generally accepted accounting principles in Japan. References to “U.S. GAAP” are to generally accepted accounting principles in the United States of America. References to “IFRS” are to the International Financial Reporting Standards.

• There are no historical financial statements included in this document. All information presented in this document is unaudited.

• References to “yen” and “¥” refer to the lawful currency of Japan and references to “dollars”, “U.S.$” and “$” are to the lawful currency of the United States of America.

• We have rounded down certain financial and operational data amounts to the relevant digit, unless otherwise indicated. Therefore, figures in tables may not add up to totals.

• Our fiscal periods cover every six months through the end of May and November of each year, except that our first fiscal period will be the period from November 7, 2012, the date of our incorporation, to May 31, 2013.

• References to “we”, “our”, “us”, and similar references are to Nippon Prologis REIT, Inc. References to the “Asset Manager” are to Prologis REIT Management K.K. References to “Prologis Japan” are to ProLogis K.K., and references to the “Prologis Group” are to Prologis, Inc. and its group companies, including Prologis Japan, a Japanese subsidiary, as well as certain investment vehicles in which Prologis, Inc. or its other group companies have a minority interest. References to “Prologis Property Japan” are to Prologis Property Japan, Inc., Japan Branch, and references to “Prologis Property Japan SPC” are to Prologis Property Japan Special Purpose Company, each of which is an indirect subsidiary of Prologis, Inc.

• References to the “Tokyo Stock Exchange” are to Tokyo Stock Exchange, Inc.

• References to “tsubo” are to the Japanese unit of area measurement equal to the size of two standard tatami mats, or approximately 3.3058 m2 (35.58 ft2).

• References to “tons” are to the metric unit of weight measurement equal to 1,000 kilograms.

• References to the “ITA” are to the Act on Investment Trusts and Investment Corporations of Japan and the regulations thereunder.

• References to “J-REIT” or “J-REITs” are generally to Japanese investment corporations (to¯shi ho¯jin) incorporated pursuant to the ITA that invest primarily in real estate or certain real-estate related assets.

• References to “Class-A logistics facilities” are to our target logistics properties that meet the demands of logistics companies and other end-users with respect to operational efficiency and fulfill certain criteria with respect to size, location, state-of-the-art equipment, convenience and safety. In particular, a Class-A logistics facility must have all of the following features: a gross floor area of approximately 16,500 square meters (approximately 177,600 square feet) or more; a location in close proximity to population clusters, transportation hubs including expressway interchanges or major airports or seaports; a large warehouse floor space exceeding approximately 5,000 square meters (approximately 53,820 square feet) on a single floor, with a floor weight capacity of at least approximately 1.5 ton/square meter, an effective ceiling height of at least

1 approximately 5.5 meters and a span between columns of at least approximately 10 meters; spiral ramps or slopes that allow trucks direct access to upper floor warehouse space or sufficiently capable vertical conveyors; and structural and facility safety features such as seismic isolation and earthquake-proofing that can withstand natural disasters. See “Class-A Logistics Facilities”. • References to “multi-tenant logistics facilities” are to logistics facilities that offer critical design and functional features standard to Class-A logistics facilities and are capable of serving multiple customers and industries. References to “build-to-suit logistics facilities” are to Class-A logistics facilities that are developed to meet a customer’s specific requirements, while maintaining the flexibility to lease the space to future tenants or convert to a multi-tenant facility. • References to “3PL” are to third-party logistics. • References to the “greater Tokyo area” are to Tokyo, Chiba, Saitama and Kanagawa prefectures. References to the “greater Osaka area” are to Osaka and Hyogo prefectures. • References to the “Kanto area” are to Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Tochigi and Gunma prefectures. References to the “Kansai area” are to Osaka, Hyogo, Kyoto, Nara, Wakayama, Shiga and Mie prefectures. References to the “Chubu area” are to Aichi, Shizuoka, Niigata, Toyama, Ishikawa, Fukui, Yamanashi, Nagano and Gifu prefectures. References to the “Tohoku area” are to Aomori, Iwate, Miyagi, Akita, Yamagata and Fukushima prefectures. References to the “Kyushu area” are to Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki and Kagoshima prefectures. • References to “global markets” are to areas of Japan vital to international trade and logistics, specifically, the Kanto and Kansai areas, and references to “regional markets” are to areas of Japan vital to domestic trade and logistics, specifically the Chubu, Tohoku and Kyushu areas. • References to “LTV ratio” are to the loan-to-value ratio, or the ratio of aggregate principal amount of interest-bearing debt, including borrowed amounts and outstanding balances of long-term and short-term investment corporation bonds to the total assets of our portfolio. • References to “surplus cash distributions” are to distributions in excess of retained earnings. • References to “distribution LTV”, which is one of the factors we expect to analyze before making any surplus cash distributions, are to the loan-to-value ratio calculated pursuant to the following formula.

Distribution LTV (%) = A/B x 100

A = interest-bearing debt (including investment corporation bonds) at the end of the fiscal period + balance of tenant leasehold deposits released at the end of the fiscal period.

B = total appraised real estate value at the end of the fiscal period + the amount of cash deposits at the end of the fiscal period – the total amount of distributions (including surplus cash distributions).

Forward-looking Statements

This document includes forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “aim”, “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “intend”, “may”, “plan”, “potential”, “predict”, “seek”, “should”, “will”, by the negative of these terms or by other similar terminology. These statements discuss expectations, identify strategies, contain projections of our financial condition or results of operations or state other forward-looking information. In particular, this document contains our forecasts for our revenues, net income and the distributions to be made on our units in “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013”, all of which are highly speculative. The forward-looking statements in this document are subject to various risks, uncertainties and assumptions about our business. Potential risks and uncertainties that could cause our actual results to differ materially from our expectations include, without limitation: • our lack of operating history; • the Asset Manager’s limited experience in operating a J-REIT; 2 • lack of full financial statements for any of the 12 properties in our anticipated initial portfolio; • our ability to make surplus cash distributions; • adverse conditions in the Japanese economy; • our ability to close all or any of our anticipated acquisitions of properties; • our ability to complete the expected debt financing; • our ability to acquire properties to execute our growth and investment strategy; • the past experience of the Prologis Group in the Japanese real estate market being no indicator or guarantee of our future results;

• our reliance on the Prologis Group; • potential conflicts of interest between us and the Prologis Group, including the Asset Manager; • competition in seeking tenants; • any natural or man-made disaster; • our concentration of properties in the Kanto area and the Kansai area; • our strategy of investing in Class-A logistics facilities, which may subject us to risks uncommon to other J-REITs that invest primarily in a broader range of real estate or real estate-related assets;

• our ability to find replacement tenants for our properties that are customized for specific use; • unique risks associated with reclaimed land, on which certain properties in our anticipated initial portfolio are located;

• illiquidity in the real estate market; • our ability to obtain financing for future acquisitions; • liquidity and other limitations on our activities under debt financing arrangements; • increased expenses due to increases in prevailing market interest rates; • decreases in rental revenues due to lease terminations, decreases in lease renewals or defaults; • our reliance on appraisals and other expert reports, which are subject to significant uncertainties; • the performance of the Asset Manager and any key third-party service providers to which we are required to assign our business, administrative and management functions;

• tight supervision by the regulatory authorities; and • our failure to satisfy a complex series of requirements pursuant to Japanese and U.S. tax regulations.

In addition to the foregoing, important risks and factors that could cause our actual results to differ materially from our expectations are discussed under “Risk Factors” and elsewhere in this document. Furthermore, with respect to any forward-looking statements in “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013”, prospective investors must read them together with all assumptions presented in such section. Our expectations expressed in these forward-looking statements may not be achieved, and our actual results could differ materially from and be worse than our expectations. We do not intend, and disclaim any duty, to update or revise any forward-looking statements contained in this document to reflect new information, future events or otherwise. We caution you not to place undue reliance on the forward-looking statements contained in this document.

3 RISK FACTORS

An investment in our units involves significant risks. You should consider carefully the risk factors described below as well as other information contained in this document before making any investment decision.

Property and Business Risks

We have no operating history, and this document contains limited unaudited financial data, making it difficult to evaluate our prospects and future financial results

We were incorporated on November 7, 2012. We have yet to commence operations of our real estate business, as we currently do not own any properties. We therefore have no historical operations or track record for you to evaluate. Accordingly, an investment in our units will be subject to a number of risks generally associated with a new business. We may not be able to implement our investment strategy or otherwise to operate successfully, which could have a material adverse effect on our ability to generate earnings to make distributions to our unitholders, and the value of our units may decline.

We have not received audited historical financial statements for any of the properties we intend to acquire and have not been able to, and are not required to, prepare pro forma combined or consolidated financial statements for our anticipated initial portfolio. Therefore, this document contains only limited unaudited financial data for the properties in our anticipated initial portfolio and does not include historical or pro forma combined or consolidated financial statements for our anticipated initial portfolio as a whole. See “Financial Data for Certain of the Anticipated Initial Properties”. Furthermore, given the unavailability of audited historical financial statements, we are unable to provide any management’s discussion and analysis of financial condition and results of operations, or MD&A, regarding the historical results of operations for us or the properties we intend to acquire on an individual, combined or consolidated basis.

The unaudited financial data for the properties in our anticipated initial portfolio that are included in this document contain substantially less detail than would be contained in audited financial statements, the notes thereto, supporting schedules and related financial disclosures. The unaudited financial data for these properties may not reveal matters of significance to an investor regarding our operations, the properties we intend to acquire, or their historical results of operations or business prospects that would have been revealed if our audited financial statements reflected actual real estate operations and were included herein or if audited historical financial statements for the properties and accompanying MD&A were included herein. Accordingly, investors should not place undue reliance on the financial data included in this document.

The Asset Manager has limited experience in operating a J-REIT

The Asset Manager will have day-to-day responsibility for our management. While employees of the Asset Manager have experience in the real estate industry, only some have experience in operating a J-REIT in accordance with the laws and regulations applicable to J-REITs and asset managers. Thus, there is no guarantee that the Asset Manager will be able to successfully manage our operations going forward. See “—J-REITs and their asset managers are subject to tight supervision by the regulatory authorities”.

We prepared the financial forecasts included in this document without the benefit of full financial statements for any of the 12 properties in our anticipated initial portfolio

We prepared the financial forecasts included in this document under the caption “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013” based partly upon certain assumptions and the limited information available to us about the 12 properties we intend to acquire for our anticipated initial portfolio. While we believe the bases for the forecasts and the assumptions underlying our forecasts are reasonable, one significant limitation with respect to the information for these properties is that historical financial statements do not exist for any of these properties. In the absence of historical financial statements, we used unaudited financial data we obtained from the Prologis Group entities that are the current owner of each property, to prepare the forecasts. Such financial data contain substantially less detail than would be contained in audited financial statements, the notes thereto, supporting schedules and related financial disclosures. In addition, although such financial data are typically subject to the seller’s representation as to their accuracy, the absence of an audit may enhance the risk that they are materially inaccurate. Had full financial statements for all of the properties we intend to acquire existed or been available to us, the financial forecasts included herein may have been materially different. Without such full financial statements, prospective investors may not have sufficient information to evaluate the reasonableness of the forecasts contained in this document, the assumptions underlying these forecasts and the merits and risks of an investment in our units.

4 Financial forecasts are necessarily speculative, and one or more of the assumptions underlying the projections may turn out to be incorrect. Other potential risks and uncertainties that could cause our actual results to differ materially from our forecasts are set forth in “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013”, as well as elsewhere in “Risk Factors”.

For example, our revenue may be affected by unexpectedly high rates of vacancy, delinquency or default under the leases at our properties. In addition, our operating expenses may be affected by, among other things, costs related to unexpected natural disasters, increases in interest rates or other factors.

Additionally, we may from time to time purchase properties at various times during our fiscal periods, in addition to the acquisitions we currently anticipate. We may also dispose of our properties. However, because of the uncertainties relating to any acquisitions or dispositions, we have assumed for purposes of these forecasts that we will not make any acquisitions or dispositions of properties during the fiscal periods ending May 31, 2013 and November 30, 2013 other than the anticipated acquisitions of the 12 properties as described in this document. Any additional acquisitions or dispositions of properties not assumed in these forecasts would result in our actual results varying significantly from these forecasts. For these reasons, actual results achieved during the fiscal periods covered may materially and adversely vary from the forecasts.

We may not be able to make any surplus cash distributions, which are presented as part of the financial forecasts in this document

Because logistics facilities typically have a greater amount of value allocated to buildings and have shorter depreciation periods relative to other types of real estate, and because Class-A logistics facilities in particular tend to have high value-added functional features, we believe that our depreciation expense will generally be higher than that for other asset classes or more conventional logistics facilities. To adjust for the non-cash impact of this depreciation expense on net income, for the time being we expect to target a level of surplus cash distributions at an amount equivalent to approximately 30% of the depreciation expense for the relevant fiscal period. We have prepared the financial forecasts included in this document based on the assumption that we will be able to make such surplus cash distributions. However, there can be no assurance that we will be able to make surplus cash distributions for any given fiscal period. For example, consistent with our distribution policy, we expect to make surplus cash distributions only within an appropriate level for maintaining financial soundness and stability, after considering alternative uses of cash such as the execution of long-term repair plans and capital expenditures, the repayment of borrowings and acquisition opportunities. In addition, we may decide not to make any amount of surplus cash distributions based on a consideration of factors such as economic or real estate conditions and our LTV ratio, credit rating or financial condition. We will also not make surplus cash distributions that would cause our “distribution LTV” to exceed 60%.

Furthermore, surplus cash distributions are the practical equivalent of a return of capital, and thus result in a decrease in our net assets, which could adversely affect our financial condition. Such distributions also decrease our cash reserves, and thus could result in our not having sufficient cash if we cannot accurately anticipate our capital expenditure needs, new acquisitions and other cash requirements.

Any adverse conditions in the Japanese economy could adversely affect us

We are a Japanese investment corporation investing in logistics properties in Japan. As such, our business performance and the distributions we make depend largely on the performance of the Japanese economy as a whole, the outlook for which remains highly uncertain and involves factors beyond our control and the control of our tenants.

Specifically, the ongoing European sovereign debt crisis, the banking sector instability in Europe, the continued strength of the Japanese yen against the currencies of Japan’s major trading partners (despite some weakening of the Japanese yen in recent months), the possibility of another credit crisis and the impact of an increase in the consumption tax rate, which was approved by the Japanese Diet on August 10, 2012, whereby the tax rate will be raised from 5% to 8% in April 2014 and then further to 10% by October 2015, may adversely affect the Japanese economy, including its logistics industry. If the Japanese economy and demand for modern logistics facilities deteriorate, there may be downward pressure on rents and property values of our logistics facilities, which would have a material adverse effect on the value of our portfolio. Also, uncertain prospects of the overall global economy may lead many firms to be conservative in their decision-making and discourage them from switching from small and older logistics facilities to modern logistics facilities, such as our Class-A logistics facilities. Moreover, although our portfolio consists largely of medium-to-long-term lease agreements

5 with lease terms of at least five years and fixed rents, a downturn or continued weakening of the economy may cause tenants to seek to renegotiate or terminate their leases pursuant to the terms of such leases or otherwise, or cause our tenants to become insolvent. Such weakening of the economy may also cause tenants in our multi- tenant properties with relatively shorter-term lease agreements, including some which begin to expire as early as 2013, to decide not to renew their lease agreements or seek to renew at lower rents at the end of their rental terms. Any such reduction in revenues would adversely affect our business, financial condition and results of operations.

Furthermore, any adverse conditions in the Japanese economy could adversely affect our access to financing, making it more difficult for us to complete debt or equity financing necessary for us to refinance existing debt, to acquire additional properties or to carry out our expansion plans. For example, at the time of the global financial crisis following the turmoil in the subprime market in the United States and the collapse of Lehman Brothers Holdings, Inc. and many of its affiliates in 2008, the Japanese economy was adversely affected and the J-REIT sector experienced extreme difficulties in securing necessary funds through debt or equity financing.

Any of these or other factors, individually or in the aggregate, could have a material adverse effect on our business, financial condition or results of operations and could decrease our unit price and the distributions that we can make on our units.

We may not close all or any of our anticipated acquisitions of properties

As of the date of this document, we have entered into conditional purchase agreements for the acquisition of the 12 properties in our anticipated initial portfolio, subject to satisfaction of certain customary closing conditions provided in the respective purchase agreements. Although we currently expect to acquire each of these properties, there can be no assurance these conditions will all be satisfied. Any such non-satisfaction of a closing condition may prevent us from completing all or any of the 12 property acquisitions. A delay in or failure to close the acquisition of some or all of these properties, or our inability to locate suitable alternative properties in a timely manner or at all, may have a material adverse effect on our business, financial condition and results of operations.

We may not complete the expected debt financing as contemplated in this document, in which case we may not be able to acquire some or all of the properties in our anticipated initial portfolio, or we may be forced to accept alternative financing with less advantageous terms

We intend to finance the acquisition of the properties in our anticipated initial portfolio in part through term loans entered into with banks, as described under “Factors Expected to Affect Financial Condition and Results of Operations—Liquidity and Capital Resources—Commitments”. However, as of the date of this document, we have not entered into any binding or non-binding agreement with respect to this expected debt financing. In addition, we expect that the loan agreements will include customary closing conditions. Thus, there is a risk that we will not be able to complete the debt financing as contemplated in this document. If we are not able to procure debt financing, we may not be able to acquire some or all of the properties in our anticipated initial portfolio. Moreover, even if we are able to procure alternative debt financing, such financing may be on terms that are less advantageous than those that are described in this document, particularly in light of the recent uncertainties in the credit market. Among other things, such alternative loan arrangements may include higher interest rates or impose more covenants or restrictions. Any such failure to complete the debt financing as currently contemplated may have a material adverse effect on our business, financial condition and results of operations.

We may not be able to acquire properties to execute our growth and investment strategy in a manner that is accretive to earnings

We intend to leverage our strengths to acquire a diverse portfolio of Class-A logistics facilities to produce stable net operating income and distributions to our unitholders and achieve steady increases in the value of our property portfolio over the medium to long term. See “Our Business—Our Investment Strategy”. Our ability to achieve profitable rental revenues and asset growth in order to increase unitholder value depends largely on our ability to identify and acquire such properties and retain tenants on favorable terms. Like other J-REITs, we may face increases in real estate values, as well as interest rates, making it difficult for us to continually identify suitable properties that can be purchased on acceptable terms. As a result, the rate of property acquisitions that we are able to complete may decline and slow the growth of our portfolio. In addition,

6 our future acquisitions may have lower revenues or higher costs than we expect, which would lower the overall rate of return on our portfolio, and this decrease in revenue may, in turn, result in lower earnings available for distributions per unit, particularly if we fund the acquisition of such properties by issuing additional units.

There may be limitations on our ability to acquire properties through the sponsor support agreement we and the Asset Manager entered into with Prologis, Inc. and Prologis Japan. For example, although Prologis, Inc. has granted us exclusive negotiation rights for eight properties, there is no obligation for Prologis, Inc. to sell us the properties unless we agree to pricing and other terms. In addition, under the sponsor support agreement, Prologis, Inc. has agreed to provide us with information on a preferential basis regarding logistics properties in Japan that are managed by the Prologis Group and are owned directly or indirectly (including through funds held jointly with third parties) by the Prologis Group, including future developments by the Prologis Group, and which Prologis, Inc. determines meet our investment objective. However, Prologis, Inc. is only obligated to negotiate in good faith to provide us with exclusive negotiation rights for such properties, and there can be no assurance that the properties in which we and the Asset Manager express an interest will be sold to us on terms that are acceptable.

We also expect to face significant and intensifying competition from other real estate investors in acquiring attractive properties. Our competitors may have greater financial resources and may be better positioned to acquire properties. These real estate investors could enjoy significant competitive advantages that result from, among other factors, a lower cost of capital or tolerance for lower returns, stronger industry relationships and enhanced operating efficiencies. We also expect more competitors to enter the Japanese logistics facilities market as the demand for logistics facilities increases. This competition will result in higher acquisition prices, and as a result we may not be able to acquire attractive properties on favorable terms in the future. Such factors may impede our ability to expand our property portfolio and thus may have a material adverse effect on our business, financial condition and results of operations, thereby decreasing the amounts available for cash distributions.

As discussed under “—Liquidity and other limitations on our activities under our debt financing arrangements may adversely affect our business, financial condition and results of operations”, covenants in connection with our indebtedness may also restrict our ability to acquire additional properties.

The past experience of the Prologis Group in the Japanese real estate market is not an indicator or guarantee of our future results

The past experience of the Prologis Group in the Japanese real estate market or other markets does not imply or guarantee any level of our future performance. Moreover, although the Prologis Group sponsored our and the Asset Manager’s formation and is the 100% shareholder of the Asset Manager, we and the Asset Manager are required by law to be operated independently from the Prologis Group. Our performance depends on our ability and that of the Asset Manager, as well as on future events and market conditions, which may be different from or inconsistent with those faced by the Prologis Group in its business, including varying business strategies, different regulatory settings, different local and national economic circumstances, varying degrees of competition and varying circumstances pertaining to the real estate market.

Our reliance on the Prologis Group could have a material adverse effect on our business

Our relationship with the Prologis Group is important to our business and we rely on the Prologis Group in a number of areas. For example, we anticipate that our initial portfolio will be comprised entirely of properties acquired from the Prologis Group, and as discussed above, Prologis, Inc. has agreed to provide us with exclusive negotiation rights with respect to eight properties developed by the Prologis Group. In addition, we and the Asset Manager have entered into a sponsor support agreement with Prologis Japan and Prologis, Inc. pursuant to which Prologis, Inc. will provide us with support in identifying properties for potential investment and certain preferential information rights regarding proposed sales of logistics properties by the Prologis Group or by third parties, act as the property manager to any properties that we acquire through the pipeline support provided by Prologis, Inc. and provide other operational support, including secondment of personnel to the Asset Manager, market research support, property acquisition and management support and consent to use of the Prologis trade name and logo by us and the Asset Manager. See “Sponsor Support Agreement”. Prologis Group special purpose companies will also be master lessees with respect to nine of the 12 properties in our anticipated initial portfolio.

If our or the Asset Manager’s relationship with the Prologis Group deteriorates, if the Prologis Group’s support is insufficient to enable us to achieve our operational and strategic goals or if the Prologis Group

7 otherwise ceases to provide support to us, including as a result of termination or breach of any of its agreements with us or the Asset Manager ceasing to be a subsidiary of the Prologis Group, there may be a material adverse effect on our business, financial condition and results of operations.

There are potential conflicts of interest between us and the Prologis Group, including the Asset Manager

The Asset Manager owes us fiduciary duties under the ITA and the asset management agreement. However, the fact that the Asset Manager is a wholly owned subsidiary of the Prologis Group and that most of the members of its management team have been seconded from the Prologis Group gives rise to potential conflicts of interest in performing its obligations to us. Further, while the Asset Manager has various arrangements with the Prologis Group pursuant to which it will provide support to us, none of these companies have any non-compete or similar obligations that would prevent them from pursuing their own interests in the logistics business in a manner that may conflict with our interests. In addition, the Prologis Group will initially hold a minority interest of approximately 15% of our units and thus will have some ability to influence all matters requiring unitholder approval. See “—Unitholders have limited control over changes in our investment policies”. Therefore, there may be a conflict of interest if the Prologis Group’s interests are not aligned with those of the rest of our unitholders. If the Asset Manager or the Prologis Group acts or is caused to act in the interest of the Prologis Group in a manner compromising our or our other unitholders’ interests, there may be a material adverse effect on our business, financial condition and results of operations. Such conflicts of interest may include the following: • We expect to purchase all of the 12 properties in our anticipated initial portfolio from the Prologis Group, and we expect to purchase additional properties from the Prologis Group in the future as contemplated by the sponsor support agreement. In connection with such purchases, there may be conflicts of interest when the Asset Manager negotiates the purchase price and other terms with the Prologis Group, and the Asset Manager’s rules on related-party transactions may not be sufficient to prevent the Asset Manager from acting against our best interest (see “Asset Manager—Rules Regarding Related-party Transactions”). • We will appoint Prologis Japan as master property manager for the properties in our anticipated initial portfolio, as well as for any properties that we acquire through the pipeline support provided under the sponsor support agreement. In addition, the Prologis Group will be the master lessee at nine of the properties in our anticipated initial portfolio. There may be conflicts of interest for the Asset Manager in negotiating the terms of the property management and master lease agreements, as well as in any decision to renew such agreements evaluating the performance of Prologis Japan as master property manager for the properties. • There may be conflicts of interest if the Asset Manager needs to enforce on our behalf any claims we or the Asset Manager may have against the Prologis Group under various agreements. For example, the Asset Manager may need to enforce claims under the purchase agreements for the properties if such properties later turn out to have defects. See “—Any property defect may adversely affect our financial condition and results of operations”. In addition, the Asset Manager may need to enforce claims it may have for our benefit under the sponsor support agreement. • We may compete with certain other Prologis Group companies for property acquisition opportunities. There may be conflicts of interest for the Asset Manager when it competes on our behalf against such other Prologis Group companies. As a result, we may not be able or have the opportunity to acquire attractive properties that other Prologis Group companies also desire to purchase. • We may compete with certain other Prologis Group companies for tenants. There may be conflicts of interest for the Asset Manager and a Prologis Group entity as our property manager, when the Asset Manager and property manager compete for tenants on our behalf against other Prologis Group companies or affiliated funds. As a result, we may fail to attract new tenants to our properties, and such tenants may prefer the properties of other Prologis Group companies or affiliated funds. See “—We may face significant competition in seeking tenants and it may be difficult to find replacement tenants”. • In performing its obligations to us, we expect that the Asset Manager will receive significant logistical and other support from the Prologis Group under the sponsor support agreement. These additional arrangements of support may aggravate the potential conflicts of interest described above.

8 Consistent with best practices in our industry, the Asset Manager has implemented policies and procedures for the management of conflicts of interest. See “Asset Manager—Rules Regarding Related-party Transactions”. However, despite these policies and procedures and vigilant monitoring, conflicts may still arise for the Asset Manager. We will have no recourse against the Prologis Group if it pursues its own interests in developing, acquiring or operating logistics facilities in Japan in a manner that conflicts with our strategy of becoming a premier supplier of Class-A logistics facilities in Japan. If any conflict of interest resulting in favorable treatment to the Prologis Group or Prologis Group companies or affiliated funds over our interests were to arise, or if we were to incur any reputational losses as a result, our business, financial condition and results of operations may be materially adversely affected.

We may face significant competition in seeking tenants and it may be difficult to find replacement tenants

The properties that we intend to acquire may face future competition for tenants with other logistics facility providers on the basis of a wide range of factors, including location, age, functionality, construction quality, maintenance and design. We will also compete for tenants on the basis of rent levels and other lease terms. This competition may create a number of risks for our business. Tenants may consider our competitors to have superior properties, and any of our future tenants may terminate or decide not to renew their leases with us in the future. As a result of these considerations, we may lose tenants to our competitors or have difficulty in renewing leases or renting properties. An increase in the number of competing properties, particularly in close proximity to our properties, could increase competition for tenants, negatively affect the relative attractiveness of our properties and force us to reduce rents or incur additional costs in order to make our properties more attractive.

If we are not able to consistently compete for tenants or if we are unable to retain or find suitable replacement tenants, our occupancy rates may decline and we may have to take certain measures, such as lowering rent levels, in order to fill vacancies. This in turn could have a material adverse effect on our business, financial condition and results of operations.

We may suffer large losses if any of our properties incurs damage from a natural or man-made disaster

Damage to any one or more of the properties which we intend to acquire, due to a natural disaster, such as a flood, earthquake or tsunami, or due to a man-made disaster, such as a fire or industrial accident, could adversely affect our business, financial condition and results of operations. For example, Japan is earthquake- prone and has historically experienced numerous large earthquakes that have resulted in extensive property damage, such as the earthquake off the Pacific coast of northeastern Japan on March 11, 2011, or the Great East Japan Earthquake, which resulted in a tsunami and leakage of radioactive material at the Fukushima nuclear power plants. Furthermore, our tenants may be adversely affected by any natural disaster, causing them to leave our properties or seek lower rent. Although we have obtained customary engineering and seismic risk reports to which we refer in the acquisition and management of our properties, these reports are highly speculative and subject to numerous assumptions that severely limit our ability to evaluate or mitigate these risks. Therefore, a large disaster may have a material adverse effect on any or all of our properties or tenants and, in turn, our business, financial condition and results of operations.

To the extent that it is reasonably available, we intend to carry casualty insurance covering all of our properties for many types of casualty losses with policy specifications and insured limits that we believe are adequate and appropriate under our current circumstances. Despite the availability of insurance, however, certain types of losses are partially or completely uninsurable, or are not generally insured against, because of restrictions under relevant laws or regulations or because insuring such losses is not economically feasible due to the policies of insurers and reinsurers. Examples of such losses include those resulting from intentional or grossly negligent violations of law, war or acts of terrorism and mismanagement. Should any of our properties suffer an uninsured loss or a loss in excess of insured limits, or if an insurance company delays or refuses payment for insured damage to a property, we could lose our capital investment in such property as well as the anticipated future revenues from such property while remaining liable for any debt or other financial obligations related to such property. In addition, we do not currently expect to obtain earthquake insurance for any properties in our portfolio. See “Appraisals and Engineering, Environmental and Seismic Reviews—Engineering, Environmental, Seismic and Other Reviews—Seismic and Other Reviews” for further discussion of seismic risk analysis. Similarly, our reputation may suffer as a result of our inability to predict, prevent and manage losses due to a natural or man-made disaster. As a result, the unexpected costs and damage to our reputation may have a material adverse effect on our business, financial condition and results of operations.

9 Many of the properties in our anticipated initial portfolio are concentrated in the Kanto area and the Kansai area

We expect that of the 12 properties in our anticipated initial portfolio, three properties will be located in the Kanto area and four properties will be located in the Kansai area. Because of this geographic concentration, our business is and will remain susceptible to circumstances and developments that may adversely impact these areas, including natural disasters such as earthquakes, any deterioration of the regional economy, any decline in occupancy rates or decrease in rents and changes in population or average income, any of which may have a material adverse effect on our business, financial condition and results of operations, thereby decreasing the amounts available for distributions and the market price of our units.

Our strategy of investing in Class-A logistics facilities may entail risks uncommon to other J-REITs that invest primarily in a broader range of real estate or real estate-related assets

The performance of our portfolio will be materially affected by the performance of the Japanese logistics industry, including in particular whether the reconfiguration of the Japanese logistics industry will continue to create a need for the Class-A logistics facilities that represent our investment target. This will depend on factors beyond our control, such as future trends regarding the third-party logistics market and retail, manufacturing and transportation industries, as well as the extent to which Japanese companies choose to shift their production of goods and services overseas. If the anticipated future growth in demand for advanced logistics facilities such as the Class-A logistics facilities in which we plan to invest does not materialize, this could result in higher vacancy rates and lower rents, reduce the revenue we can generate from our properties and thereby have a material adverse effect on our ability to maintain, or achieve continuous growth in, unitholder value.

Our portfolio may also be vulnerable to risks associated with our focus on logistics facilities more generally. For instance, if real estate surrounding our properties is developed for uses such as residential housing, hospitals or schools, such development may impede the operations of our customers, who in turn may seek logistics facilities in other areas, resulting in reduced demand for our properties. Additionally, infrastructure changes, technological innovations in transportation, and environmental regulations may alter the roles and relative importance of shipping methods, including sea, air, rail and trucking. If, for example, a development in transportation or telecommunication networks were to materialize, making current logistics services obsolete, the supply of tenants for our logistics facilities would decrease and current tenants may not be able to pay rents as contracted, or may terminate the lease agreements, decide not to renew their leases with us, or request us to reduce rents. Any portfolio consisting largely of properties primarily designed and used to meet such obsolete logistics needs would suffer material adverse effects to its financial condition and results of operations.

Some of our logistics facilities are generally expected to cater to a single tenant or a small number of tenants and are typically designed for a specific use, which may make it difficult to find substitute tenants

Among the properties in our anticipated initial portfolio, four properties have been customized for a single tenant. In addition, we expect to have five or fewer tenants at three of our multi-tenant properties. If any of these lessees were to terminate their leases or have difficulty in making rent payments, our business may be adversely affected. If a lessee were to vacate a property, the pool of potential substitute lessees may be limited due to a number of factors unique to logistics facilities, including the large area of the lease space or the specific use and configuration of the facility, creating the possibility of a prolonged period of vacancy. As a consequence, we may be forced to decrease the rent in order to secure a substitute lessee or incur significant refurbishment expenses to prepare a property for a new lessee, which may adversely affect our business, financial condition and results of operations.

Our portfolio will contain certain properties located on reclaimed land, which is subject to unique risks, including land liquefaction

Three of the properties in our anticipated initial portfolio (Prologis Park Osaka 2, Prologis Park Maishima 3 and Prologis Park Maishima 4) are located on reclaimed land, and such properties may be affected by potential risks associated with the use of reclaimed land. Such risks include contamination caused by pollutants in the soil and filling used to construct reclaimed land, as well as flooding due to the high exposure of reclaimed land to tsunamis, tidal surges, rising sea waters and other calamities. These factors could also lead to building subsidence due to an increase in soil liquidity as well as an increased risk of damage in the event of an earthquake. If any of our properties were to suffer damage due to any of these factors, the value of such property would be adversely affected, which would have a material adverse effect on our business, financial condition and results of operations.

10 Real estate investments are not as liquid as certain other types of assets, which may reduce economic returns to investors

Real estate investments are not as liquid as certain other types of investments and this lack of liquidity may limit our ability to react promptly to changes in economic or other conditions. The Japanese real estate market has historically been more illiquid than those in other developed markets. If liquidity in the Japanese real estate market is not sufficient for us to acquire suitable properties on acceptable terms, or to sell properties promptly on acceptable terms in response to changes in the economy or our investment guidelines, our business, financial condition and results of operations could be materially adversely affected.

Any inability to obtain financing for future acquisitions could adversely affect the growth of our portfolio

Our ability to use our cash flow from operations to finance property acquisitions is severely limited, since we must distribute more than 90% of our distributable profit for each fiscal period to our unitholders in order to receive and maintain favorable tax status under the Special Taxation Measures Act. Our ability to access such cash flow may be further limited by our intention to make surplus cash distributions.

Therefore, we will depend on outside financing, including debt financing and funds obtained from additional equity offerings, for our property acquisitions. Our reliance on outside financing to expand our property portfolio creates potentially significant risks for our business and the value of our units, including the following:

• Based on factors such as a negative assessment of our financial prospects by potential financing sources or adverse conditions in capital or other financial markets, any of our sources of external funding could cease to be available on terms satisfactory to us.

• If we are unable to refinance our indebtedness, if so required, or are otherwise unable to obtain financing at times and on terms satisfactory to us or at all, we might be forced to abandon potential acquisitions or sell assets on unattractive terms or at unfavorable times.

• Restrictions on our activities under debt financing arrangements may prevent us from borrowing additional funds as needed or on favorable terms for property acquisitions, capital expenditures or general corporate purposes, or to refinance our indebtedness at maturity on terms as favorable as those of our original indebtedness. See “—Liquidity and other limitations on our activities under debt financing arrangements may adversely affect our business, financial condition and results of operations”.

• We may lose acquisition opportunities to our competitors if our cost of capital increases as compared to that of our competitors, making us particularly vulnerable during times of economic downturn.

The failure to obtain financing for our future acquisitions, including the properties we intend to acquire for our anticipated initial portfolio, could in turn have a material adverse effect on our business, financial condition and results of operations.

Liquidity and other limitations on our activities under debt financing arrangements may adversely affect our business, financial condition and results of operations

As of the date of this document, we expect to borrow ¥80.9 billion under term loans to fund a portion of the purchase price of our anticipated initial portfolio and will also separately secure a commitment line of up to ¥8 billion. We may also incur significant additional indebtedness to finance future acquisitions under further loans. The limitations imposed on us by any of such loan agreements could have significant adverse consequences, including the following:

• We may be subject to restrictive covenants in connection with any future indebtedness that may restrict our operations and limit our ability to make distributions (including surplus cash distributions) to unitholders, to dispose of the properties or to acquire additional properties. For example, we expect our loan agreements to contain restrictive covenants, including the maintenance of certain LTV and debt service coverage ratios and restrictions on our ability to grant security interests in connection with other indebtedness. Breaches of such covenants could result in, among other things, restrictions on our ability to incur new debt and our being required to grant security interests in our properties to our lenders.

11 • Our cash flow may be insufficient to meet our required principal and interest payments, in which case events of default could be triggered and lenders could require us to mortgage our properties or demand that the entire outstanding balance be paid.

Furthermore, we may be prevented from arranging debt financing quickly or at all because any lender of ours must be a certain qualified institutional investor as specified by the tax laws in order for us to maintain favorable tax treatment. Any or all of these factors could have a material adverse effect on our business, financial condition and results of operations.

A high LTV ratio may increase our exposure to changes in interest rates and have a material adverse effect on our results of operations

We seek to keep the LTV ratio at a conservative level and we will operate as a general rule with an LTV ratio at approximately 50%, with an upper limit of 60%, except under special circumstances, in order to facilitate stable financial conditions. However, we may not be able to maintain such a conservative LTV ratio at all times. For example, large transactions, such as a large acquisition or debt financing, could directly or indirectly increase our LTV ratio at any given time. An increase in our LTV ratio may increase our interest expense and exposure to changes in interest rates, which in turn may adversely affect our results of operations. Furthermore, even if we maintain an LTV ratio of 50%, macroeconomic factors or market conditions beyond our control could increase our interest expense or exposure to changes in interest rates. Any such change may reduce or increase the volatility of the amount of cash distributions to our unitholders.

We may suffer impairment losses in relation to our properties

We may from time to time be required to recognize impairment losses in relation to certain long-lived assets, including land and buildings, which will be recorded as charges to our income statement during the periods to which any such impairments relate. Because any such impairments would correspondingly reduce our net income and retained earnings for the period in which they occur, our distributions may be significantly reduced for any such period as a result of such impairment.

Furthermore, as impairment losses do not generally constitute allowable deductions under Japanese tax law, we may have to pay corporate taxes due to different treatments of impairment losses under Japanese GAAP and Japanese tax law, which could further reduce our distributions in the relevant period.

Increases in prevailing market interest rates may increase our interest expense and may result in a decline in the market price of our units

Interest rates in Japan have remained low following downward adjustments by the Bank of Japan as a result of the global financial crisis in 2008. To the extent that we have any debt with unhedged floating rates of interest or we take out new debt, our interest payments may increase, which in turn could reduce the amounts available for distributions to our unitholders. Higher interest rates may also limit our capacity for short and long-term borrowings, which would in turn limit our ability to acquire properties. Thus, higher market interest rates could cause the market price of our units to decline.

In order to mitigate our exposure to interest rate volatility, we intend to attempt to actively use interest rate hedging arrangements that convert variable interest rates to fixed interest rates and to diversify our debt to include more long-term borrowings and investment corporation bonds with varying maturity dates. For example, we intend to enter into interest rate swaps to fix the variable interest rates on most of the anticipated term loans that we expect to execute. However, these measures may not be effective in reducing our exposure to interest rate changes. For example, the counterparties to our hedging arrangements may not honor their obligations. Failure to effectively mitigate our exposure to interest rate volatility may have a material adverse effect on our financial condition and results of operations, as well as our ability to pay distributions on our units.

In addition, we believe that investors consider the distribution yield on J-REIT units relative to market interest rates as an important factor in deciding whether to buy or sell J-REIT units. If market interest rates rise, prospective purchasers of J-REIT units may expect a higher distribution yield, and the market price of our units could decline if our distribution yields do not increase. Higher interest rates would not, however, result in more funds being available for us to distribute to our unitholders and, in fact, would likely increase our borrowing costs and might decrease our profits and our funds available for distribution.

12 Decreases in tenant leasehold deposits and/or security deposits may increase our funding costs

Consistent with industry practice in the real estate sector in Japan, we expect that the tenant leases of our properties generally will require the tenants to make tenant leasehold deposits and/or security deposits. We expect to receive deposits from tenants in the total initial amount of ¥4,193 million in connection with our anticipated initial portfolio (based on information as of September 30, 2012). We generally do not expect to be required to pay interest on these tenant leasehold and security deposits. While these deposits may reduce our cost of capital in relation to other borrowings for property acquisitions, if the size of these deposits related to our properties decreases, or if we need to repay them more quickly than expected, we may be required to obtain funding at a higher effective cost of capital, thus having a material adverse effect on our portfolio returns.

Limitations on our control over operating costs may adversely affect our business

Our operating costs, such as facility management fees, depreciation and property taxes, will be largely fixed. Our rental revenues, on the other hand, may decrease due to rising vacancy rates or decreased rents. Also, some of our operating costs, such as utility expenses, will not be fixed and may increase, and our tenants may not agree to pay any or all of these costs. Competitive conditions in the local rental market may limit our ability to increase rents to cover such operating cost increases while maintaining our occupancy rates. Any such decreases in rental revenues or increases in operating costs could thus have a material adverse effect on the profitability of our portfolio, thereby decreasing the amounts available for distributions and possibly the market price of our units.

We may lose rental revenues in the event of lease terminations, decreased lease renewals, the default of a tenant as a result of financial difficulty or insolvency, or careless or imprudent property management by a tenant

If our tenants terminate their lease agreements during lease terms or fail to renew their lease agreements at the end of their rental terms, our overall occupancy rate may fall temporarily, resulting in a decrease in expected revenues. The average remaining lease term for the properties in our anticipated initial portfolio is 5.2 years and 44.5% of the remaining lease terms in terms of annual contracted rent will expire within three years. Furthermore, we may be limited from protecting ourselves against such losses through the use of contractual provisions that limit a tenant’s right to terminate, such as early termination penalties, if the courts refuse to uphold such contractual provisions or limit their effect. In addition, tenants have a statutory right to demand the reduction of rent under certain circumstances, which may cause a reduction in rent or a refund of excess rent order by the court. Tenants may also seek the protection of bankruptcy laws, which could result in delays in the receipt of rent payments, our inability to collect rental income, delays in the termination of the tenant’s lease or a delay in our ability to re-let or sell the space. Moreover, the daily management of our properties will generally be in the hands of our tenants. Careless or imprudent management of our properties may result in a material adverse effect on the value of our properties.

Master lease agreements expose us to the risk of becoming an unsecured creditor of our master lessees in the event of their insolvency

For the nine properties in our anticipated initial portfolio which will be held through a trust structure, a Prologis Group special purpose company will be a master lessee. Under a master lease agreement, the master lessee has the primary leasehold interest in the property that is subleased to the end-tenants. Although the trustees will retain their ownership interests (and we will retain the trust beneficiary interests) in the properties, the trustees will be unsecured creditors of the master lessees with respect to substantially all of our rents from these nine properties if the master lessee becomes insolvent before transferring the rent payments or any return of security deposits to the trustees. Although we expect to have arrangements for the end-tenants to make rent payments directly to the trustee, to the extent we are not able to enter into such arrangements in the future, the trustees will be unsecured creditors of the master lessees. In such a case, any insolvency of the master lessee may lead to losses, which could have a material adverse effect on our financial condition and results of operations.

Our cost of complying with regulations applicable to the properties we intend to acquire could adversely affect the results of our operations

Although we believe that the properties we intend to acquire are substantially compliant with current requirements imposed by applicable administrative laws and local ordinances, the enactment of new or additional regulations, including those related to building standards and handicap access as well as environmental and

13 zoning restrictions, could force us to incur costs in modifying our properties to comply with such regulations or prevent us from disposing of our properties. In addition, such new or additional regulations may cause us to incur significant additional costs in making any improvements to our properties. The ultimate cost of any such compliance requirements is not currently ascertainable but, if significant, could have a material adverse effect on our business, financial condition and results of operations.

Since some of the properties we intend to acquire are located in port areas, there may be tenants subject to regulation by the Port Labor Act of Japan and other related laws and regulations and may also be affected by certain business practices and demands of unions. For example, employers engaging in port transportation face constraints on the workers they may hire to work, and as a result, our tenants’ labor and other operational costs for subject facilities may be higher than for other facilities. We cannot assure you that such port area regulations will not affect our tenants’ businesses, which could consequently have a material adverse effect on our business, financial condition and results of operations.

Any property defect may adversely affect our financial condition and results of operations

The properties we intend to acquire may have defective title, design, construction or other defects or problems that may require significant capital expenditures or repair or maintenance expenses, or may result in payment or other obligations to third parties, despite our due diligence investigations of these potential issues prior to our acquisition. Moreover, the engineering and other reports that we rely upon as part of our investigation of a property are subject to potential inaccuracies or deficiencies, because many of these property defects are difficult or impossible to ascertain due to the limitations inherent in the scope of the inspections, the technologies or techniques used therein and other factors. Any or all of these factors could give rise to significant expenses, which may, in turn, have a material adverse effect on our business, financial condition and results of operations.

Moreover, statutory or negotiated representations and warranties made by the sellers of properties that we acquire may not protect us from liabilities arising from property defects. In most real property sales transactions in Japan, the seller owes statutory warranty obligations to the purchaser for any latent defects in the property pursuant to Article 570 of the Civil Code of Japan. The seller may also make contractual representations and warranties for the benefit of the purchaser to the extent that the purchaser has the ability to negotiate for them. However, such statutory warranty obligations may be contractually waived by the purchaser. Furthermore, in addition to being subject to possible statutory or contractual limitations, our ability to enforce claims under representations and warranties may also be subject to contractual and statutory limitations, including limitations with respect to properties purchased from an insolvent owner. The seller’s financial condition, and the possibility that we may only be able to assert a claim against a limited liability special purpose entity with immaterial assets, which may have been dissolved and liquidated following the sale of its properties, may also limit our protection under statutory and contractual warranty obligations. Most of the sellers of properties in our anticipated initial portfolio are limited liability special purpose entities with immaterial assets aside from the properties that we expect to acquire from them, and may be dissolved and liquidated one year following the sale of the properties. Any of these factors could subject us to potentially significant liability for property defects, which would have a material adverse effect on our business, financial condition and results of operations.

In addition, any defects in a property may lower its value or make it difficult to dispose of such property as we deem appropriate. Even if we were able to sell such a property, there is a risk that the defects could result in potentially significant expenses, including liability we may incur to a third party from selling a property with defects. As we are generally deemed to be a registered real-estate transaction manager under the Building Lots and Building Transaction Business Act of Japan, under certain circumstances, we are not permitted to ask the purchaser to waive statutory warranty obligations. In such case, we could bear unforeseen expenses in relation to defects of the disposed property and repairs of damages. This and any of the other reasons above could have a material adverse effect on our business, financial condition and results of operations.

We rely on expert appraisals and engineering, environmental and seismic reports, which are subject to significant uncertainties

We obtain appraisals as well as engineering, environmental and seismic reports to assist us in determining whether to acquire properties and how to operate properties we will own. However, these reports are not intended to be a representation as to the past, present or future value or engineering, environmental or seismic condition of the relevant property. Furthermore, different review methodologies or different sets of assumptions could affect the results of such reports and the conclusions drawn from them. Thus, different experts reviewing the same property could reach significantly different conclusions.

14 Property appraisals are largely based on forward-looking information that is inherently speculative and difficult to verify, and the appraisal values provided to us may not reflect the prices that we could obtain upon the sale of the relevant property. The appraisal values of the properties provided to us represent the analysis and determination of the relevant appraiser based on his or her particular assumptions, estimations and judgments about the value of the properties appraised, which necessarily include subjective elements. Different sets of assumptions or different estimations and judgments could result in significantly different appraisal values for the same property. Thus, other qualified appraisers could reach materially different conclusions regarding the value of our properties, including those we intend to acquire. See “Appraisals and Engineering, Environmental and Seismic Reviews—Appraisals”.

Although the engineering, environmental and seismic reports we have obtained for our properties, including those we intend to acquire for our anticipated initial portfolio, have not revealed any liabilities that we believe will have a material adverse effect on our business, because such risks are often hidden or difficult to evaluate, the reports we have obtained may not meaningfully assess such risks. Furthermore, the reviews conducted in preparation of such reports typically have a more limited scope than similar reviews conducted in similar situations in other jurisdictions. If we were to discover any significant, unidentified engineering, environmental or seismic liabilities, the value of the affected property could fall, we may be required to incur additional costs and discharge of the liability could be time consuming. See “Appraisals and Engineering, Environmental and Seismic Reviews—Engineering, Environmental, Seismic and Other Reviews”.

In addition, in accordance with customary practice in Japan, we disclose certain information relating to the probable maximum loss, or PML, of our properties based on reports we receive from third parties. PML percentages are based on complicated, highly speculative building engineering reports that include many subjective factors and are based on numerous assumptions. Neither we nor the Asset Manager are experts in earthquake risk and analysis, nor do we have the ability to assess or independently verify the analysis of PML percentages provided to us, and the uncertainties inherent in such reports limit the value of them to us. There is no assurance that a property’s PML will correspond to the actual loss suffered in the event of an earthquake. In addition, the currently available PML data for our anticipated initial portfolio do not necessarily reflect the effects of the Great East Japan Earthquake, and otherwise may not be up-to-date or reliable. Therefore, the information contained in such reports should not be referred to or relied upon in making an investment decision. See “Appraisals and Engineering, Environmental and Seismic Reviews—Engineering, Environmental, Seismic and Other Reviews—Seismic and Other Reviews”.

We rely on industry and market data that are subject to significant uncertainties

In addition to expert appraisals and engineering, environmental and seismic reports, we rely on certain market reports and industry and market data and analyses obtained from independent third-party industry sources in order to make property investment and operating decisions. We generally do not independently verify the data or analyses obtained from these sources, and such data and analyses reflect the particular assumptions, estimates and judgments used by these sources at such times. Thus, there is no assurance that any industry and market data and analyses obtained from these sources are accurate evaluations of the relevant market conditions at the time we use them to make investment or operating decisions. If any of these data or analyses proves to be incorrect, misleading or incomplete, any decisions we make in reliance on such data or analyses expose us to potential risks. For example, we may be induced to make certain investments at prices that are too high, to sell certain other investments at prices that are too low or to miss favorable opportunities altogether.

We may need to pay penalties under forward commitment contracts

We may enter into forward commitment contracts for the acquisition of properties. In principle, the purchaser is liable for damages arising from an event of default in the event that the contract is cancelled by the purchaser. In addition, regardless of the evidence of the amount of damages, some forward commitment contracts include a penalty provision determining damages based upon a certain proportion of the sale price. In the case of forward commitment contracts, since there is a period of time between signing and settlement (i.e., the delivery of the property), if we have no other option but to terminate the agreement due to our inability to obtain financing for the purchase of properties caused by changes in market conditions during the period, we would need to pay such penalties, which could have an adverse effect on our business, financial condition and results of operations.

15 Buildings we intend to acquire may violate earthquake resistance building codes, and any such buildings may collapse in even minor earthquakes or may be required to be strengthened or demolished by us at significant expense

In Japan, architectural plans for buildings must be reviewed by either a licensed third-party engineering firm, an architect or local government for compliance with building codes, including earthquake resistance standards. The level of complexity of structural calculations makes it very difficult to retroactively audit the work of firms or local governments that performed the calculations when a building was originally designed and built. Any retroactive calculations must be based on original plans and volumes of supporting data, which may no longer exist, and can take months to complete and result in significant costs. Consequently, we intend to review properties for compliance with building codes, but we do not plan to have third parties verify that seismic risk calculations with respect to buildings we intend to acquire are in fact correct. Moreover, because the support structures of existing buildings can be hidden and impossible to verify directly, fraud or mistakes in the construction or inspection phase may be impossible to subsequently detect.

As a result, we cannot provide any assurance that any of the properties we acquire, including the 12 properties that we intend to acquire for our anticipated initial portfolio, will not subsequently be discovered to have been built in violation of earthquake resistance building codes. If any of our buildings are non-compliant, they may collapse in even a minor earthquake, or we may be forced to spend large sums of money and dedicate significant management and other resources to strengthening or destroying any such buildings. Any such non-compliance could result in liabilities for compensating victims, costs for strengthening, destroying or rebuilding properties and a loss in rental revenue. Our reputation could also be severely damaged.

Moreover, any party responsible for such frauds or mistakes in the construction of properties may subsequently become insolvent, and we may not be able to recover damages, requiring us to bear some or all of such expenses. Any or all of the foregoing could result in material adverse effects on our business, financial condition or results of operations.

The environmental assessments of our properties made prior to our ownership may not uncover all environmental liabilities, and Japanese laws subject property owners to strict environmental liabilities

Prior to our acquisition of a property, we intend to arrange for an environmental assessment of the property conducted by an independent engineering firm. See “Appraisals and Engineering, Environmental and Seismic Reviews”. These assessments will include an on-site visual inspection of the property, an examination of current and historical uses of the property, discussions with persons in charge of property management and a review of relevant historical documents. However, relative to other real estate property types, the logistics facilities in which we intend to invest have a higher risk of incurring environment-related problems such as soil or groundwater problems due to the nature of their locations, and such assessments may not be adequate to identify all potential environmental problems, which can be hidden or otherwise impossible to detect without special expertise and equipment, or at all.

Under the Soil Contamination Countermeasures Act of Japan, a current owner of real property may be held strictly liable for the removal or remediation of hazardous or toxic substances, such as lead, arsenic and trichloroethylene, on or under such property, whether or not the current owner knew of or was responsible for the presence of such hazardous or toxic substances. We may also be held liable under other laws for the use of asbestos and polychlorinated biphenyls, or PCBs, at any of our properties. In addition, the presence of hazardous or toxic substances, or the failure to properly remediate such substances, may have a material adverse effect on the owner’s ability to dispose of the real property or borrow using the real property as collateral. If we discover any environmental liabilities at our properties, the value of our properties could decrease, and we may be required to remediate the underlying hazard and discharge the related environmental liabilities at a substantial cost. As a result, there may be a material adverse effect on our business, financial condition or results of operations. In addition, when excessive moisture accumulates in buildings or on building materials and is not discovered or treated, mold growth may occur. Because of Japan’s climate, in which the summer months have relatively high levels of humidity, mold growth may become problematic. The presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected properties or expose us to liability and could have a material adverse effect on our business, financial condition and results of operations.

We may also become liable if, directly or indirectly, a third party is injured or otherwise suffers a loss as a result of the presence of toxic substances on our properties, and in such a case it is unclear whether we can be

16 indemnified by those who are actually responsible. In such event, unanticipated clean-up costs that we may incur, the adverse effect on the salability of properties, the likely adverse impact on our tenants affected by such substances, and the risk of prosecution by governmental authorities may materially adversely affect our business, financial condition and results of operations.

In addition, our properties may be regulated by the Water Quality Pollution Control Act to the extent certain facilities such as large-sized water purifier tanks are installed on such properties, as will be the case with Prologis Park Ichikawa 1. According to the Water Quality Pollution Control Act, in the event that drainage which does not conform to the relevant standards is likely to be discharged, the relevant prefectural governor may order the improvement of the mud-water treatment method at the facility or the temporary suspension of the use of such facility. In addition, if that facility is likely to fall into disrepair, and other accidents occur causing water containing harmful substances to be discharged or to seep underground that may have harmful effects on human health or the environment, the property owner may be obligated to take emergency measures to prevent the discharge or seepage of water containing harmful substances, and if they neglect to take such measures, the relevant prefectural governor may impose an order obligating them to do so.

Management and Governance Risks

Our success depends on the performance of service providers to which we are required to assign various key functions

Under the ITA, we are not permitted to have employees and must outsource substantially all of our activities to third parties. The activities that need to be outsourced include our investment and financing activities, the management and custody of our assets, and certain administrative functions. As a result, our business success depends on the performance of the service providers we engage to perform these functions and our ability to maintain our relationships with these parties.

In particular, we will rely on the Asset Manager to achieve our business objectives. The Asset Manager will have broad discretion in carrying out its activities and will be the party primarily responsible for the formation and implementation of our business strategy, which includes our acquisition and financing activities, as well as the oversight of our day-to-day operations. The Asset Manager manages our assets, oversees property management for each property and directs numerous programs to be implemented by the property managers.

In addition, we and the Asset Manager will rely on property managers for on-site property management to support us and the Asset Manager in coordinating the management of the properties in our portfolio. The Asset Manager will have discretion in carrying out property management and leasing activities, including the selection of property managers and tenants.

Our reliance on third parties to conduct our business activities exposes us to potential risks. The Asset Manager, property managers, building maintenance companies, custodian and general administrator, transfer agent or other third-party service providers may not provide adequate services or may not remain in business. The termination provisions in our agreements with the Asset Manager and with our custodian and general administrator permit us to terminate their services only under limited circumstances. Also, as our portfolio continues to grow, the Asset Manager may face human resource constraints in managing our portfolio effectively. Even if a third party’s performance is favorable, that party may seek to terminate its agreement with us or may not renew its agreement with us at the end of its term. In such a case, we may not be able to appoint appropriate replacements on terms satisfactory to us in a timely manner or at all.

As a result of these risks, we may face difficulties in managing our properties and conducting our business.

Our performance depends on the efforts of key personnel of the Asset Manager

Our performance is dependent on the efforts of key personnel of the Asset Manager to make appropriate judgments and decisions regarding the operation of our business, including the formulation of strategies for implementing our business goals and the acquisition, management and disposal of properties. See “Asset Manager—Management of the Asset Manager”. We rely on the Asset Manager to retain directors and employees with relevant professional experience and knowledge in real estate and finance in order to continue to grow our business. However, competition for such highly skilled business personnel exists not only from other real estate companies, including J-REITs and other real estate investment funds, but also from investment and commercial

17 banks. There can be no assurance that the Asset Manager will be successful in retaining sufficient numbers of appropriately qualified personnel to help manage and grow our business. Failure to retain qualified personnel could have a material adverse effect on our business, financial condition and results of operations, thereby decreasing the market price of our units and the amounts available for distributions.

J-REITs and their asset managers are subject to tight supervision by the regulatory authorities

The Japanese regulatory authorities have implemented various measures to supervise J-REITs and their asset managers. For instance, the Japanese regulatory authorities have in the past taken action on a number of occasions, including issuing administrative orders against several J-REITs and their asset managers for corporate governance issues, such as the failure by an asset manager to perform its duties of care or comply with its fiduciary duties owed to J-REITs, as well as failure to take proper appraisal measures when arranging for a J-REIT to purchase properties owned by an asset manager’s group company, thus resulting in the properties being acquired by the J-REIT at possibly high prices.

Although we believe our internal controls are adequate and that we are in material compliance with all applicable laws and regulations, we may become the subject of regulatory investigations or orders in the future, and such regulatory investigations or orders and their results could have a material adverse effect on the market price of our units. In addition, in the event of any administrative order or other sanction being imposed on the Asset Manager as a result of any inappropriate action taken with respect to its management of our assets, the Asset Manager’s management of our assets could also be adversely affected, and there could be harm to the reputation of both the Asset Manager and us.

Taxation Risks

Our failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify us from certain taxation benefits and significantly reduce our cash distributions to our unitholders

We intend to maintain our current favorable tax treatment available to J-REITs that comply with Japanese tax laws. Most importantly, we expect to be able to treat our cash distributions as a deductible expense from our taxable income, provided that we satisfy all the requirements for such treatment under Japanese tax laws and regulations. See “Taxation—Taxation Relating to J-REITs under Japanese Law—Taxation of J-REITs”. If we are unable to meet such requirements, some of which are very complex or difficult to interpret or apply, or if the relevant governmental agencies fail to interpret certain tax laws and regulations in a manner consistent with our interpretation, we will not be able to take advantage of this favorable tax treatment. In such a case, we would not be able to deduct our cash distributions from our taxable income as expenses. Instead, we would have to pay cash distributions after our taxable income has been subject to Japanese corporate income tax at the regular rate.

Some of the significant tax requirements, all of which must be met to qualify for this favorable tax treatment, and the associated risks are as follows: • We must make cash distributions to our unitholders in each fiscal period in excess of 90% of our distributable profit (defined as accounting income before tax and following certain adjustments), as defined in the Special Taxation Measures Act. Our articles of incorporation require that we make cash distributions for each fiscal period in excess of 90% of our distributable profit, as defined in the Special Taxation Measures Act, in principle, up to the extent of retained earnings as of the end of such fiscal period. However, our distributable profit, as defined in the Special Taxation Measures Act, may be higher than our retained earnings under Japanese GAAP. If our distributable profit is significantly higher than our retained earnings for any fiscal period, we may not be able to pay cash distributions from retained earnings in excess of 90% of our distributable profit. Accordingly, it may be difficult to satisfy this requirement where a sizable amount of corporate income tax is assessed. Moreover, we may not be able to borrow funds or dispose of assets in order to generate the cash necessary for distributions. In such a case, we may not be able to make distributions in an amount sufficient to maintain our favorable tax treatment. • Our largest unitholder and its affiliates must not collectively hold more than 50% of our outstanding units or voting rights. Under the ITA, we are not permitted to restrict the transfer of our units and therefore, we have no control over the trading and ownership of our units or whether we satisfy this tax requirement. Furthermore, we may not be able to ascertain the identity of all of our unitholders or determine whether any of them are affiliates, rendering it difficult to accurately determine whether this tax requirement is being satisfied.

18 • Our borrowings must be from certain qualified institutional investors as defined by the FIEA and the Special Taxation Measures Act. If the Japanese tax authorities determine that our tenant leasehold or security deposits are loans, we would fail to satisfy this requirement.

• Our units must be held only by certain qualified institutional investors as defined by the FIEA and the Special Taxation Measures Act or by 50 or more investors at the end of each fiscal period. As stated above, we have no control over the trading and ownership of our units. Hence, we have no control over whether we will satisfy this tax requirement.

If the Japanese tax authorities disagree with the interpretations we used to determine our taxable income for prior periods, we may be forced to pay additional taxes for those periods

The Japanese tax authorities may from time to time investigate the basis of the determinations we make to satisfy relevant Japanese tax laws and regulations. If the tax authorities audit us and order us to retroactively change our determination related to the requirements for deductions for cash distributions, such deductions claimed in prior periods may be reclassified as taxable income in respect to the relevant prior period. In such a case, our tax burden would increase for the fiscal period in which we recognize this additional tax expense and force us to reduce the amounts of cash distributions to our unitholders for the fiscal period in which we recognize the additional tax expense or for subsequent periods.

We may not be able to benefit from reductions in certain real estate taxes enjoyed by qualified J-REITs

When we acquire properties, we may also benefit from reductions in real estate registration taxes and real estate acquisition taxes, provided that we comply with an additional series of tax requirements. However, if we are unable to meet any of these additional tax requirements, some of which are very complex or difficult to interpret or apply, or if the relevant governmental agencies fail to interpret certain tax laws and regulations in a manner consistent with our interpretation, we will not be able to take advantage of this favorable tax treatment.

Changes in Japanese tax laws may significantly increase our tax burden

The Japanese taxation system is subject to periodic revision and changes in interpretation, particularly with respect to recent reform measures designed to stimulate the overall economy in Japan. These and other factors could lead to unanticipated changes in the tax laws and regulations relating to J-REITs, or their interpretation by the relevant tax authorities, which may significantly increase our tax burden for any fiscal period and, consequently, force us to reduce the amounts of distributions to our unitholders.

We expect to be treated as a “publicly traded partnership” for U.S. federal income tax purposes

We expect that we will be classified as a publicly traded partnership that is taxed as a partnership for U.S. federal income tax purposes. Accordingly, each U.S. holder will be required to report on its U.S. federal income tax return, its allocable share of our items of income, gains, losses, deductions and credits without regard to whether corresponding cash distributions are received by that U.S. holder. A U.S. holder may be allocated income in a taxable year that exceeds the distributions on its units, and it may be allocated a share of our income in a taxable year even if it has not received a cash distribution in such year. In addition, all or a portion of any gain that is recognized by a U.S. holder upon a sale of the units may be treated as ordinary income.

Legal and Regulatory Risks

Insider trading regulations designed to protect shareholders in non-J-REIT corporations do not protect unitholders of J-REITs

Listed J-REIT units are not currently subject to insider trading regulations, as stipulated in the FIEA. Although we and the Asset Manager maintain internal rules relating to insider trading, these rules are merely contractual obligations of our officers and the officers and employees of the Asset Manager and cannot be enforced by unitholders, regulators or other third parties. Insider trading may damage the confidence of investors in our units and result in lower liquidity or decreases in the market price for our units.

Our ownership rights in some of our properties may be declared invalid or limited

We expect that nine of the 12 properties we intend to acquire will be held in a trust structure under which the title to the property will be registered in the name of the trustee, and the remaining three properties will

19 be held directly by us and registered in our name. However, such registration of title does not guarantee absolute ownership under Japanese law. We may lose the beneficiary interest in a trust property or ownership right if the seller or a former owner is found to have originally entrusted the property with a trustee or otherwise transfers the title to avoid having the property foreclosed by creditors. For example, if the former owner of a property we acquire subsequently becomes subject to bankruptcy, corporate reorganization or civil rehabilitation proceedings, we could face a claim for avoidance or fraudulent conveyance. If, for example, we acquired the property while the seller or a former owner was insolvent, or if as a result of the sale of the property to us, the seller becomes insolvent, we may be required to return the property or beneficiary interest in the property to the seller or a former owner without refund of the purchase price, or we may have to pay significant amounts to settle such claims. Further, if the former owner of a property we acquire was or becomes unable to pay its debts at the time of our acquisition of the property, the acquisition may be voided by the creditors of the former owner. Although we do not believe that any of the properties we intend to acquire for our anticipated initial portfolio are currently subject to significant risks of this type, these risks cannot be completely eliminated. As a result, future changes in the conditions of any owners or former owners of the properties we intend to acquire could jeopardize our ownership of the properties.

There is no title insurance available in Japan, which limits our ability to obtain protection from property ownership risks. Moreover, because the rights and obligations attached to some of our properties are complicated, in part because of the manner in which we acquire and hold our properties, our ownership rights in some of our properties may be declared invalid, or the rights held by third parties may limit our rights in the properties. For example, for tax reasons, when we purchase a property we may seek to delay the date on which we apply for transfer of property rights to be transferred to us on the public real estate register. Although we will seek to take steps such as pre-registering the property rights in order to ensure priority in the real estate register, during this period of delay we may not be able to assert our ownership in the event that the seller becomes insolvent. Any of these circumstances could have a material adverse effect on our business, financial condition and results of operations.

We may lose our rights in a property we intend to acquire if the purchase of the property is recharacterized as a secured financing

Depending on the underlying facts and circumstances surrounding the purchase of a property, the purchase may not meet “true sale” requirements under Japanese law and may be recharacterized as a secured financing. In such a case, the relevant property would be deemed to be an asset of the seller, and we would lose our ownership interest in the property. We would instead hold only a security interest in the property. Recharacterization could occur when the seller becomes insolvent by way of bankruptcy, corporate reorganization or civil rehabilitation proceedings. Under Japanese law, whether a purchase may be recharacterized as a secured financing is determined through a consideration of various factors, including, without limitation, the intention of the seller and purchaser, whether the seller recorded the purchased property on its balance sheet, whether the seller transferred the economic risk to the purchaser, and whether the seller and purchaser contracted a buy-back arrangement permitting the seller to reacquire the property. Although we have no reason to believe that the acquisition of any of the properties we intend to acquire for our anticipated initial portfolio would be recharacterized as a secured financing, any such acquisition may be so recharacterized following a legal or regulatory proceeding.

Our leasehold or subleasehold rights may be terminated or may not be asserted against a third party in some cases

Under Japanese law, buildings and the underlying land upon which they are built can be owned independently of each other. For example, the owner of a building may only hold a leasehold interest in the underlying land. See “Regulation—Laws and Regulations Relating to Japanese Real Estate”. To the extent that we hold leasehold or subleasehold interests in the underlying land upon which the buildings are built, either individually or together, we may not be able to reclaim our deposit with the lessor of the underlying land if the lessor of the underlying land were to become insolvent, and we may, in any bankruptcy or other such proceeding, become an unsecured creditor with respect to leasehold and security deposits paid to the lessor.

Leasehold interests may also be terminated in certain events. Further, if a leasehold interest is not perfected, it may not be asserted against third parties, including any new owner of the underlying land. In the future we may hold leasehold interests in a manner customary for the Japanese real estate market and intend to take appropriate measures to prevent such events from occurring, or to enable us to address such events should they occur; however, such events may still occur.

20 We may in the future make investments in properties through certain methods which are more complicated than and may have risks unlike those in the arrangements we currently expect to use for our anticipated initial portfolio

We may from time to time make investments in properties through more complicated methods, which may have some unique risks and, among other things, may limit our control over the properties. Such methods may include various ownership arrangements and structures under Japanese law, as further described below. Although none of the properties in our anticipated initial portfolio is expected to be held under any of the arrangements and structures described below, if we acquire such interests in the future, our rights related to the properties may be affected by the actions of other owners or interested parties, or be subject to other uncertainties. We may face limitations and be subject to various risks which may make our sales and acquisitions more difficult, and our business and operating results may be adversely affected as a result.

Leasehold interests held by third parties

We may from time to time invest in land and have third parties hold leasehold interests in such land and own the buildings and there are specific risks associated with such arrangements. In accordance with Japanese law, upon the expiration of the leasehold interest, the lessee may require us to purchase the building on the leased land at the prevailing market price, and there can be no assurance that such market price will be favorable to us. Under certain circumstances, a lessee may transfer its leasehold interest to a third party without the consent of the landlord and, for example, such transfer could be made to a new lessee with financial difficulties, which may have a material adverse effect on our results of operations. See “Regulations—Laws and Regulations Relating to Japanese Real Estate—Land Leases” for more details. Our operating results may also be adversely affected if rent payments are delayed and the total past due rent exceeds the amount secured by deposits and guarantees. Moreover, if rent is revised downward due to revision of rent or under deduction rights provided to the lessee under Japanese law, rent revenue from land with leasehold interest may decrease and may adversely affect our results of operations.

Partial ownership

Compartmentalized ownership. With compartmentalized ownership (kubun shoyu¯) arrangements, an owner typically co-owns the land and the common areas with other owners in proportion to each owner’s ownership ratio. The administration of a building subject to compartmentalized ownership is subject to various statutory and legal provisions, and certain decisions regarding property use and administration may require a majority or super-majority vote of all owners. As such, we may not be able to use or administer the building in the way we wish. Additionally, there may be rules regarding the sale of interests by the owners. In such a case, we may not be able to sell our interests in the way we wish without being subject to applicable procedures.

Property or trust beneficiary co-ownership. We may acquire an interest in some properties in the form of a co-ownership interest (kyo¯yu¯-mochibun) with third parties in the future. Under Japanese law, a co-owner of a property has the right to sell its interest in the property without the consent of the other co-owners, unless there is an agreement between the co-owners that requires such consent or grants a right of first refusal. In general, a co-owner has the right to demand that such property be partitioned. Although special provisions may be included to contractually prohibit the exercise of such right of partition, such provisions are only valid for a period of five years. If a co-owner of one of our properties becomes subject to bankruptcy proceedings, corporate reorganization or civil rehabilitation proceedings, the trustees in the proceedings of such co-owner may have the right to demand that such property be partitioned. Although the other co-owners of the property may have a right of first refusal to purchase the ownership interests of the defaulting or selling co-owner, we may not be able to exercise such rights on favorable terms. In addition, a sale of our co-ownership interest under such circumstances may result in liquidation proceeds that are less than the appraisal value of the property or interests being sold, which would have an adverse effect on our business, financial condition and results of operations.

A co-owner of a property may mortgage its interest in the property. However, such mortgage becomes applicable to the entire property when the co-owned property is partitioned. Accordingly, each of the co-owners in such case would be subject to such mortgage in proportion to its ownership interest. There is a risk that our interest in a property that was formerly owned through a co-ownership interest and owned by us independently following a partition may be subject to a mortgage that was placed on it by another co-owner.

21 We will own most of our properties through trust beneficiary interests and may suffer losses as a trust beneficiary

We expect that nine of the 12 properties in our anticipated initial portfolio will be in the form of beneficial interests in Japanese trusts that hold or will hold those properties as title holders. Although we have entered into various contractual arrangements to reduce trust-related risks, we may suffer certain trust-related liabilities and losses that would not arise if we had direct ownership of these properties, including liabilities to third parties arising from the disposition of a trust property, compensation of the trustee and property defects or losses due to unauthorized disposition or collateralization of a trust property by the trustee or the trustee’s insolvency or losses arising from the breach of trust agreement by the trustee. In addition, the trustee’s consent is generally required to transfer the beneficial interest. Further, we may not be able to assert our rights as beneficial owner if no trust registration is filed. Moreover, for properties held through trust beneficiary interests, we, as a beneficiary, will be subject to losses and risks related to the underlying properties as described in this “Risk Factors” section.

There are important differences regarding the rights of unitholders in a J-REIT compared to those of shareholders in a corporation

Under the ITA and our articles of incorporation, unitholders who do not attend and exercise their voting rights at a general meeting of unitholders are deemed to be in agreement with proposals submitted at the meeting, except in cases where contrary proposals are also being submitted. Accordingly, unitholders who do not properly exercise their voting rights may have their votes counted in favor of the proposals submitted at the meeting, regardless of their wishes.

Additionally, under the ITA, the rights of our unitholders and management are different from what might be expected in a non-J-REIT corporation. For instance, our financial statements which contain statements regarding our making of cash distributions will be approved solely by our board of directors without unitholder approval. As such, a general meeting of our unitholders may not necessarily be held every fiscal period.

Unitholders have limited control over changes in our investment policies

Amendment of the investment policies set forth in our articles of incorporation requires a vote of our unitholders. However, such investment policies are subject only to broad principles, and the manner in which we implement our investment objectives may be determined by our board of directors or delegated by our board of directors to the Asset Manager without a vote of our unitholders. Because of this broad authority, strategies for implementing our investment objectives may be changed without the vote of our unitholders in a way that could be inconsistent with the expectations of our unitholders. In addition, if any unitholder is successful in acquiring control over us, our investment objectives and business may be significantly modified from what is described in this document.

22 FINANCIAL DATA FOR CERTAIN OF THE ANTICIPATED INITIAL PROPERTIES

Overview

We were incorporated as an investment corporation (to¯shi ho¯jin) in Japan under the ITA on November 7, 2012.

We have no historical financial statements because we were only recently incorporated and have no operational history. Further, we have not prepared any pro forma combined financial statements for the properties in our anticipated initial portfolio. The financial data presented in this section for the properties we expect to include in our anticipated initial portfolio are based upon information we obtained from the Prologis Group entities that are the current owners of the interests with respect to each such property. The financial data are presented for the six months ended December 31, 2011 and the six months ended June 30, 2012. Investors should not attempt to annualize the data for periods shorter than one year contained in the tables.

The financial data are presented on a property-by-property basis. The financial data have not been audited or prepared in accordance with Japanese GAAP, and contain substantially less detail than would be contained in audited financial statements, the notes thereto, supporting schedules, related financial disclosures and MD&A. Additionally, the financial data presented below may not reveal matters of significance to an investor regarding the properties we intend to acquire that would have been revealed if audited historical financial statements and accompanying MD&A were included herein on a consolidated or property-by-property basis. Accordingly, investors should not place undue reliance on the following financial data. See “Risk Factors—Property and Business Risks—We have no operating history, and this document contains limited unaudited financial data, making it difficult to evaluate our prospects and future financial results”.

In addition, we note the following limitations with respect to the financial data we present below:

• Different expenses. Property management and facility expenses, as well as certain other expense items, vary among properties and property owners, and are also expected to change after our acquisition. In addition, while nine of the properties are (and will be after our acquisition) held through trust structures, thus resulting in trustee fees, Prologis Park Takatsuki, Prologis Park Tosu 2 and Prologis Park Tosu 4 are (and will be after our acquisition) owned directly.

• Limitations on allocations of expenses. Three of the properties that we intend to acquire (Prologis Park Kasugai, Prologis Park Kitanagoya and Prologis Park Tagajo) are currently owned by the same special purpose company, which also holds other properties. Such a special purpose company which holds multiple properties is not able to allocate certain expenses among the various properties held, and thus the financial data may not reflect certain expenses that we will incur after we acquire and operate them.

• Lack of availability of financial data for certain properties. Financial data for Prologis Park Tosu 2 are not available for the six months ended June 30, 2012, and financial data for Park Takatsuki, Prologis Park Tosu 2 and Prologis Park Tosu 4 are not available for the six months ended December 31, 2011 due to the fact that these properties commenced operations subsequent to these periods. In addition, we have not obtained permission from the current properties of any of the build-to-suit properties to release detailed line items.

• Other limitations. The financial data below are subject to other limitations, such as the fact that they do not reflect certain additional expenses that we expect to incur, such as the fees payable to property managers and the Asset Manager, general administrative expenses and non-operating expenses such as interest and financing expenses.

Due to the incomplete nature of the financial data and the other limitations described above, investors should not attempt to consolidate the following information, as it will not generate an accurate presentation of the financial history of the properties we intend to acquire or provide an appropriate basis to evaluate our consolidated business prospects.

23 Financial Data

The following is certain financial data for the 12 properties in our anticipated initial portfolio. For this purpose, we define Pro Forma NOI as operating revenues less operating expenses, as prepared by the current owners.

For the six months ended December 31, 2011 Operating expenses (1) Property and Other Real facility Repairs and property- Property Operating estate management Utility maintenance Insurance Trustee related Pro Forma number Property name revenues (1)(2) taxes fees expenses (3) expenses expenses fees expenses NOI (1) Multi-Tenant: (in thousands) 1 Prologis Park ¥ 1,170,561 ¥ 75,000 ¥ 25,119 ¥ 102,506 ¥ 2,451 ¥ 1,923 ¥ 999 ¥ 48,089 ¥ 914,470 Ichikawa 1 2 Prologis Park 999,876 82,598 21,026 46,570 6,609 1,805 900 29,169 811,197 Zama 1 3 Prologis Park 239,815 9,825 17,408 19,042 4,181 1,757 900 70,326 116,372 Kawajima (4) 4 Prologis Park 892,862 92,824 19,010 42,238 1,651 1,971 1,249 34,297 699,619 Osaka 2 5 Prologis Park 470,834 57,855 12,007 26,248 1,718 1,170 799 24,450 346,584 Maishima 3 6 Prologis Park 492,186 64,828 5,639 29,404 2,578 14,033 0 17,904 357,797 Kasugai 7 Prologis Park 231,469 36,131 8,183 11,324 570 626 900 13,211 160,520 Kitanagoya 8 Prologis Park 233,980 (20,221) 3,302 11,840 710 4,627 0 14,088 219,633 Tagajo (5) Build-to-Suit: 1 Prologis Park ------320,227 Maishima 4 (6) 2 Prologis Park ------Takatsuki (7) 3 Prologis Park ------Tosu 2 (7) 4 Prologis Park ------Tosu 4 (7)

Notes: (1) Rounded down to the nearest thousand yen. (2) Includes rent income, common area charges, facilities charges, parking lot revenues and other revenues. (3) Includes electricity, water and other utility expenses. (4) Prologis Park Kawajima was constructed in June 2011 and was not yet stabilized during this period. (5) Figures have been adjusted to exclude certain one-time expenses incurred and insurance payments received in connection with the Great East Japan Earthquake that occurred on March 11, 2011. The amount of real estate taxes reflects tax reductions introduced after the Great East Japan Earthquake. (6) We have not obtained permission from the tenant of this property to release the information missing from the table. (7) These properties were not in operation during this period.

24 For the six months ended June 30, 2012 Operating expenses (1) Property and Other Real facility Repairs and property- Property Operating estate management Utility maintenance Insurance Trustee related Pro Forma number Property name revenues (1)(2) taxes fees expenses (3) expenses expenses fees expenses NOI (1) Multi-Tenant: (in thousands) 1 Prologis Park ¥ 1,142,467 ¥ 84,601 ¥ 25,119 ¥ 89,994 ¥ 2,507 ¥ 1,923 ¥ 1,200 ¥ 48,200 ¥ 888,921 Ichikawa 1 2 Prologis Park 989,546 76,353 21,026 45,675 6,184 1,805 900 30,065 807,535 Zama 1 3 Prologis Park 670,754 72,928 20,890 32,659 960 2,108 1,200 48,314 491,692 Kawajima 4 Prologis Park 901,750 86,127 19,010 43,059 811 1,971 1,549 34,387 714,832 Osaka 2 5 Prologis Park 502,136 53,201 12,007 23,668 1,315 1,170 800 24,168 385,804 Maishima 3 6 Prologis Park 507,121 60,274 5,789 24,226 2,207 1,331 2,053 21,731 389,505 Kasugai 7 Prologis Park 255,201 21,718 8,183 10,816 332 626 743 13,190 199,591 Kitanagoya 8 Prologis Park 231,846 12,338 3,326 10,546 643 474 954 11,512 192,049 Tagajo Build-to-Suit: 1 Prologis Park ------324,067 Maishima 4 (4) 2 Prologis Park ------100,067 Takatsuki (4)(6) 3 Prologis Park ------Tosu 2 (5) 4 Prologis Park ------4,354 Tosu 4 (4)(7)

Notes: (1) Rounded down to the nearest thousand yen. (2) Includes rent income, common area charges, facilities charges, parking lot revenues and other revenues. (3) Includes electricity, water and other utility expenses. (4) We have not obtained permission from the tenant of this property to release the information missing from the table. (5) Prologis Park Tosu 2 was not in operation during this period. (6) Prologis Park Takatsuki was constructed in January 2012 and was not yet stabilized during this period. (7) Prologis Park Tosu 4 was constructed in July 2012 and was not yet stabilized during this period.

25 FACTORS EXPECTED TO AFFECT FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following describes our expected primary items of revenue and expense and certain factors that may affect such items. We expect all amounts in our financial statements to be expressed in Japanese yen.

Operating Revenues

Rental Revenues (Including Rent Income and Common Area Charges). We expect to receive a significant amount of our operating revenues as rental revenues pursuant to lease contracts that have been or will be entered into with the tenants of our properties. Our rental revenues may be affected by a number of factors, including the occupancy rates of our properties, the contractual rent payments payable by our tenants and our aggregate leasable area. Our ability to operate our properties at a high level of occupancy and attractive rent levels will depend upon a number of factors, including the attractiveness of our properties, the performance of the Asset Manager, property managers and other third parties to which we outsource our key business functions, the demand for the type of logistics facilities we will invest in, the demand for space in relevant rental markets, the supply of relevant properties in such markets and the rate of inflation or deflation in the Japanese economy.

Future economic downturns or regional downturns affecting the markets in which we operate properties may impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease commitments, which could adversely affect our ability to maintain or increase rental revenues at our properties.

Operating Expenses

Property-related Expenses. We expect to incur customary operating expenses arising from the operation of our properties including the following:

• Depreciation. Depreciation expenses will depend on the acquisition costs of our properties and the assignment of components of our properties to accounting categories with varying estimated useful lives. We expect to use the straight-line method to calculate the depreciation expenses for our properties.

• Real Estate Taxes. Real estate taxes include municipal property taxes and city planning taxes, which are imposed annually on the record owner of each property as of January 1 of each year and are paid in installments. When a property is sold, the purchaser of the property typically reimburses the seller, pursuant to the purchase agreement, for the pro rata portion of the real estate taxes that has previously been paid by the seller and that relates to the period from the acquisition date to the end of the calendar year in which such acquisition occurs (or, in some cases, to the end of March of the subsequent year). As is customary for property transactions in Japan and in accordance with Japanese GAAP, we intend to capitalize such pro rata portion of the real estate taxes. We expect to begin expensing real estate taxes relating to our anticipated initial portfolio of properties in the fiscal period ending May 31, 2014.

• Repairs and Maintenance Expenses. We expect to incur expenses associated with the ongoing repair and maintenance of the properties we expect to acquire. The general condition of each property will affect the amount of expenditures we make for ongoing repairs and maintenance.

• Property Management Fees. For the 12 properties in our anticipated initial portfolio, we will compensate Prologis Japan as the property manager with a property management fee on a monthly basis based on pro forma rental revenue of our properties as agreed between the Asset Manager and Prologis Japan.

• Trust Fees. We expect to acquire nine of the 12 properties in our anticipated initial portfolio as a trust beneficiary of trusts established through trust agreements with major financial institutions. Each trustee will be entitled to fixed trust fees that we expect to pay on a monthly basis for the period from the acquisition date through the termination of the trust.

• Insurance Expenses. We will incur insurance expenses related to fire, liability and business interruption insurance for each of the properties in our portfolio. We expect that our insurance expenses will vary from fiscal period to fiscal period based upon prevailing conditions in the insurance market.

26 • Other Property-related Expenses. We expect to incur certain other property-related expenses, such as leasing commissions, membership fees and road usage/parking fees.

Asset Management Fees. Pursuant to the asset management agreement, we will pay to the Asset Manager a type 1 management fee based on net operating income (with certain adjustments) and a type 2 management fee based on total net income (with certain adjustments). In addition, we will pay the Asset Manager acquisition fees (which will be capitalized) and disposition fees in connection with the acquisition and disposition of properties, except in connection with the acquisition of our anticipated initial portfolio. The amount of asset management fees will depend upon the size of our portfolio, our earnings and our portfolio turnover. See “Asset Manager—Asset Management Agreement—Asset Management Fees” for discussion of the asset management fees.

Other. We expect to incur certain other operating expenses, including with respect to fees paid to the custodian, general administrator and transfer agent, as well as appraisal fees, audit costs, tax advisory and legal fees and directors’ remuneration. With respect to the custodian, general administrator and transfer agent fees, we have the following arrangements with SMTB:

• Pursuant to a general administration agreement and custody agreement that we have entered into with SMTB, we will pay it a fee on a biannual basis for the provision of general administrative and custodial services. The general administrative and custodial fees will be calculated as a percentage of our total assets as of the end of each month and will depend on the size of our property portfolio.

• Pursuant to a transfer agency agreement we have entered into with SMTB, we will pay it fees based on the number of unitholders and/or the amount of transfer agency services provided by SMTB.

See “Custodian, General Administrator and Transfer Agent” for a more detailed discussion of the general administrative and custodial fees and transfer agency fees.

Property Acquisitions and Dispositions

Although we expect to have 12 properties in our portfolio after our anticipated acquisitions, any further acquisitions or dispositions of properties that we may make in the future may be relatively significant in relation to our portfolio as a whole, and may have a significant impact on our operating revenue and expenses. This will be especially true when we purchase properties in groups after arrangement of financing, such as our anticipated acquisition of 12 properties. For any fiscal period in which we acquire a property for our portfolio, our operating revenue and expenses will increase for the portion of the fiscal period in which the property is in operation. We thus expect that increases in our operating revenue and expenses attributable to acquired properties, relative to our total operating revenue and expenses, will continue to be significant for the near to medium term. In addition, for any fiscal period in which we dispose of a property in our portfolio, our operating revenue and expenses will decrease for the portion of the fiscal period in which we no longer operate the property. When we dispose of properties, we recognize gain or loss on sale of investment properties, which are included in operating revenues or operating expenses, respectively. Furthermore, although costs at the time of acquisition related to compliance with existing regulations applicable to the properties we acquire, such as costs to make modifications to comply with the City Planning Act and the Building Standards Act and costs to create environmental reports, will be capitalized during the first year of acquisition, we may bear compliance-related costs after the first year of acquisition, including any costs related to future changes in laws and regulations. See “Regulation—Laws and Regulations Relating to Japanese Real Estate—City Planning Act and Building Standards Act”. Also, as is customary for property transactions in Japan and in accordance with Japanese GAAP, when we acquire a property, we capitalize the pro rata portion of the property-related taxes. See “—Operating Expenses—Property- related Expenses—Real Estate Taxes”.

Non-operating Expenses

Interest Expenses. Once we commence operations, we expect to incur interest and financing expenses primarily relating to amounts outstanding under our anticipated term loans.

Finance-related Costs. Once we commence operations, we expect to incur interest and financing expenses primarily relating to amounts outstanding under our anticipated term loans.

27 Accounting Policies and Standards

We intend to comply with the provisions set forth in the ITA, the FIEA and its related accounting regulations, Japanese GAAP, the Corporation Tax Act, the Special Taxation Measures Act, and the various rules and regulations of the Tokyo Stock Exchange and The Investment Trusts Association, Japan.

Critical Accounting Policies

The following describes what we expect to be our critical accounting policies that will affect our more significant judgments and estimates used in the preparation of our financial statements. The preparation of our financial statements in conformity with Japanese GAAP will require us to make judgments and estimates that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities. These estimates will be based on, but not limited to, historical results, industry standards and current economic conditions, giving due consideration to materiality. Our estimates will be based on information that will be available to us at the given time and on various assumptions that we believe are reasonable under the circumstances. Actual results may vary from those estimates, and those estimates could differ, under different assumptions or conditions.

Taxes on Property

In accordance with Japanese GAAP and Japanese real estate industry custom, when we purchase a property, we capitalize the pro rata portion of the property-related taxes we reimburse to the seller as part of the acquisition cost of the property in the fiscal period of the acquisition. The property-related taxes for subsequent calendar years are charged as operating expenses. See “—Operating Expenses—Property-related Expenses— Real Estate Taxes”.

Revenue Recognition and Rental Receivables

Revenue recognition. We have separate revenue recognition policies depending on the source of the revenue:

• Rental revenues. We generally recognize rental revenues, including fixed rent revenues, variable rent revenues and common area charges, on an accrual basis over the term of each lease agreement.

• Reimbursable operating expenses and other operating revenues. We accrue utility charge reimbursements, parking space rental revenues and other miscellaneous revenues from master lessees or tenants on a gross basis. We record reimbursable charges and related reimbursements as expenses and revenues, respectively, for the fiscal period during which they are accrued or earned. However, because certain operating expenses are not determined at the end of the fiscal period to which they should be attributed, we must estimate the material reimbursements at the end of each fiscal period based on numerous factors, including historical results and current trends. These estimates require subjective assumptions and estimates, which are more speculative when the operating history of the property is limited.

Depreciation of Property and Equipment

Property and equipment, with the exception of land, is recorded at cost and depreciated on a straight-line basis over the useful lives of the applicable assets. We make subjective assessments on a regular basis as to the useful lives of properties for the purpose of determining the amount of depreciation. These assessments have a direct impact on our net income. When properties are retired or otherwise disposed of, the properties and related accumulated depreciation accounts are removed at the applicable amounts and any differences are expensed.

Maintenance and Repairs

Expenditures for maintenance and repairs are recognized upon completion of work. Major replacements and improvements that we deem will improve or extend the life of an asset are capitalized and depreciated over their estimated useful lives. We use no categorical means to identify capitalizable maintenance and repairs and examine the particular features of each item subject to maintenance or repair to decide whether or not the expenditure should be expensed or capitalized. As a result, the decision to identify such major replacements and improvements involves significant judgment.

28 Impairment Accounting

Certain long-lived assets, such as fixed assets and intangible assets, are stated at cost less depreciation and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We will recognize an impairment loss if certain indicators of asset impairment exist and the carrying amount of an asset exceeds the undiscounted sum of future cash flows of the asset. The impairment loss is measured as the difference between the carrying amount and recoverable amount (defined as the higher of fair value less cost to sell or value-in-use) of the asset. The estimation of future cash flows is inherently uncertain and relies on assumptions regarding current and future market conditions. Examples of situations that could affect future cash flows of our properties include, but are not limited to, significant decreases in occupancy, unforeseen bankruptcy, lease termination by a key tenant and a significant decrease in rents.

Asset Retirement Obligations

Asset retirement obligations are recorded when there is a statutory or contractual obligation associated with the retirement of a tangible fixed asset. Such obligations are initially recognized at present value along with an accompanying asset for the asset retirement obligation. Subsequently, the asset retirement obligation is adjusted for the accretion of the liability, depreciation of the accompanying assets, as well as for the revision of future cash flows and discount rate estimates. Estimating the present value of asset retirement obligations is inherently uncertain and relies on various assumptions and estimates, which may require revisions as further and current information becomes available.

Liquidity and Capital Resources

Funds for Acquisitions

Initially, our primary funding need is to finance the acquisition of the 12 properties that we expect to acquire for our anticipated initial portfolio, which we expect will be acquired for an aggregate purchase price of ¥173,020 million.

We anticipate funding our future investment activities with the net proceeds from future debt and equity financings and cash flow after distributions (to the extent consistent with our qualification for taxation as a J-REIT). However, our ability to use our cash flows from operations to finance property acquisitions is severely limited because we are required to distribute more than 90% of all of our distributable profit, calculated in accordance with the Special Taxation Measures Act, for each fiscal period to our unitholders. See “Distributions”.

We may borrow additional amounts in connection with the acquisition of new properties, the funding of general corporate needs, or as necessary to meet certain distribution requirements imposed on J-REITs under the Special Taxation Measures Act in order to qualify for favorable tax treatment. We may raise additional capital by issuing, in private and public transactions, equity or bonds, but the availability and terms of any such issuance will depend upon market and other conditions. There can be no assurance that we will be able to raise additional capital or financing on acceptable terms and on a timely basis, or at all.

In addition, we will consider the effects of use of tenant leasehold and security deposits in evaluating our capital needs. We pay no interest on tenant leasehold and security deposits. These deposits in relation to a property are typically transferred to us when we acquire a property and we thereby assume the obligation to return the deposit when required.

Funds for Financial Obligations and Other Cash Needs

Upon our commencement of operations, cash from our operations will be the primary source of income to fund our expenses (including debt services, repairs, maintenance and capital expenditures) and distributions to unitholders.

After the expiration or termination of the leases for our properties, or in the event a lessee is unable to meet its obligations, we anticipate that any expenditures we might become responsible for in maintaining our properties will be funded with cash from operations, borrowings or other sources. Any unanticipated expenditures or significant borrowings may adversely affect our cash available for distributions and liquidity.

29 Commitments

We have executed a non-binding letter of intent in connection with anticipated unsecured borrowings (which we have assumed will be in the total amount of ¥80.9 billion) to be used toward the purchase of our anticipated initial portfolio. In addition, we expect that the loan agreements will include customary closing conditions, including the final internal approval of the lenders. The following table summarizes the terms and maturity of the long-term borrowings, as currently contemplated in the letter of intent:

Maturity (from loan Amount of disbursement Use of Security/ Financial institution borrowings (1) Interest rate (2)(4) date) (3) proceeds guaranty (in millions) Syndicate of lenders Base interest rate + 0.25% One year Anticipated arranged by Sumitomo Base interest rate + 0.35% Three years property Unsecured Mitsui Banking Base interest rate + 0.45% Five years acquisitions and ¥80,900 and non- Corporation and The Bank Base interest rate + 0.55% Seven years other guaranteed of Tokyo-Mitsubishi UFJ Base interest rate + 0.65% Nine years related expenses Ltd......

Notes: (1) Represents the anticipated amount as of the date of this document. (2) Does not include financing-related costs to be paid to the financial institutions. The base interest rate refers to the Japanese yen TIBOR (Tokyo Interbank Offered Rate) for three-month deposits announced by the Japanese Bankers Association two business days prior to the loan disbursement date. The base interest rate will be revised on each interest payment date. (3) Each of the loans is repayable either in whole or in part prior to the maturity date if certain requirements, including our advance written notice, are met. (4) We may use interest rate swaps to fix interest rate payments for all or part of our borrowings that have a maturity date of more than one year after the loan disbursement date.

We expect our loan agreements to contain restrictive covenants, including the maintenance of certain LTV and debt service coverage ratios and restrictions on our ability to grant security interests in connection with other indebtedness. Breaches of such covenants could result in, among other things, restrictions on our ability to incur new debt and our being required to grant security interests in favor of the lenders.

30 FORECASTS FOR THE FISCAL PERIODS ENDING MAY 31, 2013 AND NOVEMBER 30, 2013

The forecasts and other information contained below are forward-looking statements, which are based upon our expectations, assumptions, estimates and projections at the time we announced these forecasts on February 4, 2013 in accordance with the rules of the Tokyo Stock Exchange. The following forecasts and underlying assumptions are subject to various risks and uncertainties, and our actual results may differ materially from those contained in these forecasts and assumptions. In addition, the forecasts and underlying assumptions are subject to a considerable degree of subjectivity. Differing judgments could lead to different forecasts or assumptions under the same set of facts and circumstances. See “Risk Factors—Property and Business Risks— We prepared the financial forecasts included in this document without the benefit of full financial statements for any of the 12 properties in our anticipated initial portfolio”. Prospective investors should read the following forecasts and other information together with the risks and uncertainties contained in “Risk Factors” and elsewhere in this document and make your own independent assessment of our future performance and prospects. Potential risks and uncertainties that could cause our actual results to differ materially from our forecasts include, without limitation:

• our lack of operating history;

• the Asset Manager’s limited experience in operating a J-REIT;

• lack of full financial statements for any of the 12 properties in our anticipated initial portfolio;

• our ability to make surplus cash distributions;

• adverse conditions in the Japanese economy;

• our ability to close all or any of our anticipated acquisitions of properties;

• our ability to complete the expected debt financing;

• our ability to acquire properties to execute our growth and investment strategy;

• the past experience of the Prologis Group in the Japanese real estate market being no indicator or guarantee of our future results;

• our reliance on the Prologis Group;

• potential conflicts of interest between us and the Prologis Group, including the Asset Manager;

• competition in seeking tenants;

• any natural or man-made disaster;

• our concentration of properties in the Kanto area and the Kansai area;

• our strategy of investing in Class-A logistics facilities, which may subject us to risks uncommon to other J-REITs that invest primarily in a broader range of real estate or real estate-related assets;

• our ability to find replacement tenants for our properties that are customized for specific use;

• unique risks associated with reclaimed land, on which certain properties in our anticipated initial portfolio are located;

• illiquidity in the real estate market;

• our ability to obtain financing for future acquisitions;

• liquidity and other limitations on our activities under debt financing arrangements;

• increased expenses due to increases in prevailing market interest rates; 31 • decreases in rental revenues due to lease terminations, decreases in lease renewals or defaults;

• our reliance on appraisals and other expert reports, which are subject to significant uncertainties;

• the performance of the Asset Manager and any key third-party service providers to which we are required to assign our business, administrative and management functions;

• tight supervision by the regulatory authorities; and

• our failure to satisfy a complex series of requirements pursuant to Japanese and U.S. tax regulations.

We make no representation that we will achieve the results anticipated by the forecasts.

We have no duty to review or revise the forecasts after the date of their announcement. We have no duty to update these forecasts except pursuant to the rules of the Tokyo Stock Exchange, which require an investment corporation listed on the exchange to announce revised forecasts promptly if the investment corporation revises the original forecasts and if the revised forecasts deviate from the original forecasts by more than a prescribed percentage, which is 30% or more for profits or losses and 5% or more for distributions.

We did not prepare the forecasts with a view toward complying, and they do not comply, with the published guidelines of the U.S. Securities and Exchange Commission or the U.S. Public Company Accounting Oversight Board or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The prospective financial information was prepared for the purposes of complying with the rules of the Tokyo Stock Exchange.

While we prepared the forecasts below by applying accounting principles that we believe are substantially consistent with Japanese GAAP, these forecasts have not been audited or reviewed by our independent auditors and we cannot assure you that the principles applied are in fact consistent with Japanese GAAP. The application of Japanese GAAP requires the recording, compilation, evaluation and adjustment of actual historical financial data, none of which we have performed. Investors are cautioned that Japanese GAAP differs in material respects from IFRS and U.S. GAAP.

We have prepared the following financial forecasts based upon the information currently available to us and the assumptions specified herein. While we believe the information upon which we have based the following forecasts and the assumptions underlying such forecasts are reasonable, full historical financial statements for the 12 properties we intend to newly acquire for our anticipated initial portfolio were not available to us and have not been included in this document. Accordingly, full financial statements were not utilized in creating the financial forecasts. Had full financial statements for each of the properties existed and been available to us, the following financial forecasts may have been materially different, and had such information been included in this document, it may have revealed facts that would have been significant in investors’ evaluations of the financial forecasts and the underlying assumptions.

All financial information, including prospective financial information, included in this document has been prepared by, and is the responsibility of, our management. Our independent auditors have not compiled, examined or performed any procedures with respect to any information contained herein and they do not express an opinion, nor will they provide any report or other form of assurance on such information or its achievability. Our independent auditors assume no responsibility for and deny any association with such financial information.

32 Forecasts Announced on February 4, 2013

The following table shows our forecasted revenues, net income, distributions per unit (excluding surplus cash distributions) and surplus cash distributions per unit for the fiscal periods ending May 31, 2013 and November 30, 2013, which we generated based on various assumptions, including those presented below. Our fiscal periods cover every six months ending on May 31 and November 30 of each year. For the fiscal period ending November 30, May 31, 2013 2013 (forecast) (forecast) (in millions, except distributions per unit) (1) Operating revenues ...... ¥3,574 ¥ 6,212 Net income ...... 1,201 2,879 Distributions per unit (excluding surplus cash distributions) (2) ...... 6,574 15,755 Surplus cash distributions per unit (2) ...... 1,415 2,123

Notes: (1) Operating revenues and net income have been rounded down to the nearest million yen; distributions per unit has been rounded down to the nearest yen. (2) Distributions per unit and surplus cash distributions per unit are calculated as total distributions divided by units outstanding as of the record date for the related distribution. For the forecast for each of the fiscal periods ending May 31, 2013 and November 30, 2013, we assumed that there would be 182,750 units outstanding as of May 31, 2013 and November 30, 2013, which would be the record dates for the related distributions, and that we would distribute substantially all of our net income for such fiscal period and approximately 28.5% of the depreciation expense for such fiscal period as surplus cash distribution.

Certain General Assumptions Underlying the Forecasts

For the purposes of our forecasts presented above, we have made the following general assumptions: • We assumed that there would be no material changes to applicable legislation and regulations, including those related to taxation. • We assumed that all agreements, including the asset management agreement, property management agreements, and lease and sublease agreements, would be enforceable and performed in accordance with their respective terms. • We assumed that there would be no material changes to Japanese GAAP, our accounting procedures or our distribution policies. • We assumed that we would borrow ¥80,900 million to fund a portion of the purchase price of our anticipated initial portfolio. We also assumed that we would receive a refund of the consumption taxes incurred in connection with the acquisition of the properties in our anticipated initial portfolio during the fiscal period ending November 30, 2013, and that we would use the proceeds of such tax refund to repay ¥5,100 million during the same fiscal period. • We assumed that we would not acquire or sell any additional properties beyond the 12 properties in our anticipated initial portfolio. • We assumed that there would be no non-operating revenues or expenses of any extraordinary nature for the fiscal periods ending May 31, 2013 and November 30, 2013. • We assumed, consistent with our current distribution policy, that we will distribute substantially all of our net income for each fiscal period, and that we will make surplus cash distributions as set forth above. The distributions per unit may be less than the amounts in the forecasts included in this document due to various factors such as fluctuations in rental revenue due to tenant changes, changes in the portfolio composition, incurrence of unexpected repairs and maintenance expenses, fluctuations in interest rates and issuance of additional units. The surplus cash distributions per unit may be less than the amounts in the forecasts included in this document based on the actual amount of our depreciation expense, as well as our consideration of alternative uses of cash such as the execution of long-term repair plans and capital expenditures, the repayment of borrowings and acquisition opportunities, as well as other factors. For a description of these and other uncertainties related to surplus cash distributions, see “Risk Factors—Property and Business Risks—We may not be able to make any surplus cash distributions, which are presented as part of the financial forecasts in this document”.

33 • We assumed there would be no material changes in the Japanese economy or real estate market. • We assumed compliance with the provisions set forth in the ITA, the FIEA, Japanese GAAP, the Companies Act of Japan, Japanese tax laws and the various rules and regulations of the Tokyo Stock Exchange and The Investment Trusts Association, Japan.

Key Assumptions Underlying the Forecasts Announced on February 4, 2013

Portfolio Assets

We assumed that we will purchase the 12 properties as described in this document for an aggregate purchase price of ¥173,020 million, as well as pay certain costs associated with such purchase. We assumed that we will not acquire or sell any properties, and that there will be no material changes to the composition of our investment portfolio, between the date we complete the acquisition of the 12 properties in our anticipated initial portfolio and November 30, 2013.

Operating Revenues

We assumed that operating revenues will consist principally of rental revenues generated by the 12 properties in our anticipated initial portfolio. We assumed the amounts of our anticipated revenues based on contractual rates specified in lease agreements, relevant lease agreements and information obtained from current interest holders, as further described below.

Rental Revenues. We assumed that our revenue will consist principally of rental revenues (including contractual rent and common charges) generated by the properties comprising our anticipated initial portfolio. We assumed revenues based on contractual rates specified in agreements as of September 30, 2012. We then made adjustments on a property-by-property basis, based on information that the Asset Manager obtained during its due diligence investigation of the properties we intend to acquire, including known tenant departures (including early terminations) and discussions with property managers, as well as on market trends and an evaluation of each property’s competitiveness. Based on such factors, we assumed that the properties in our anticipated initial portfolio would have an occupancy rate of 97.7% as of May 31, 2013 and 99.0% as of November 30, 2013. We also assumed no delinquencies or non-payment of rents by tenants.

Other Operating Revenues. We assumed certain other operating revenues, including utility charge reimbursements, parking revenue, property services fees, and advertising and miscellaneous revenues by using historical data and considering information that the Asset Manager obtained during its due diligence investigation of the properties we intend to acquire.

Operating Expenses

We expect to incur certain operating expenses arising from the operation of our properties, including the following:

Depreciation. We assumed that we will incur depreciation of approximately ¥907 million and ¥1,360 million for the fiscal periods ending May 31, 2013 and November 30, 2013, respectively, calculated using the straight-line depreciation method.

Real Estate Taxes. Real estate taxes include municipal property taxes and city planning taxes, which are imposed annually on the record owner of each property as of January 1 of each year. When a property is sold, the purchaser of the property typically reimburses the seller, pursuant to the purchase agreement, for the pro rata portion of the real estate taxes that has previously been paid by the seller and that relates to the period from the acquisition date to the end of the calendar year in which such acquisition occurs. As is customary for property transactions in Japan and in accordance with Japanese GAAP, we intend to capitalize such pro rata portions of the real estate taxes. Accordingly, we assumed we would capitalize a combined total of ¥989 million of real estate taxes for the fiscal periods ending May 31, 2013 and November 30, 2013, and recognize no expense. We expect to begin expensing real estate taxes related to our anticipated initial portfolio of properties starting with the second month of the fiscal period ending May 31, 2014.

Repair and Maintenance Expenses. We assumed that we will incur certain repair and maintenance expenses in connection with the ongoing repairs and maintenance of the 12 properties in our anticipated initial portfolio, based in part on the plan prepared by the Asset Manager for each property.

34 Property and Facility Management Fees. We assumed that we will incur property management fees based on the calculation methods indicated in the expected property management agreements and relevant information obtained during due diligence in connection with the anticipated acquisition of the properties.

Insurance Expenses. We assumed insurance expenses based on the insurance premium quotes we have received for each property.

Utility Expenses. We assumed monthly utility expenses for the properties in our anticipated initial portfolio based on relevant information obtained through the due diligence investigation of these properties and a consideration of seasonal and other factors.

Other Property-related Expenses. We assumed we will incur certain other property-related expenses, such as leasing commissions, membership fees and road usage/parking fees.

Other Operating Expenses

Asset Management Fees and Other Expenses. We assumed that our other operating expenses will consist principally of asset management fees paid to the Asset Manager. We assumed asset management fees based on the asset management agreement, as described in “Asset Manager—Asset Management Agreement— Asset Management Fees”.

Other. We assumed expenses for custodial, general administrative and transfer agency services based on the relevant agreements. We also assumed certain other operating expenses, such as directors’ remuneration and appraisal fees.

Non-operating Expenses

We assumed non-operating expenses will primarily include incorporation and offering-related costs and interest expenses.

Initial Start-up Costs and Issuance Costs of New Units. We expect to expense all of our offering- related costs during the fiscal period ending May 31, 2013, and to amortize our initial start-up costs using the straightline depreciation method over a period of 60 months. We assumed combined offering-related expenses and initial start-up costs amortization of approximately ¥351 million and ¥10 million for the fiscal periods ending May 31, 2013 and November 30, 2013, respectively.

Interest Expenses. We expect to have interest expenses of ¥239 million and ¥417 million for the fiscal periods ending May 31, 2013 and November 30, 2013, respectively.

Financing-related Costs. We expect to have financing-related costs, which mainly include amortization of upfront fees, arrangement fees and other administrative fees, of ¥55 million and ¥96 million for the fiscal periods ending May 31, 2013 and November 30, 2013, respectively. Among those costs, we assumed financing-related cost amortization of ¥55 million and ¥95 million for the fiscal periods ending May 31, 2013 and November 30, 2013, respectively.

Capital Expenditures

We assumed capital expenditures of ¥28 million and ¥62 million for the fiscal periods ending May 31, 2013 and November 30, 2013, respectively.

35 OVERVIEW OF THE LOGISTICS PROPERTY MARKET IN JAPAN

Logistics Market

The logistics business can be divided broadly into the following functional categories: delivery/ transportation, storage, handling, packaging and distribution processing. Logistics facilities are leased to manufacturers, retailers, e-commerce businesses, transportation companies, 3PL firms and other enterprises that support both regional distribution and global trade. Logistics facilities enable these users to perform functions critical to their businesses and facilitate the delivery of consumer goods like electronics and daily necessities such as food, clothes and commodities. Given their importance to the supply chain, we believe that Class-A logistics facilities will continue to generate strong demand, irrespective of shifts in broader economic conditions.

Changes in global trade are primary drivers of demand for logistics facilities. Trade is closely interrelated to gross domestic product (“GDP”); higher levels of investment, production and consumption within a globalized country are consistent with increased levels of imports and exports. As the world produces and consumes more, the volume of global trade is expected to increase at a rate well in excess of that of global GDP. In turn, an increase in consumption is expected to increase demand for logistics facilities.

The Role of Japan as a Major Economy and Global Logistics Hub

Japan is a major economic power, with the third highest GDP in the world as of 2011 according to the International Monetary Fund and a relatively high GDP per capita. As illustrated in the table below, areas in Japan that are important to domestic and international logistics have GDP and population figures comparable to those of countries considered in the entirety. All of the Japanese markets in which we seek to invest (i.e., the Kanto, Kansai, Chubu, Kyushu and Tohoku areas) are densely populated and relatively affluent, comparing favorably to major countries in terms of population and GDP. The Kanto area alone has a GDP that exceeds the GDP of either Italy, Russia, India, Canada or Australia.

Economic Indicators by Country or Region Ranked by GDP

Rank Country or Region GDP Population (in US$ billions) (in millions) 1 United States 15,075.7 310 2 China 7,298.1 1,341 3 Japan 5,866.5 127 4 Germany 3,607.4 82 5 France 2,778.1 63 6 Brazil 2,492.9 195 7 United Kingdom 2,431.3 62 8 Kanto area (Including Tokyo) 2,317.5 43

9 Italy 2,198.7 61 10 Russia 1,850.4 143 11 India 1,826.8 1,225 12 Canada 1,739.0 34 13 Australia 1,486.9 22 14 Spain 1,479.6 46 15 Mexico 1,154.0 113 16 South Korea 1,116.2 48 17 Chubu area (Including Nagoya) 1,090.4 22 18 Kansai area (Including Osaka) 1,064.7 23 19 Indonesia 846.5 240 20 The Netherlands 838.1 17 21 Turkey 774.3 73

36 Rank Country or Region GDP Population (in US$ billions) (in millions) 22 Switzerland 660.8 8 23 Saudi Arabia 597.1 27 24 Kyushu area (Including Fukuoka) 549.3 13

25 Sweden 544.7 9 26 Belgium 514.6 11 27 Poland 514.5 38 28 Norway 485.4 5 29 Iran 482.4 74 30 Taiwan 466.4 23 31 Argentina 444.6 40 32 Austria 418.4 8 33 South Africa 408.7 50 34 Tohoku area (Including Sendai) 403.3 9 35 Thailand 345.7 69

Source: IMF “World Economic Outlook Database October 2012”; Cabinet Office, Government of Japan “List of Japanese prefectures by GDP for the Fiscal Year Ended March 2009”; Ministry of Internal Affairs and Communications of Japan, Statistics Bureau “2010 Survey”; United Nations, Department of Economic and Social Affairs “World Population Prospects, the 2010 Revision”. Notes: (1) GDP of Iran, Turkey, Argentina and South Africa are the estimated values for 2012, GDP of Japan is the nominal value for the fiscal year ended March 2009 and GDP of other countries are actual values for 2011. (2) The population of Taiwan is the published value by the Ministry of Foreign Affairs of Japan as of the end of October 2012. (3) The dollar value of yen is based on the rate of telegraphic transfer middle rate US$1=JPY77.6 of The Bank of Tokyo-Mitsubishi UFJ, Ltd., as of September 30, 2012. (4) GDP and population figures above have been rounded to the nearest hundred million and the nearest million, respectively.

Japan’s major trading partners internationally include China, the United States, Europe and other Asian countries, including South Korea. Moreover, Japan’s geographic location as a gateway to the growing economies of Asia also serves to make it an important hub of global logistics. We also believe that from the point of view of regulatory transparency, Japan has the most established logistics property market in Asia. As global trade continues to expand inside and outside of Asia, we believe that Japan has the potential to further grow as a global logistics hub to serve as a locus of that trade.

Fundamental Reconfiguration of Japanese Logistics Driving Demand for Advanced Logistics Facilities

We believe that the overall economic, industrial and social structure inside and outside Japan has changed dramatically in recent years. These larger structural shifts first affected manufacturing but have since impacted all other industries in the supply chain, leading to a fundamental reconfiguration of Japan’s logistics networks across all industries. Key factors affecting such a reconfiguration include:

• Requirement for logistics facilities to interface with the sophisticated supply chain. The expansion of global trade, the shift of production lines overseas and the increase in imported goods have led to a shift in need from conventional warehouses to state-of-the-art logistics facilities. Traditional warehouses are located close to factories and serve only a storage function while state-of-the-art logistics facilities are situated in close proximity to seaports or airports, are convenient for distribution to areas of high consumption and are able to interface with the increasingly complex and sophisticated supply chain.

• Shift from ownership to leasing. Japanese companies are increasingly focusing corporate resources on their core businesses. As part of this process, we believe that many Japanese companies that do not focus on logistics as a core business are in the process of removing their logistics-related properties from their balance sheet by shifting from ownership to leasing arrangements or through elimination and consolidation of such logistics-related properties. We believe that many of these companies are seeking, or will seek, to lease state-of-the-art logistics facilities that meet their need for more sophisticated logistics functions.

37 • Rise of 3PL firms that require logistics facilities with higher functionality. Japanese companies are also increasingly engaging in cost-cutting by outsourcing logistics functions that would traditionally be performed in-house to 3PL firms focused exclusively on providing logistics services. As a result of this trend, 3PL firms are increasingly focused on improving the quality of their logistics services and meeting the increasingly sophisticated distribution needs of their clients in a timely manner. We believe that 3PL firms are experiencing growth and represent a strong source of demand for state-of-the-art logistics facilities with higher functionality that can provide them with a competitive advantage.

Set forth below is the indexed revenue growth in the 3PL businesses of nine companies that are tenants in our anticipated initial portfolio, which we believe is representative of the growth of 3PL businesses generally in Japan.

Indexed 3PL Business Revenue Growth of Selected Tenants Index (March 2008=100) 130

120

110

100

90

80

70

60 March 2008 March 2009 March 2010 March 2011 March 2012

Source: CBRE. Note: (1) The above graph was prepared based on a survey of the 3PL business conducted by CBRE at our and the Asset Manager’s request of the revenue growth of 3PL businesses in Japan. The survey was conducted by creating indexes for the last five years of 3PL business revenue (based on publicly disclosed segment revenue information) of nine tenants in our anticipated initial portfolio. March 2008 data is the base index (=100). The data includes revenue growth that may be attributable to acquisitions or other factors not related to organic revenue growth.

38 • Rise of e-commerce and e-tailing. The rise of e-commerce and e-tailing in Japan has significantly changed the logistics needs of retail businesses, as direct-order sales have increased and department store sales are in decline. Among other changes, we believe that this rise of e-commerce and e-tailing is increasing the need for logistics facilities that are convenient in terms of appropriately managing personal and product information, rapid sorting of numerous goods and providing efficient and accurate small-scale deliveries to diverse individual customers. The following graph shows trends in department store and online/direct-order company sales in Japan from 2005 to 2011:

Trends in Department Store and Online/Direct-order Company Sales

(in JPY trillions)

8.0

6.0

4.0

2.0

0.0 2005 2006 2007 2008 2009 2010 2011

Department stores Online/Direct-order companies

Source: Japan Department Stores Association, Japan Direct Marketing Association. Note: (1) Sales for online/direct-order companies were calculated by adding the sales results from a survey conducted by the Japan Direct Marketing Association of its 508 member companies to estimates from various other surveys of the sales of some 160 other prominent, non-member companies. The survey was conducted from June 11 to July 13, 2012. The estimate was centered on the sales of goods, including clothing, general goods, cosmetics and health foods. Insurance and digital contents are included as part of the sales from member companies.

Older, conventional warehouses in Japan were designed primarily to serve only storage purposes, and thus are not able to respond to the increasing need for throughput functionality driven by these factors. As a result, we believe there is strong demand for advanced logistics facilities, such as the Class-A logistics facilities that are our investment target and that meet certain standard criteria with respect to size, location, state-of-the-art equipment, convenience and safety, as described in more detail under “Class-A Logistics Facilities”.

At our and the Asset Manager’s request, CBRE has prepared certain analyses of advanced logistics facilities and the logistics market in Japan, as described below. For this purpose, CBRE defined “advanced logistics facilities” using certain characteristics derived from our definition of Class-A logistics facilities in the different ways described in the relevant footnotes below.

Increasing Demand for Advanced Logistics Facilities Unmet by Supply

Despite what we believe to be the increasing demand for advanced logistics facilities, we believe that an overwhelming percentage of the domestic stock of logistics facilities in Japan is not equipped with modern, highly-specialized operational capabilities and is thus functionally obsolete for advanced logistics needs.

39 The following graph shows that less than 2% of all logistics facilities in Japan meets the definition of advanced logistics facilities used by CBRE based on data as of March 2011.

Proportion of Advanced Logistics Facilities in Japan

Advanced Logistics Facilities 8.4 million m² 1.8%

Other 452.8 million m² 98.2%

Source: CBRE. Notes: (1) Based on a survey conducted by CBRE at our and the Asset Manager’s request. (2) “Advanced logistics facilities” are logistics facilities for lease, developed by corporations investing in real estate and real estate development companies and functionally designed having the following characteristics derived from our definition of Class-A logistics facilities: a gross floor area of at least 5,000 tsubo (16,500 square meters), and, as a general rule, a floor weight capacity of at least 1.5 ton/square meter and a ceiling height of at least 5.5 meters and a span between columns of at least 10 meters. The survey did not include logistics facilities owned by logistics companies and therefore did not cover all logistics facilities having a gross floor area of 5,000 tsubo (16,500 square meters) or more. CBRE collected data for the survey from information disclosed by property owners and from information received or collected by CBRE in its ordinary course of brokerage activities. (3) The gross floor area of all logistics facilities located across Japan, including logistics facilities owned by corporations, as of March 2011 was estimated by CBRE based on the “Summary Report on Prices, etc. of Fixed Assets (Land)” prepared by the Ministry of Internal Affairs and Communications and the “Annual Report on Construction Statistics” prepared by the Ministry of Land, Infrastructure, Transport and Tourism. Since it is an estimated value, the actual sum of the gross floor areas of all logistics facilities including logistics facilities owned by corporations located across Japan may differ.

Although data using the equivalent criteria are not available for properties outside of Japan, we believe that the proportion of such advanced logistics facilities is significantly lower in Japan than in other developed markets, and that this relative scarcity suggests strong potential demand for Class-A logistics facilities.

We believe that this scarcity of advanced logistics facilities in Japan is due in part to the fact that the majority of Japanese logistics facilities were built either under an outdated construction code or before the concept of advanced logistics facilities was introduced. First, as shown in the graph below, since 1961, approximately 177 million square meters of warehouses were built under the construction code in place before 1981, which had lower earthquake-resistance standards, and therefore these warehouses are functionally obsolete from a safety perspective.

40 Logistics Facilities Built Before and After Construction Code Changes

(in thousands m2)

20,000

18,000 Approximately 177 million m 2 16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0 1961 1965 1966 1978 1982 1983 1987 1988 1991 1993 1994 1999 2000 2003 2005 2006 2009 2010 1962 1963 1964 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1979 1980 1981 1984 1985 1986 1989 1990 1992 1995 1996 1997 1998 2001 2002 2004 2007 2008

Source: Ministry of Land, Infrastructure, Transport and Tourism, “Statistics of Construction Starts”. Note: (1) The above shows the sum of the gross floor area of warehouses with steel framed reinforced concrete construction, reinforced concrete construction and steel construction.

In addition, many sophisticated logistics facilities that are responsive to the needs of high-grade distributive processing were not introduced in Japan until the last 15 to 20 years, which we believe calls into question the adequacy of the existing logistics facilities in Japan. Therefore, we believe that there is and will continue to be strong demand to upgrade from older, functionally obsolete facilities to advanced logistics facilities such as the Class-A logistics facilities in which we plan to invest.

41 Strong Structural Demand Supporting a Need for Increasing Supply of Advanced Logistics Facilities

The cumulative supply of advanced logistics facilities (based on another CBRE survey conducted at our and the Asset Manager’s request) has continued to rise each year, despite inconsistent GDP growth in Japan, as shown in the graph below:

Historical Trends in the Cumulative Supply of Advanced Logistics Facilities in Japan

(in thousands m2) (%) 12,000 6.0

10,000 4.0

8,000 2.0

6,000 0.0

4,000 (2.0)

2,000 (4.0)

0 (6.0) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Supply (Left Axis) Real GDP Growth (Right Axis)

Source: CBRE. Cabinet Office, Government of Japan (GDP). Notes: (1) Based on a survey conducted by CBRE at our and the Asset Manager’s request. (2) This data is as of September 30, 2012. “Advanced logistics facilities” are logistics facilities for lease, developed by corporations investing in real estate and real estate development companies and functionally designed that have a gross floor area of 5,000 tsubo (16,500 square meters) or more and, as a general rule, with floor weight capacities of 1.5 ton/square meter or more and ceiling heights of 5.5 meters or more. (3) The survey did not include logistics facilities owned by logistics companies and therefore did not cover all logistics facilities having a gross floor area of 5,000 tsubo (16,500 square meters) or more. CBRE collected data for the survey from information disclosed by property owners and from information received or collected by CBRE in its ordinary course of brokerage activities.

We believe the continued development of advanced logistics facilities over the last decade, despite inconsistent growth in the Japanese economy at large, indicates strong stable structural demand for advanced logistics facilities that has been largely independent from the performance of the Japanese economy at any given time. This is illustrated by the consistent demand for advanced logistics facilities even through the global financial crisis and the Great East Japan Earthquake and its aftermath.

42 Stable Rent and Occupancy Rates

As indicated in the graph below, market rents for medium-to-large-scale logistics facilities in the greater Tokyo area and the greater Osaka area have been generally stable.

Average Asking Rent for Medium-to-Large Scale Logistics Facilities

(JPY/Tsubo) 5,000

4,000

3,000

2,000

1,000

0 2005 2006 2007 2008 2009 2010 2011

Greater Tokyo Area Greater Osaka Area

Source: CBRE. Note: (1) For properties with 1,000 tsubo (3,300 square meters) or more available for lease. “Greater Tokyo Area” includes Tokyo, Chiba, Saitama and Kanagawa prefectures. “Greater Osaka Area” includes Osaka and Hyogo prefectures.

In addition, occupancy rates in medium-to-large scale multi-tenant logistics facilities in both the greater Tokyo area and the greater Osaka area rose between 2008 and 2011, despite the recent worldwide economic downturn, and new demand has exceeded new supply since 2010, as indicated in the respective graphs below. We believe these graphs also show a structural stable demand for relatively larger-sized logistics facilities despite the inconsistent performance of the Japanese economy. We also believe that the stable occupancy rates indicate the possibility of achieving rent stability and earnings growth through investments in such logistics facilities.

The following graphs show occupancy rates, new supply and net absorption for medium-to-large-scale logistics facilities in the greater Tokyo area and the greater Osaka area, respectively.

Occupancy Rates, New Supply and Net Absorption for Medium-to-Large-Scale Logistics Facilities in the Greater Tokyo Area

(m2) (%) 2,000,000 100 1,800,000 90 1,600,000 80 1,400,000 70 1,200,000 60 1,000,000 50 800,000 40 600,000 30 400,000 20 200,000 10 0 0 2005 2006 2007 2008 2009 2010 2011 New Supply (Left Axis) Net Absorption (Left Axis) Occupancy Rate (Right Axis)

43 Occupancy Rates, New Supply and Net Absorption for Medium-to-Large-Scale Logistics Facilities in the Greater Osaka Area

(m2) (%) 1,000,000 100 900,000 90 800,000 80 700,000 70 600,000 60 500,000 50 400,000 40 300,000 30 200,000 20 100,000 10 0 0 2005 2006 2007 2008 2009 2010 2011

New Supply (Left Axis) Net Absorption (Left Axis) Occupancy Rate (Right Axis)

Source: CBRE. Notes: (1) Based on a survey conducted at our and the Asset Manager’s request. (2) For facilities of 5,000 square meters or more. As of June 2012, the greater Tokyo area included 212 facilities and the greater Osaka area included 50 facilities. “New Supply” refers to the aggregate floor area of logistics facilities newly constructed and available for lease each year. “Net Absorption” refers to the increase and decrease of occupied floor space based on subtracting the area of customers leaving a property from the area leased to new customers each year. “Occupancy Rate” refers to the percentage of the total area available for lease that is in fact leased as of December 31 of each year.

Sustained High Level of Demand for Advanced Logistics Facilities Following the Great East Japan Earthquake

The Great East Japan Earthquake and resulting tsunami that occurred in March 2011 caused substantial property destruction and damage, particularly in the Tohoku region of northeastern Japan. Following the disaster, we believe there has been an increasing focus on business continuity from leading companies seeking to relocate to more earthquake-resistant facilities, and a trend for large companies with widespread operations to diversify their logistics centers across multiple locations. We believe this trend has increased demand for advanced logistics facilities in a variety of global and regional markets in Japan.

44 CLASS-A LOGISTICS FACILITIES

We are strategically focused on Class-A logistics facilities in Japan’s key logistics hubs due to the ongoing fundamental reconfiguration of Japan’s supply chain, the increasing importance of advanced logistics which requires advanced logistics facilities and the obsolescence of a majority of Japan’s existing logistics stock, as discussed above under “Overview of the Logistics Property Market in Japan”.

Specifically, we consider Class-A logistics facilities to be those that meet the demands of logistics companies and other end-users with respect to operational efficiency and fulfill the following criteria with respect to size, location, state-of-the-art equipment, convenience and safety:

• A gross floor area of approximately 16,500 square meters (approximately 177,600 square feet) or more;

• a location in close proximity to population clusters, transportation hubs including expressway interchanges or major airports or seaports;

• a large warehouse floor space exceeding approximately 5,000 square meters (approximately 53,820 square feet) on a single floor, with a floor weight capacity of at least approximately 1.5 ton/ square meter, an effective ceiling height of at least approximately 5.5 meters, and a span between columns of at least approximately 10 meters;

• spiral ramps or slopes that allow trucks direct access to upper floor warehouse space or sufficiently capable vertical conveyors; and

• structural and facility safety features such as seismic isolation and earthquake-proofing that can withstand natural disasters.

45 OUR BUSINESS

Overview

We were incorporated on November 7, 2012 under the ITA as a Japanese investment corporation (to¯shi ho¯jin) formed to acquire, own and operate real estate properties. This type of investment corporation is commonly referred to as a J-REIT. Pursuant to the ITA, we are required to outsource substantially all of our operations and activities to third parties, including the Asset Manager. See “Asset Manager.”

Our investment objective is to acquire and own logistics facilities in Japan, and to increase unitholder value by maintaining a portfolio that generates stable income and achieves steady portfolio growth through sound acquisitions and proactive portfolio management.

We do not currently own any properties, but we expect to acquire an initial portfolio of 12 properties from our sponsor, the Prologis Group. See “Anticipated Initial Portfolio”.

We intend to differentiate our business by focusing on the following key criteria and strategies:

• Strategic focus on building a high-quality portfolio of Class-A logistics facilities. Given the ongoing fundamental reconfiguration of Japan’s supply chain, the increasing importance of advanced logistics which requires advanced facilities and the obsolescence of the majority of Japan’s existing logistics stock, we believe there will continue to be strong demand for Class-A logistics facilities located in Japan’s key logistics hubs. While only a small percentage of Japan’s total logistics facilities qualifies as advanced, all 12 properties in our anticipated initial portfolio are Class-A logistics facilities. Our anticipated initial portfolio, with an aggregate acquisition price of ¥173.0 billion, immediately provides us with scale, and had a weighted average age of 3.4 years as of September 30, 2012.

• Full sponsor support from the Prologis Group, the leading global owner, operator and developer of logistics facilities. The Prologis Group, our sponsor, is the leading global owner, operator, and developer of Class-A logistics facilities, focused on markets tied to global trade across Asia, the Americas, and Europe. Through our relationship with the Prologis Group, we will benefit from its global expertise, customer relationships and track record as a leading developer of logistics facilities in Japan and throughout the world. According to CBRE, since 2002 the Prologis Group has developed approximately 44% of the advanced logistics facilities stock in Japan having certain characteristics of Class-A logistics facilities. Our exclusive negotiation rights for eight additional properties owned by the Prologis Group, as well as other pipeline support, operational support and personnel support we will receive under the sponsor support agreement, provide attractive growth opportunities to acquire stabilized Class-A logistics facilities and increase value for our unitholders.

• Earnings stability from a diversified portfolio of Class-A logistics facilities. We believe that the longer lease terms generally associated with logistics facilities, as well as the superior design features of Class-A logistics facilities in particular, will provide substantial stability in earnings. We believe the rising demand and current supply imbalance for Class-A logistics facilities further supports that earnings stability. We will seek to maximize earnings stability through an optimal balance between multi-tenant logistics facilities, which provide tenant diversification, and build-to- suit logistics facilities, which provide for comparatively longer lease terms. We will also aim to have a geographically diverse portfolio that targets both global and regional markets in Japan.

• Financial strategy focused on long-term stability and efficiency. We will seek to maintain a capital structure that ensures long-term stability and takes into account our LTV ratio and market conditions. With respect to debt financing, we intend to maintain an appropriate proportion of long- term, fixed-rate loans. In utilizing equity financing, we intend to carefully consider dilution to existing unitholders.

• Governance structure promoting medium-to-long-term growth in unitholder value. While utilizing the full support of the Prologis Group, we and the Asset Manager will also implement appropriate measures to protect the interests of unitholders and to minimize conflicts of interest, as detailed under “Asset Manager—Rules Regarding Related-party Transactions”. We also believe that the interests of the Prologis Group and our unitholders will be aligned in that we anticipate that the

46 Prologis Group will hold approximately 15% of our units. In addition, asset management compensation paid to the Asset Manager will be linked to net operating income and net income for the relevant period, with certain adjustments.

Our Market Opportunity

We believe Class-A logistics facilities offer a unique opportunity to generate stable, attractive investment returns. This opportunity is a result of the following factors:

• Japan’s position as a global logistics hub. We believe that Japan’s economic strength, its strong international trade relationships and its geographic location as the eastern gateway to rising Asian economies make it an important global logistics hub, leading to increased demand for logistics facilities.

• Fundamental reconfiguration of Japanese logistics, driving demand for Class-A logistics facilities. The rapid growth of the third-party logistics market is driven by a variety of factors including Japanese companies striving to reduce operating costs. Additionally, the rise of e-commerce and e-tailing is driving strong and sustainable demand for Class-A logistics facilities in Japan.

• Increasing demand for advanced logistics facilities unmet by supply. Despite increasing demand, we believe there continues to be a shortage of advanced logistics facilities in Japan equipped with highly specialized operational capabilities. According to a survey conducted by CBRE, less than 2% of the existing logistics stock in Japan had certain advanced features similar to Class-A logistics facilities as of March 2011. Although data using the equivalent criteria is not available for properties outside of Japan, we believe that such advanced logistics facilities represent a significantly greater proportion of the existing logistics stock in the United States and Europe.

• Stable rent and occupancy rates. Rent and occupancy rate levels for medium-to-large scale multi- tenant logistics facilities have been stable in recent years despite the inconsistent performance of the Japanese economy, which we believe demonstrates a structural stable demand for relatively larger- sized logistics properties.

• Sustained high level of demand for Class-A logistics facilities following the Great East Japan Earthquake. Following the earthquake, leading companies have placed an increased focus on business continuity planning, seeking facilities that have earthquake resistant structural and design safety features. Furthermore, large companies are spreading their operations across multiple locations, recognizing the importance of geographic diversity from the perspective of business continuity.

See “Overview of the Logistics Property Market in Japan”.

Sponsorship from the Prologis Group

The Prologis Group includes the global parent company Prologis, Inc., a real estate investment trust headquartered in the United States and listed on the New York Stock Exchange with a $16 billion equity market capitalization as of September 30, 2012, and its group companies (including Prologis Japan, as well as joint investment vehicles and managed funds in which the Prologis Group has less than a majority interest). The Prologis Group owns and operates approximately 52.5 million square meters (565 million square feet) of net leasable area of logistics facilities in 21 countries. The Prologis Group also has a strong track record in Japan spanning more than 10 years and has developed or is currently developing a total of 67 Class-A logistics facilities totaling 4.0 million square meters (43.1 million square feet) of gross floor area. For more information regarding the Prologis Group and its track record in Japan, see “The Prologis Group”.

As discussed in more detail under “Sponsor Support Agreement”, we and the Asset Manager expect to receive broad support from the Prologis Group, including pipeline support, operational support and personnel support. In terms of positioning within the Prologis Group’s operations in Japan, the Prologis Group is expected to assume the mid- to high-risk role of developing logistics facilities, while we expect to assume the low- to moderate-risk role of owning stabilized Class-A logistics facilities. We consider a property to be stabilized when its occupancy rate is in excess of 90%. The Prologis Group plans to continue developing Class-A logistics facilities in Japan, providing attractive opportunities for us to grow our portfolio and increase value for our unitholders. See “Sponsor Support Agreement” for additional details.

47 Our Investment Strategy

We plan to invest in advanced logistics facilities in global and regional markets in Japan. Our strategy will utilize the more than 10 years of experience of the Prologis Group in developing and leasing in Japan as well as the Prologis Group’s global platform. Our focused strategy builds on the strength of our initial portfolio of Class-A logistics facilities and provides stable income and distributions to unitholders and steady increases in the value of our portfolio. We intend to implement the following strategies to achieve our objectives:

Portfolio Strategy

• Focus on Class-A Logistics Facilities. Our portfolio strategy is primarily focused on investments in Class-A logistics facilities, leveraging the unique development capabilities of the Prologis Group. Our sponsor support agreement provides us with access to the expertise, portfolio and brand of the Prologis Group. We will also seek to acquire stabilized Class-A logistics properties from third-party sellers.

• Maximize Diversification. Our investment strategy is focused on both diversification by property characteristics and by geography, with the goal of securing stability of income and distributions.

O Investments in a mix of “multi-tenant” and “build-to-suit” logistics facilities. The logistics facilities in which we intend to invest can be categorized as “multi-tenant” or “build-to-suit” logistics facilities, which respectively have the following characteristics:

▪ Multi-tenant logistics facilities. The multi-tenant logistics facilities that we seek to acquire offer critical design and functional features standard to Class-A logistics facilities and are capable of serving multiple customers and industries, increasing cash flow stability. We will utilize the Prologis Group’s leasing expertise and strong customer relationships to maintain and increase portfolio occupancy. The lease term for multi-tenant logistics facilities is generally five years.

▪ Build-to-suit logistics facilities. The build-to-suit logistics facilities that we seek to acquire are developed to meet a customer’s specific requirements, while maintaining the flexibility to lease the space to future tenants or convert to a multi-tenant facility. The lease term for build-to-suit logistics facilities is generally 10-15 years, providing stable cash flow.

O Target geographic diversification. We will seek to build a geographically diverse portfolio targeting areas of Japan vital to international trade and logistics, which we call “global markets”. We also plan to target areas vital to domestic trade and logistics within Japan, which we call “regional markets”. Specifically, we consider the Kanto and Kansai areas (encompassing Tokyo and Osaka, respectively), which have the greatest levels of domestic consumption and international trade and distribution, to be global markets, and the Chubu, Tohoku and Kyushu areas, which are regional areas critical to Japan’s domestic trade, to be regional markets. We believe that a geographically diverse portfolio will minimize fluctuations in cash flow due to regional economic shifts or localized impacts from natural disasters. We may also invest in areas outside these global and regional markets that are close to areas with high consumption or production or we otherwise deem suitable locations for logistics facilities. All 12 of our anticipated initial properties are located in global or regional markets.

• Strong Initial Portfolio. Our relatively large anticipated initial portfolio of 12 properties, with an aggregate acquisition price of ¥173.0 billion, comprises high-quality Class-A logistics facilities that reflect the objectives of our portfolio strategy. For more information regarding our anticipated initial portfolio, see “Anticipated Initial Portfolio”.

48 External Growth Strategies

We will seek to build on the strengths of our anticipated initial portfolio through external growth from the pipeline support we expect to receive from the Prologis Group and the independent sourcing capabilities of the Asset Manager, creating substantial growth opportunities.

• Pipeline support. Prologis, Inc. has provided us with exclusive negotiation rights for the eight initial properties indicated in the following chart, all of which we expect to meet our investment criteria within approximately one year.

Year Build-to-Suit/ Gross Region Property name constructed Multi-Tenant Location floor area (1) (m2) Kanto area Prologis Park Narashino 4 2013 Build-to-Suit Narashino, Chiba 108,485 Prologis Park Zama 2 2012 Multi-Tenant Zama, Kanagawa 99,550 Prologis Park Yokohama- 2008 Multi-Tenant Yokohama, Kanagawa 65,192 Tsurumi Prologis Park Tokyo-Shinkiba 2007 Multi-Tenant Koto-ku, Tokyo 31,250 Kansai area Prologis Park Kawanishi 2013 Build-to-Suit Kawanishi, Hyogo 76,759 Prologis Park Kobe 2013 Build-to-Suit Kobe, Hyogo 32,964 Prologis Park Amagasaki 3 2013 Build-to-Suit Amagasaki, Hyogo 43,962 Tohoku area Prologis Park Iwanuma 1 2008 Multi-Tenant Iwanuma, Miyagi 39,957

Note: (1) Rounded down to the nearest square meter.

To obtain the full benefit of the Prologis Group’s expertise in logistics property development, we and the Asset Manager have also entered into a sponsor support agreement with Prologis, Inc. and Prologis Japan for further Class-A logistics facility acquisition opportunities. Pursuant to the sponsor support agreement, Prologis, Inc. may provide us with exclusive negotiation rights for additional proposed sales of properties developed by the Prologis Group, as well as preferential information rights for proposed sales of property by the Prologis Group and by third parties. For more details, see “Sponsor Support Agreement.”

Since completing its initial development in Japan in August 2002, the Prologis Group is expected to have developed a total of approximately 4.0 million square meters of logistics properties across Japan’s key logistics hubs by the end of 2013. This represents an average of approximately 360,000 square meters developed annually since 2003. The Prologis Group continues to be highly committed to growing its Japan development business and we expect this will be a key contributor to our growth strategy through the sponsor support agreement.

• Independent property sourcing by the Asset Manager. In addition to our utilization of the sponsor support agreement with Prologis, Inc. and Prologis Japan, we will also take advantage of property sourcing through the Asset Manager’s independent network.

Internal Growth Strategies

We also seek to maintain and grow earnings from our anticipated initial portfolio through the following internal growth strategies:

• Proactive management of multi-tenant logistics facilities to opportunistically capture market rent growth. Consistent with our portfolio strategy, and reflected in our anticipated initial portfolio, we expect a significant portion of our properties to be multi-tenant logistics facilities. Multi-tenant logistics facilities tend to have relatively shorter-term leases (generally five years) and a more diversified tenant base. These shorter lease terms may be used to take advantage of favorable market conditions. Although we believe that the market for Class-A logistics facilities is generally stable, in situations where rent levels fall temporarily, entering into short-term lease arrangements makes it possible to capture upside when the market recovers.

• Utilizing the Prologis Group’s operational expertise. We intend to service our portfolio with the same level of operational expertise that the Prologis Group provides for all of its properties in Japan. Based on the sponsor support agreement and other arrangements, we and the Asset Manager

49 expect to receive (i) master property management support for properties in our portfolio; (ii) market research support; (iii) personnel support; (iv) use of the “Prologis” trade name and logo; and (v) other operational assistance including acquisition support, as well as employee training to support efficient and effective operations.

See “Sponsor Support Agreement”.

• Maintaining stable revenues through a diversified mix of customers. The Prologis Group currently has over 4,500 customers worldwide, maintaining relationships with a large number of customers both domestically in Japan and globally. We plan to leverage these strong customer relationships to diversify our tenant base and to maintain revenue stability. For information regarding customers of the Prologis Group in Japan and globally, see “The Prologis Group”. The Prologis Group’s diverse customer base is reflected in the tenant base of our anticipated initial portfolio, as indicated below.

O The top tenant accounts for only 6.9% of the total leased area of our anticipated initial portfolio.

O The top 20 tenants account for 76.4% of the total leased area of our anticipated initial portfolio.

O The tenants in the portfolio represent a diverse array of end markets, including 3PL, e-tailing, consumer goods, electronics and manufactured products.

See “Anticipated Initial Portfolio”.

• Utilizing the Prologis Group’s leasing expertise. As part of its “one-stop-shop service” the Prologis Group has developed specialized leasing expertise. Approximately 56% of the lessees in our anticipated initial portfolio entered into lease agreements with Prologis Japan without the use of a broker. We believe this demonstrates the Prologis Group’s strong relationships with customers, which we will seek to leverage as we expand our portfolio.

Our Financing Strategy

We intend to maintain a stable and flexible financing strategy that enables us to produce stable profits and achieve steady growth. Key elements of our financing strategy include the following:

• Equity financing. When issuing additional units, we intend to take into consideration capital market trends, the economic environment, the timing of acquisitions as well as dilution to existing unitholders in order to achieve stable growth in the long term.

• Surplus cash distributions. Logistics facilities typically have a greater amount of value allocated to buildings and have shorter depreciation periods relative to other types of real estate, and Class-A logistics facilities in particular tend to have high value-added functional features. As a result, we expect that the depreciation expense for our properties will generally be higher than that for other asset classes or more conventional logistics facilities. Further, given the newness of the facilities in our anticipated initial portfolio, with a weighted average age of 3.4 years, we expect the depreciation expense for these properties to be higher than that for older properties. Thus, in principle, in addition to distributions of retained earnings, we intend to make surplus cash distributions on a regular basis to distribute a portion of the surplus cash accumulated, after considering alternative uses such as the execution of long-term repair plans and capital expenditures, the repayment of borrowings and acquisition opportunities. For the time being, we expect to target surplus cash distributions at an amount equivalent to approximately 30% of the depreciation expense for the relevant fiscal period.

• Debt financing. In order to ensure operational stability, we intend to maintain an appropriate proportion of long-term, fixed-rate loans.

• LTV ratio. To ensure that we have the ability to acquire properties in a timely and flexible manner, we will maintain a conservative loan-to-value, or LTV, ratio (which we define as the ratio of aggregate principal amount of interest-bearing debt, including borrowed amounts, outstanding balances of long-term and short-term investment corporation bonds to the total assets of our portfolio) at approximately 50%, with an upper limit of 60%, except under special circumstances.

50 • Credit rating. As of the date of this document, we have been issued a AA- long-term issuer credit rating from the Japan Credit Rating Agency, Ltd. In the future we may utilize this credit rating to issue investment corporation bonds.

For more information, see “—Financing Policies”.

Portfolio Composition Policy

We intend to invest in real estate properties that are used primarily as logistics facilities. When investing in logistics facilities, we will consider significant factors, such as the location, specifications, and features of the logistics facilities.

Geographic Areas

Pursuant to our focus on both global and regional markets in Japan, we intend to identify and invest in logistics facilities that are strategically located in logistics hubs while maintaining significant geographic diversification. The following is a map showing the locations and investment areas of the properties in our anticipated initial portfolio.

Locations and Investment Areas of Properties in Our Initial Anticipated Portfolio

Chubu area (Regional markets) Hokkaido Major City: Nagoya Population: 22MM GDP: US$1,090.4Bn Tohoku area (Regional markets)

Major City: Sendai Population: 9MM Kyushu area (Regional markets) GDP: US$403.3Bn Major City: Fukuoka Tagajo Population: 13MM Kanto area (Global markets) GDP: US$549.3Bn Takatsuki Major City: Tokyo Population: 43MM Chugoku Kawajima Ichikawa 1 GDP: US$2,317.5Bn Zama 1 Kasugai Kansai area (Global markets) Tosu 2 Kitanagoya Tosu 4 Major City: Osaka Shikoku Population: 23MM GDP: US$1,064.7Bn Osaka 2 Maishima 3 Maishima 4

Source: Cabinet Office, Government of Japan “List of Japanese prefectures by GDP 2009”; Japan Ministry of Internal Affairs and Communications, Statistics Bureau, “Census 2010”. Note: (1) The dollar value of yen is based on the rate of telegraphic transfer middle rate US$1=JPY77.6 of The Bank of Tokyo-Mitsubishi UFJ, Ltd., as of September 30, 2012. GDP of each area is the nominal value for 2009.

GDP and population in our targeted markets in Japan rank among the largest economic areas in the world. For example, the Kanto area (including Tokyo), with a population of 43 million, ranks as the eighth largest economy in the world in terms of GDP, while the Chubu area (including Nagoya), with a population of 22 million, ranks as the 17th, and the Kansai area (including Osaka), with a population of 23 million, ranks as the 18th. See “Overview of the Logistics Property Market in Japan—The Role of Japan as a Major Economy and Global Logistics Hub”. We believe these areas will remain important to future trade and logistics given their economic size and Japan’s central location in the growing continent of Asia.

51 Our anticipated initial portfolio by anticipated acquisition price consists of 50.5% in the Kanto area, 31.4% in the Kansai area and 18.0% in regional markets. Over the long term, we plan to maintain a portfolio in which the Kanto and Kansai areas will represent at least 70% of our portfolio. The remaining 30% or less of our investments will be either in regional markets or in other areas outside these global and regional markets.

Property Type

We aim to improve the profitability and stability of our portfolio by diversifying our investments in multi-tenant logistics facilities and build-to-suit logistics facilities. Over the long term, we plan to invest approximately 80% in multi-tenant logistics facilities and approximately 20% in build-to-suit logistics facilities.

The following graphic of Prologis Park Ichikawa 1, one of the properties in our anticipated initial portfolio, shows typical features of a multi-tenant Class-A logistics facility.

52 The following graphic of Prologis Park Maishima 4, another of the properties in our anticipated initial portfolio, shows typical features of a build-to-suit Class-A logistics facility.

Investment Policy

Property Selection

As a general rule, we will focus our investments on both real estate properties and real estate trust beneficiary rights that possess medium-to-long-term competitive superiority and stability in rental revenues. Before investing in properties, we plan to evaluate them based on our overall assessment of profitability, geographical characteristics, tenant retention, condition of the building and its equipment, earthquake resistance and property rights. Our evaluation will include:

• Tenants. We plan to confirm the creditworthiness of tenants by evaluating the tenant’s business, industry trends, the probability of continuous use, rental rates and lease terms.

• Location. We will evaluate the location of target properties based on a comprehensive review of the characteristics of each property, including the suitability of sites and the surrounding environment; proximity to key areas of consumption and production, as well as accessibility to transportation

53 such as highways, seaports, airports, rail and truck terminals; convenience of commute for employees; future potential of the surrounding area; and whether there are laws, regulations and public subsidies for development projects.

• Size. We plan to invest in large facilities with a gross floor area of at least 16,500 square meters (approximately 177,600 square feet). We intend to limit property concentration, so that, as a general rule, no individual property should comprise more than 20% of our total portfolio, based on acquisition price.

• Seismic review. We plan to invest in properties with a PML of 15% or less. However, in the future, if we acquire a property with a PML that exceeds 15%, we will consider obtaining earthquake insurance from a reputable insurance company.

• Facilities and other specifications. We plan to complete a comprehensive assessment of the characteristics of each property to determine whether we will invest in a property. This assessment will include ceiling height, span between columns, spiral ramps or slopes, floor weight capacity, truck berth, the size of parking lots and truck yards, and the quality of offices and rest areas. We will also consider available equipment, including elevators, vertical carrier machines, air-conditioning and lighting, telecommunications capacity and dock levelers, and the versatility of the property for other tenants.

• Environmental considerations. We will look to invest in properties that minimize damage to the environment and operate in an environmentally friendly manner based on standards set by the Asset Manager.

• Property age. We will consider the age and remaining expected life of properties and make acquisitions from the perspective of medium-to-long-term operations.

• Soil. We plan to acquire only properties with soil that is properly treated pursuant to the Soil Contamination Countermeasures Act (Act No. 53, 2002), as well as other relevant environmental laws, regulations and ordinances of local governments.

• Property rights

O Co-ownership and compartmentalized properties. We will determine whether to acquire properties by individually assessing any interference with the disposal and use of whole real estate properties, the proportion of property rights, and the status of other joint owners and individual unit owners.

O Leasehold properties. We will determine whether to acquire properties by individually evaluating lease agreement terms, the profitability of lease agreements and the stability of property rights.

O Properties with security interests. As a general rule, we will limit our acquisitions of properties with security interests to those that we deem safe investments.

• Properties under development. We may invest in properties under development if we can acquire such properties upon the completion of their construction, provided that any risk relating to the completion of construction and leasehold of such properties are either minimized or mitigated.

Due Diligence

Prior to investing in a property, we will conduct economic, physical and legal due diligence, generally covering the following topics:

Economic Due Diligence

• Tenant evaluation. With respect to tenants, this includes an analysis of the creditworthiness of the tenant, status of rent payments, an evaluation of the lease type, lease period, lease terms, past lease performance, lease purpose, lease usage and the nature and structure of logistics operations, an

54 evaluation of the tenant’s business, industry trends, the tenant’s positioning in the industry and the tenant’s earnings history. We will also evaluate compliance with relevant laws and ordinances.

• Market analysis. This includes an analysis of trends in logistics, current market rental rates and occupancy rates, as well as medium-to-long-term projections, competition, trends in tenant demand and city plans for future logistics infrastructure, such as seaports, airports and roads, in the surrounding area.

• Profitability. We will consider the type of lease contract and the possibility to take advantage of the difference between the maturing tenant rental rate and the current market rate. We will also consider the possibility of fluctuations in taxes and public charges, repair history and repair plans, estimated repair costs, and the adequacy of other arrangements relating to expenses.

• Locations. This includes a review of the suitability of the site and the surrounding area, level and competitiveness of traffic accessibility, growth potential of the surrounding area and the presence or absence of laws, regulations and public subsidies for development planning.

Physical Due Diligence

• Building evaluation. This includes a review of the building’s characteristics, such as the construction completion date, main structure and scale, architect and construction company. This also includes a review of building specifications, such as architecture, ceiling height, span between columns, floor weight capacity, floor shape, berths, loading bays, parking spaces and truck yards, rooftop, administration offices, rest areas, slopes and ramps. With respect to the condition of facilities, this includes elevators, vertical conveyors, air-conditioning, lighting, telecommunication capacity and dock levelers. Building evaluation also includes an evaluation of electrical equipment, air conditioning, plumbing and sanitation, security system, the condition of lifters and the condition of parking lots.

• Building management. This includes a review of compliance with relevant laws and regulations, design documents, confirmation letters of construction, certified documents, the quality of building management, policies regarding building management, estimated expenses for repairs based on construction progress reports, terms of warranties made by construction companies, exterior of the building, rooftop, exterior and interior appearance, equipment and the presence or absence of agreements with neighbors.

• Earthquake resistance. This includes a confirmation of seismic capacity satisfying new earthquake- resistance standards or comparable capacity, the PML status, land surveys and the probability of liquefaction based on such surveys.

• Environment and soil due diligence. This includes reviewing soil and environmental reports, the use and management of asbestos, chlorofluorocarbon and PCB containment, and land use reports.

Legal Due Diligence

• Property rights related investigation. This includes a confirmation of property rights with respect to land and buildings, including ownership rights, surface rights, leasehold interests, co-ownership rights, compartmentalized property rights and mortgage status. In addition, this includes the review of documents related to the real estate registrar, such as registry books and land plots, terms and conditions of tenant leases, trust agreements, administrative laws, the presence or absence of litigation and the status of any such litigation and the status of the previous owner.

• Boundary survey. This includes a boundary survey to confirm the property boundaries and to assess whether any encroachments or potential conflicts exist.

We will also conduct due diligence for engineering reports and real estate appraisals that we receive from experienced independent third-party professionals of recognized investigative abilities.

55 Forward Commitment Contracts

We may enter into forward commitment contracts, which include contracts for the acquisition of properties under which settlement of the contract occurs one month or more following the execution. Before making a decision to enter into any such contract, we will carefully consider factors such as the maximum termination penalties, maximum property acquisition amounts, maximum time allowable between execution of the contract and settlement and financing for the acquisition. If we execute a forward commitment contract in the future, we expect to immediately disclose publicly an outline of such commitment, including the commitment rationale, the cancellation terms and any impact on our financial condition in case of contract default.

Operational and Property Management Policies

Leasing

We seek to secure prime tenants through an understanding of market and tenant trends and through consideration of individual lease terms by utilizing the support from the Prologis Group. In selecting tenants, we perform checks of creditworthiness and comprehensive background checks and make a comprehensive determination based on rent levels, rent period, amount of deposit, type of business, tenant composition and total space required. Upon a comprehensive consideration of the status of each property in relation to assets under management, the stability of rental revenues and operational efficiency, we determine whether it is most efficient to enter into a leasing arrangement involving a direct contract with the tenant, a pass-through type master lease or a sublease type master lease. In the case of a master lease, we or a trustee lease to a master lessee as a sublessor, and the master lessee subleases to end-tenants as sublessees. In the case of a pass-through type master lease, rent received by the lessor is in principle the same amount as the rent received by the master lessee from end-tenants, while in the case of a sublease type master lease, a fixed amount of rent is received from the master lessee regardless of fluctuation in sublease occupancy rates.

We generally seek to utilize fixed term lease agreements under the Act on Land and Building Leases with respect to lease agreements with tenants and sublessees. When entering into fixed term lease agreements, we may grant an exclusive right of first refusal related to the renewal of the lease agreement (in this case, a renewal would consist of the tenant continuing to occupy the property by entering into a new fixed term building lease agreement that becomes effective on the day following the expiration date of the previous lease agreement) based on consideration of tenant creditworthiness.

In light of a tenant’s creditworthiness we may also grant preferential negotiation rights related to a new contract triggered by vacancy or to provide vacancy information on a preferential basis.

When granting preferential negotiation rights, we will carefully evaluate the probability that any such rights will be exercised in order to minimize the vacancy rate of our property portfolio.

Property Management

We work to maintain and improve the value of our properties as well as to maximize the returns from our properties through the establishment of an efficient system for property management. In addition, we also strive to reduce expenses such as management costs and repair costs by conducting a fair selection process for service providers. Moreover, we endeavor to enhance tenant satisfaction through providing a safe and comfortable environment to tenants and users of our properties.

We will select experienced property managers that have a proven track record in operating and managing logistics facilities, and that possess the ability to manage our portfolio in accordance with our management plans.

Given Prologis Japan’s superior operational capabilities and ability to achieve superior results, in principle we intend to select Prologis Japan as our master property manager for properties that are acquired through the pipeline support provided by Prologis Japan. See “Sponsor Support Agreement—Master Property Management”.

In selecting property managers other than Prologis Japan, we will complete a comprehensive review of past performance, considering the services provided and the total volume of work. We will retain such property managers pursuant to terms and conditions we determine to be appropriate. In any of the cases above, after

56 retaining the services of a property manager, we will conduct periodic assessments of the property manager’s performance and compensation. If the appropriate performance and compensation levels cannot be maintained, we will consider termination of the agreement or will allow the agreement to expire without renewal. We will not agree to provisions that will prevent our ability to consider termination or non-renewal.

Maintenance and Repairs

In order to maintain and improve the medium-to-long-term competitiveness of our properties and tenant satisfaction, we will implement a maintenance and repair plan for each of our properties, completing all necessary repairs and making capital investments. We will in principle complete maintenance and repairs within the limits of depreciation expense on an individual property basis as well as on our entire portfolio.

We will reserve funds for maintenance and repairs as necessary in light of depreciation expenses, maintenance and repair plans and cash flows.

Insurance Policy

We intend to take out appropriate casualty insurance, including fire and liability insurance, for our properties in order to address damage to our properties or to secure our ability to compensate tenants and other third parties for damage resulting from fires, accidents or other events.

We will make decisions on whether to take out earthquake insurance based on a comprehensive account of the impact on each individual property and the entire portfolio and the effectiveness of the insurance. However, if we acquire a property with a PML that exceeds 15%, we will consider taking out earthquake insurance after evaluating the expected impact of an earthquake against the burden of insurance costs.

Disposition Policy

In general we expect to acquire properties for medium-to-long-term investment purposes and do not expect to sell our properties in the short-term. However, we may consider a disposal of our properties if we believe it is opportunistic and in the best interests of our unitholders. We will make decisions on such dispositions based on a number of factors, including market surveys, precedent transactions, the long-term profitability of the subject property, the impact of the disposition on the portfolio as a whole, and third-party appraisals as necessary.

Financing Policies

We intend to maintain a stable and flexible financing strategy for the purpose of producing stable medium-to-long-term profits and achieving steady growth of our asset value, as well as contributing to efficient and stable operations.

Equity finance

Issuing new units. We may issue additional investment units in order to achieve long-term and stable growth of our assets under management, considering capital market trends, the economic environment, acquisition timing, our capital composition and dilution to existing unitholders in order to achieve stable growth in the long term.

Surplus cash distributions. For a description of our policy with respect to surplus cash distributions, see “—Our Financing Strategy—Surplus Cash Distributions”.

Debt finance

• LTV ratio. When procuring debt financing, we will consider our LTV ratio. We have set an upper limit of 60% for the LTV ratio, but as a general rule we will operate with an LTV ratio of approximately 50%. However, we may temporarily exceed 60% as a result of new acquisitions or other events.

• Maximum limits and lenders of the loans. We will select lenders with an established record, and will seek attractive financing by leveraging the relationships of the Prologis Group. We may only borrow from lenders that are certain qualified institutional investors as specified by

57 Article 2(3)(i) of the FIEA. The maximum amount of any borrowing and issuance of investment corporation bonds will be ¥1 trillion, respectively, and the aggregate amount of any borrowing and issuance of investment corporation bonds will be ¥1 trillion, and we intend to obtain unsecured and unguaranteed financing.

• Collateral policy. In general, we intend to obtain unsecured financing, but may grant security interests (although we expect that our initial term loans will include covenants that restrict our ability to do so).

• Commitment lines. We may enter into commitment line agreements to establish borrowing facilities or enter into reservation agreements necessary for future acquisitions or debt repayment.

• Investment corporation bonds. We may issue short- or long-term investment corporation bonds, taking into consideration interest rates, financing costs, funding sources, procurement periods and repayment and redemption dates.

Policies for Utilizing Depreciation Expense

As discussed above in “Financing Strategies”, in light of the high cost and the short depreciation period for the building relative to the land in the case of logistics facilities, we believe our depreciation expense will be greater than that of other types of properties. We intend to utilize an appropriate amount of the retained cash in an amount equivalent to our depreciation expense effectively to maximize individual unitholder returns through:

• strengthening the competitiveness of our logistics facilities via repairs and capital expenditures;

• allocating a portion towards partial repayment of borrowings to reduce interest costs;

• allocating a portion towards the acquisition of new properties to increase distribution yields; and

• making surplus cash distributions.

Management of Surplus Funds

• Derivative transactions. We may execute derivative transactions for the purpose of hedging interest rate fluctuation risks in connection with financing and other risks.

• Cash management. We will always hold cash and cash equivalents in an amount we believe appropriate to meet our expected financing needs, such as for property acquisition, property repairs, working capital, repayment of tenant leasehold or security deposits, repayment of small-amount indebtedness and payments of distributions. We intend to carefully manage excess cash and maintain sufficient cash levels to protect against changing market conditions. We may also use tenant leasehold and security deposits for the acquisition of properties or as working capital.

Disclosure Policy

We will disclose information to investors promptly, accurately and fairly in accordance with and in the form required by the ITA, the FIEA and other applicable laws and ordinances as well as by the Tokyo Stock Exchange, The Investment Trusts Association, Japan and other organizations.

With regard to certain transactions with interested parties as defined in the rules governing the Asset Manager, we will publicly disclose such information promptly in an appropriate manner to maintain transparency and comply with applicable laws and regulations and such rules regarding transactions with interested parties.

Credit Ratings

We have obtained a long-term issuer credit rating from Japan Credit Rating Agency, Ltd., or JCR, of AA- (stable outlook) as of the date of this document. However, our investment units have neither been assigned credit ratings nor been made available for inspection by credit rating companies nor do we have any plan for our investment units to be rated by such credit rating companies or become available for inspection in the future.

58 Management

Our Executive and Supervisory Directors

The following table provides information about our executive and supervisory directors:

Name Position Age Expiration of current term Masahiro Sakashita Executive Director 51 November 2014 Katsumi Shimamura Supervisory Director 68 November 2014 Yoichiro Hamaoka Supervisory Director 59 November 2014

Our articles of incorporation require that we have one or more executive directors and two or more supervisory directors. Our articles of incorporation also require that we have at least one more supervisory director than the number of executive directors.

Our board of directors currently comprises one executive director and two supervisory directors. Except for our initial directors, all directors are elected at general meetings of our unitholders. The executive director represents us and has responsibility for the administration of our affairs. The supervisory directors have a statutory duty to review the executive director’s administration of our affairs. Our executive director and supervisory directors work together to ensure that we comply with tax and other legal and regulatory requirements, including those arising under the ITA and related J-REIT regulatory provisions. Certain responsibilities of the executive director set out in the ITA, such as convoking general meetings of unitholders and entering into or terminating the asset management agreement, require a resolution of our board of directors. The quorum for a resolution is a majority of the members of our board of directors, and the adoption of a resolution requires a majority of the votes present. If any director has a conflict of interest with respect to a proposed resolution, the director is not counted for purposes of achieving a quorum, and he or she is disqualified from voting.

In accordance with the provisions of our articles of incorporation, the term of office for directors is two years, although directors can serve any number of consecutive terms. The terms for the directors currently in office will expire in November 2014.

Under the ITA, our board of directors has limited functions, which include approving:

• our financial documents, including the balance sheet, statement of income, the asset management report, the statement of distributions, as well as incidental documents related to the various aforementioned financial documents;

• the convocation of general meetings of our unitholders;

• the terms of issuing new investment units;

• the terms of issuing investment corporation bonds;

• the termination of our asset management agreement with the Asset Manager, which is then, in principle, subject to approval by the general meeting of our unitholders;

• the appointment of our general administrator;

• the appointment of a bond administration company for any of our investment corporation bonds;

• any merger agreement;

• any agreement or amendment thereto pertaining to the management or custody of assets; and

• any payment of fees, charges or other expenses pertaining to the management and custody of our assets.

59 The members of our board of directors are as follows:

Masahiro Sakashita. Mr. Sakashita has been the President and Chief Executive Officer of the Asset Manager since June 2012, as well as our Executive Director since November 2012. He previously served as the Managing Director and Chief Investment Officer of Prologis Japan. He oversaw leasing, capital deployment and investment management. Mr. Sakashita has over 28 years of experience in the finance and real estate industry and over seven years at Prologis Japan, expanding the Prologis Group’s platform in Japan by identifying attractive development opportunities and building strong relationships with key customers in the market. Prior to joining Prologis Japan, Mr. Sakashita worked for The Sumitomo Trust and Banking Co., Ltd., a leading trust bank and brokerage firm in Japan, involved in real estate financing and advisory services.

Katsumi Shimamura. Mr. Shimamura is our Supervisory Director. He is currently also a member of the Transport Council Committee of the Ministry of Land, Infrastructure, Transport and Tourism. He was previously an advisor to Prologis Japan. He was also Managing Director and Executive Officer for Nippon Express Co., Ltd.

Yoichiro Hamaoka. Mr. Hamaoka is our Supervisory Director. He is currently the CEO of NS Holdings Corp. He also held positions in Mitsui Fudosan Co., Ltd. starting in 1976, where he was responsible for leasing, acquisitions, development, property management and securitization in Japan and the United States, and was previously, as a Managing Director of Jones Lang LaSalle K.K., responsible for the management of its Japan operations.

None of our directors holds any of our units. We have not entered into any transactions with any of our directors.

Compensation

Our articles of incorporation allow us to pay our executive director up to ¥1,000,000 per month and our supervisory directors up to ¥500,000 per month. Our board of directors is responsible for determining a reasonable compensation amount for our executive director and our supervisory directors, taking into account general price and wage movements. We do not have a unit-based compensation plan.

Directors’ Insurance

We maintain a range of insurance policies for our directors that we believe are appropriate for our business.

Limitation of Liability

Although our directors are liable for damages that result from their failure to perform their duties, pursuant to the ITA, our articles of incorporation provide that, so long as a director has acted in good faith and has not been grossly negligent, our board of directors may consider the particular circumstances and decide to exempt such director from liability to the extent permitted by laws and regulations.

Independent Auditors

Under the ITA, we must appoint independent auditors, which must be either certified public accountants or a public accounting firm, by resolution at a general meeting of unitholders, except for the first independent auditors that were appointed at our incorporation. KPMG AZSA LLC is our current independent auditor.

Our board of directors is responsible for establishing the aggregate compensation of our independent auditor.

Legal Proceedings

We are not involved in or threatened by any legal arbitration, administrative or other proceedings, the results of which might, individually or in the aggregate, be material to an investor.

60 Management of Our Operations and Activities

Under the ITA, we are not permitted to have any employees, and we are required to outsource substantially all of our operations and activities to third parties, including:

• the formulation and implementation of our investment strategy not stipulated in our articles of incorporation;

• the acquisition and disposition of properties;

• our finance and accounting supervisory activities;

• the management of our properties and other assets; and

• certain custodial and administrative functions.

We have engaged Prologis REIT Management K.K. to act as the Asset Manager and Sumitomo Mitsui Trust Bank, Limited to act as our custodian and perform certain administrative services relating to our operations. See “Asset Manager” and “Custodian, General Administrator and Transfer Agent”.

Oversight of Service Providers by Our Board of Directors

Our business will be operated by our board of directors, which consists of one executive director and two supervisory directors. We currently hold a board meeting generally once a month. At board meetings, our executive director will report on the Asset Manager’s operations and other matters. Each of our supervisory directors will receive such a report from the executive director, and request, if deemed necessary, reports regarding asset management operations from the Asset Manager. Executive and supervisory directors may request the officers and personnel of the Asset Manager, custodian and general administrator to attend board meetings and provide explanations regarding the Asset Manager’s operations.

Employees

We have no employees in accordance with the restriction on having employees under the ITA.

61 THE PROLOGIS GROUP

Overview

Prologis, Inc., the global parent company of the Prologis Group, is a real estate investment trust headquartered in the United States and listed on the New York Stock Exchange with a $16 billion equity market capitalization as of September 30, 2012. The Prologis Group includes Prologis, Inc. and its group companies (including Prologis Japan, as well as joint investment vehicles and managed funds in which the Prologis Group has less than a majority interest). The Prologis Group is the leading global owner, operator and developer of logistics facilities, focused on markets tied to global trade across Asia, the Americas and Europe and owns and manages the world’s largest portfolio of institutional quality logistics real estate properties. As of September 30, 2012, the Prologis Group owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties and development projects expected to total approximately 52.5 million square meters (565 million square feet) of net leasable area in 21 countries, which account for more than 70% of total global GDP. The Prologis Group’s global network of logistics facilities allows it to provide advanced logistics facilities to customers around the globe.

The Prologis Group’s Track Record

As of September 30, 2012, the Prologis Group owned and managed more than 3,000 logistics facilities leased to approximately 4,500 customers, including manufacturers, retailers, transportation companies, third- party logistics providers, e-commerce companies, and other logistics customers worldwide.

The Prologis Group’s Global Network

Asia Americas Europe Total leasable 3.2 35.9 13.4 area (in million m2) No. facilities in 77 2,397 587 operation No. countries 3414

The Prologis Group has 29 years of experience with fund management focusing exclusively on logistics real estate properties with local market real estate experts across markets in Asia, the Americas and Europe. As of September 30, 2012, the Prologis Group’s assets under management totaled $45.0 billion across its wholly owned properties, 11 closed-ended co-investment funds and vehicles, five open-ended co-investment funds and vehicles, and numerous institutional joint-ventures. The Prologis Group has $18.4 billion in private capital assets under management in 16 geographically diverse funds. In each of its managed funds, Prologis has made a significant investment aligning its incentives with its partners’, as evidenced in the following table.

Prologis Managed Funds as of September 30, 2012

Prologis Geographic Group Date Co-Investment Ventures Type (3) Focus Investment Established Structure Prologis Institutional Alliance Fund II ...... Core US 28.2% June 2001 Closed-ended Prologis AMS ...... Core US 38.5% June 2004 Closed-ended Prologis Mexico Fondo Logistico (1) ...... Core/Development Mexico 20.0% July 2010 Closed-ended Prologis North American Properties Fund I ...... Core US 41.3% June 2000 Closed-ended Prologis Targeted U.S. Logistics Fund (1) ...... Core US 25.0% October 2004 Open-ended Prologis North American Industrial Fund ...... Core US 23.1% March 2006 Open-ended Prologis DFS Fund I ...... Development US 15.0% October 2006 Closed-ended

62 Prologis Geographic Group Date Co-Investment Ventures Type (3) Focus Investment Established Structure Prologis North American Industrial Fund III ...... Core US 20.0% July 2007 Closed-ended Prologis SGP Mexico (1) ...... Core Mexico 21.6% December 2004 Closed-ended Prologis Mexico Industrial Fund ...... Core Mexico 20.0% August 2007 Closed-ended Prologis Brazil Logistics Partners Fund I (1)(2) ...... Development Brazil 50.0% December 2010 Closed-ended Prologis Targeted Europe Logistics Fund (1) ...... Core Europe 32.1% June 2007 Open-ended Prologis European Properties Fund II (1) ...... Core Europe 29.7% August 2007 Open-ended Europe Logistics Venture 1 (1) ...... Core Europe 15.0% February 2011 Open-ended Prologis Japan Fund 1 ...... Core Japan 20.0% June 2005 Closed-ended Prologis China Logistics Venture 1 (1) ...... Core/Development China 15.0% March 2011 Closed-ended

Source: Prologis, Inc. October 23, 2012 Q3 12 Supplemental Financial Report, “Earnings Release and Supplemental Information”. Notes: (1) These funds are or will be actively investing in new properties through acquisition and/or development activities, whereas the remaining funds do not expect to be actively investing in new properties. (2) The Prologis Group has a 50% ownership interest in and consolidates an entity that in turn owns 50% of an entity that is accounted for using the equity method (“Brazil Fund”). The Brazil Fund develops industrial properties in Brazil. During 2011 and 2012, the Brazil Fund sold 90% of four operating properties to a third party and retained a 10% ownership interest in the properties (“Brazil JVs”). Therefore, the Prologis Group effectively owns 25% of the Brazil Fund and 2.5% of the operating properties in the Brazil JVs, which are included in the Prologis Group’s owned and managed operating pool. (3) “Core” funds are funds that invest in stabilized logistics facilities that can expect stable earnings in the medium and long term. “Development” funds are funds that invest in the entire developmental process of logistics facilities, from development through funding and then external sale after construction is complete.

In addition, Prologis, Inc. has the largest market capitalization among specialized logistics real estate and REIT companies in the world, as indicated in the graph below.

Market Capitalization of Publicly-traded Logistics Real Estate Companies and REIT Companies Internationally

(in US$ millions)

18,000

16,000

14,000 Ascendas Real Estate Investment Trust 12,000 Global Logistic (SGX:A17U) Properties Limited 10,000 (SGX:MC0) Liberty Property Trust Goodman Group (NYSE:LRY) 8,000 (ASX:GMG) Mapletree Logistics Trust (SGX:M44U) DCT Industrial 6,000 Trust Inc. Duke Realty Corp. (NYSE:DCT) (NYSE:DRE) 4,000 SEGRO plc Mapletree (LSE:SGRO) Industrial Trust (SGX:ME8U) 2,000

0 Prologis, Inc. (NYSE:PLD)

Source: The New York Stock Exchange, Singapore Exchange, Australian Stock Exchange and The London Stock Exchange. Note: (1) As of September 30, 2012.

63 The following chart shows the top global customers of the Prologis Group by annual base rent as of September 30, 2012.

Top 20 Overall Global Prologis Group Customers (by annual rent base)

Percentage of No. of No. of total annual countries with markets with No. of No. Tenant rent S&P Rating leases (1) leases (2) leases (3) 1 DHL...... 2.2% — 15 41 126 2 Kuehne & Nagel ...... 1.3% — 14 28 65 3 CEVA Logistics ...... 1.3% — 10 22 42 4 Geodis ...... 1.1% — 11 18 39 5 Amazon.com, Inc...... 0.9% — 3 6 13 6 Home Depot, Inc...... 0.8% A- 1 7 8 7 Panasonic Group (6) ...... 0.8% BBB (4) 2720 8 United States Government ...... 0.8% — 1 10 52 9 FedEx Corporation ...... 0.7% BBB 2 12 42 10 PepsiCo ...... 0.7% A 2 11 18 11 Tesco PLC ...... 0.7% A- 2 3 9 12 Nippon Express Group (6) ...... 0.6% — 3 12 29 13 SG Holdings Co., Ltd. (Sagawa Group) (6) . . . 0.6% — 1 3 23 14 Kraft Foods, Inc...... 0.6% BBB 3 8 10 15 Hitachi Transport System Group (6) ...... 0.6% — 6 7 33 16 Wal-Mart Stores ...... 0.5% AA 2 7 19 17 Panalpina, Inc...... 0.5% — 6 14 24 18 Caterpillar Logistics Services Inc...... 0.5% A (5) 447 19 Unilever ...... 0.5% A+ 2 4 4 20 DB Schenker ...... 0.4% — 6 13 32 Total ...... 16.1% ————

Notes: (1) Represents the number of countries in which the Prologis Group has entered into a lease agreement with the respective tenant. (2) Represents the number of markets in which the Prologis Group has entered into a lease agreement with the respective tenant, including the regions within each country. (3) Represents the total number of lease agreements which the Prologis Group has entered into with the respective tenant. (4) Rating of Panasonic Co., Ltd. (5) Rating of Caterpillar Inc. (6) Including affiliated companies. (7) This list was created by Prologis Japan based on lease agreements entered into by the Prologis Group as of September 30, 2012. The S&P ratings are long-term, local-currency issuer credit ratings as of November 2012.

Prologis Japan

The Prologis Group established its Japanese operations in 1999, and has since built a market-leading business in Japan providing advanced logistics facilities to global and local customers. As of the date of this document, Prologis Japan has developed or is currently developing a total of 67 Class-A logistics facilities since 2002, representing approximately 4.0 million square meters (43.1 million square feet) of gross floor area. As of September 30, 2012, Prologis Japan owned and operated 50 large-scale logistics facilities across Japan, from Tohoku in the northeast to Kyushu in the southwest, with approximately 2.4 million square meters (25.8 million square feet) of gross floor area.

64 As shown in the chart below, Prologis Japan has been the largest developer of new advanced logistics facilities for lease in the Japanese market since 2002.

Share of the Development of Advanced Logistics Facilities for Lease in Japan since 2002 (by gross floor area)

Others 24.1%

Prologis Japan 44.4% Company D 6.1%

Company C 7.0%

Company B 7.8% Company A 10.5%

Source: CBRE. Notes: (1) Based on a survey conducted by CBRE at our and the Asset Manager’s request. (2) This data is as of September 30, 2012. “Advanced logistics facilities” are logistics facilities for lease, developed by corporations investing in real estate and real estate development companies and functionally designed that have a gross floor area of 5,000 tsubo (16,500 square meters) or more and, as a general rule, with floor weight capacities of 1.5 ton/square meter or more and ceiling heights of 5.5 meters or more. (3) The survey did not include logistics facilities owned by logistics companies and therefore did not cover all logistics facilities having a gross floor area of 5,000 tsubo (16,500 square meters) or more. CBRE collected data for the survey from information disclosed by property owners and from information received or collected by CBRE in its ordinary course of brokerage activities. (4) Rounded to the nearest tenth. Therefore, the figures may not add up to 100%.

Moreover, the Prologis Group continues to be highly committed to growing its Japan development business. The following chart depicts the Prologis Group’s historical developments in Japan since 2002, based on gross floor area and number of development projects.

The Prologis Group’s Developments in Japan Since 2002

4,500,000 Multi-Tenant 80

Build-to-Suit 4,000,000 67 70 Number of Development Projects 63 3,500,000 58 56 60 54

) 3,000,000 50 2 50

2,500,000 38 40 2,000,000

30 25 Gross Floor Area (m 1,500,000

16 20 Number of Development Projects 1,000,000

8 10 500,000 5 1 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 E

65 We believe that the Prologis Group’s leading position in Japan is a direct result of its track record and expertise as one of the world’s leading owners, managers, and developers of advanced logistics facilities. The Prologis Group has made investing in Japan a priority and has gained the trust and support of corporate Japanese customers through high-quality differentiated logistics facilities and services. The breadth and depth of Prologis Japan’s customer base is summarized as follows:

• Customer Diversification. Prologis Japan’s diversified customer base includes a mix of global, multi-national companies, such as Amazon.com, Panasonic Group and Caterpillar Logistics Services (a subsidiary of Caterpillar, Inc.), as well as domestic companies such as Hitachi Transport System Group, SG Holdings (Sagawa Group) and Nippon Express.

• Prologis Network. All of the above referenced representative customers have leases with Prologis Japan across more than one facility in Japan and five of the six customers have leases with the Prologis Group across multiple countries.

• Industry Diversification. Prologis Japan’s customer base is diversified across numerous industries and end markets, including 3PL firms, consumer products companies, manufacturers and general transportation companies.

The Prologis Group has developed logistics facilities in all of Japan’s key global and regional logistics hubs, as shown in the list below, which also includes the properties in our anticipated initial portfolio. All of the properties on the list below that the Prologis Group currently owns (and not included in our anticipated initial portfolio) meet our investment criteria and are thus covered by our preferential information rights under the sponsor support agreement.

Year Gross floor Multi- Constructed Property Name (1) Location Area area (2) (m2) Tenant Build-to-Suit

2002 Former Prologis Park Shinkiba* Koto-ku, Tokyo Kanto 18,341 – O 2003 Former Prologis Park Urayasu* Urayasu, Chiba Kanto 25,847 – O Former Prologis Park Narita* Sanbu, Chiba Kanto 45,580 O – Former Prologis Park Tatsumi* Koto-ku, Tokyo Kanto 12,224 – O Former Prologis Park Tokyo* Ota-ku, Tokyo Kanto 62,041 O – 2004 Former Prologis Park Tokai* Tokai, Aichi Chubu 30,149 – O Former Prologis Park Fukusaki* Kanzaki, Hyogo Kansai 24,153 – O Former Prologis Park Osaka* Osaka, Osaka Kansai 141,778 O – 2005 Prologis Park Narita 1-A Narita, Chiba Kanto 10,034 O – Prologis Park Narita 1-B Narita, Chiba Kanto 54,226 O – Former Prologis Park Narita II* Sanbu, Chiba Kanto 21,836 O – Former Prologis Park Kazo* Kazo, Saitama Kanto 67,434 – O Former Prologis Park Yokohama* Yokohama, Kanagawa Kanto 99,382 O – Former Prologis Park Sugito I* Kita-Katsushika, Saitama Kanto 52,369 – O Prologis Park Amagasaki 1 Amagasaki, Hyogo Kansai 91,426 O – Prologis Park Tokyo-Ohta Ota-ku, Tokyo Kanto 75,472 O – 2006 Former Prologis Park Misato* Misato, Saitama Kanto 45,807 – O Former Prologis Park Urayasu III* Urayasu, Chiba Kanto 66,672 O – Former Prologis Park Tomiya* Kurokawa, Miyagi Tohoku 18,429 – O Former Prologis Park Tokyo II* Koto-ku, Tokyo Kanto 85,526 O – Former Prologis Park Maishima I* Osaka, Osaka Kansai 68,981 – O Former Prologis Park Koshigaya II* Koshigaya, Saitama Kanto 42,755 O – Former Prologis Park Maishima II* Osaka, Osaka Kansai 53,299 – O Prologis Park Kashiwa Kashiwa, Chiba Kanto 20,550 – O Former Prologis Park Amagasaki* Amagasaki, Hyogo Kansai 123,824 O – 2007 Former Prologis Park Sendai* Sendai, Miyagi Tohoku 36,978 – O Former Prologis Park Sugito II* Kita-Katsushika, Saitama Kanto 107,138 O – Prologis Park Amagasaki 2 Amagasaki, Hyogo Kansai 93,825 O – Prologis Park Funabashi 5 Funabashi, Chiba Kanto 45,489 O – Prologis Park Narita 1-C Narita, Chiba Kanto 33,684 O – Prologis Park Tokyo-Shinkiba Koto-ku, Tokyo Kanto 31,250 O – Prologis Park Osaka 2 Osaka, Osaka Kansai 139,211 O – Prologis Park Centrair Tokoname, Aichi Chubu 73,995 O – Prologis Park Osaka 1 Osaka, Osaka Kansai 39,157 O – Former Prologis Park Tomisato* Tomisato, Chiba Kanto 27,524 – O Prologis Park Sagamihara Sagamihara, Kanagawa Kanto 51,474 – O Prologis Park Kasugai Kasugai, Aichi Chubu 93,988 O – Former Prologis Park Hayashima II* Tsukubo, Okayama Chugoku 13,357 – O

66 Year Gross floor Multi- Build-to- Constructed Property Name (1) Location Area area (2) (m2) Tenant Suit

2008 Prologis Park Narashino 3 Narashino, Chiba Kanto 49,809 O – Former Prologis Park Tosu I* Tosu, Saga Kyushu 69,283 O – Prologis Park Maishima 3 Osaka, Osaka Kansai 79,991 O – Former Prologis Park Komaki* Komaki, Aichi Chubu 55,021 O – Prologis Park Yokohama-Tsurumi Yokohama, Kanagawa Kanto 65,192 O – Prologis Park Narita 3 Sanbu, Chiba Kanto 57,118 O – Former Prologis Park Iwatsuki* Saitama, Saitama Kanto 31,071 – O Former Prologis Park Koriyama I* Koriyama, Fukushima Tohoku 24,047 – O Former Prologis Park Misato II* Misato, Saitama Kanto 59,461 O – Prologis Park Ichikawa 1 Ichikawa, Chiba Kanto 138,735 O – Prologis Park Iwanuma 1 Iwanuma, Miyagi Tohoku 39,957 O – Former Prologis Park Kiyama* Miyaki, Saga Kyushu 23,508 – O 2009 Prologis Park Tagajo Tagajo, Miyagi Tohoku 36,851 O – Prologis Park Zama 1 Zama, Kanagawa Kanto 118,688 O – Prologis Park Kitanagoya Kitanagoya, Aichi Chubu 43,655 O – Prologis Park Ichikawa 2 Ichikawa, Chiba Kanto 76,842 O – 2010 Prologis Park Ebina Ebina, Kanagawa Kanto 32,487 – O Prologis Park Maishima 4 Osaka, Osaka Kansai 57,194 – O 2011 Former Prologis Park Tomiya II* Kurokawa, Miyagi Tohoku 15,563 – O Prologis Park Kawajima Hiki, Saitama Kanto 157,721 O – 2012 Prologis Park Takatsuki Takatsuki, Osaka Kansai 20,117 – O Prologis Park Tosu 4 Tosu, Saga Kyushu 29,430 – O Prologis Park Osaka 4 Osaka, Osaka Kansai 120,562 O – Prologis Park Tosu 2 Tosu, Saga Kyushu 21,932 – O Prologis Park Zama 2 Zama, Kanagawa Kanto 99,550 O – 2013 Prologis Park Narashino 4 Narashino, Chiba Kanto 108,485 – O (expected) Prologis Park Amagasaki 3 Amagasaki, Hyogo Kansai 43,962 – O Prologis Park Kawanishi Kawanishi, Hyogo Kansai 76,759 – O Prologis Park Kobe Kobe, Hyogo Kansai 32,964 – O Total 67 properties Approximately 38 29 4.0 million m2 properties properties

Notes: (1) * indicates assets sold to a third party. (2) Rounded down to the nearest square meter. (3) As of the date of this document, we have no definite plans to acquire properties outside of our anticipated initial portfolio. Finally, while Prologis Japan has granted us exclusive negotiation rights for Prologis Park Tokyo-Shinkiba, Prologis Park Yokohama- Tsurumi, Prologis Park Iwanuma 1, Prologis Park Zama 2, Prologis Park Kawanishi, Prologis Park Kobe, Prologis Park Amagasaki 3 and Prologis Park Narashino 4, there is no guarantee that we will be able to acquire any of the above properties, including those for which we have been granted exclusive negotiation rights.

Features of Logistics Facilities Developed by the Prologis Group

In developing logistics facilities in Japan, the Prologis Group builds the most advanced and state-of-the-art facilities. These specifications and features take into account the need for efficiency in the logistics business and leverage the Prologis Group’s in-depth expertise gained both in and outside Japan as a leading global owner, operator and developer of logistics facilities. Key specifications and characteristics of Prologis Group facilities in Japan include (1):

• Spiral ramps or slopes allowing access to upper floors. Ramps are wide enough for direct access by 10-ton trucks and 40-feet container trailers.

• Driveways. The width of driveways on all floors is at least 13 to 14 meters and the ceiling height is at least 5.5 meters.

• Truck berths (2). The berth is at least 10 meters wide and 13 meters deep, and the shutter at the entrance/exit is at least 4.5 meters tall.

• Platforms. The height of the platforms is one meter.

Notes: (1) Not all multi-tenant logistics facilities developed by Prologis Japan, or all Class-A logistics facilities, may conform entirely to these specifications. (2) A “truck berth” is an area for trucks to park that faces the warehouse space.

67 • Warehouse. Warehouses are flexible and spacious with a span between columns of at least 10 meters and a height of 5.5 meters.

• Floor weight capacity. The floor weight capacity is 1.5 ton/square meter with forklifts that can support up to 1.5 tons.

• Office space. The height of office space is at least 2.7 meters with raised floors for network cables, well-equipped for functional use.

• Disaster prevention and 24-hour security. A permanent Disaster Control Center is staffed 24 hours a day, overseeing a security system monitoring each facility to prevent crime and fire.

In addition to the specifications set forth above, the Prologis Group has continued to implement functional improvements that take into account the unique characteristics of logistics facilities and improve their overall quality. Such improvements include environmentally-friendly measures that increase energy efficiency, which are becoming increasingly more important both in Japan and globally, amenities to provide more convenient and comfortable work environments for employees, safety measures and Business Continuity Planning for tenants in the event of natural disasters, and Comprehensive Assessment System for Built Environment Efficiency certification.

68 SPONSOR SUPPORT AGREEMENT

We intend to utilize the support from the Prologis Group in order to achieve our external and internal growth objectives. On January 10, 2013, we and the Asset Manager entered into a sponsor support agreement with Prologis Inc. as the sponsor support company and Prologis Japan as the master property management company. The sponsor support agreement has a term of ten years and renews automatically upon expiration for a subsequent ten year period unless otherwise notified in writing by one of the parties three months before the expiration of the agreement. See “Risk Factors—Our reliance on the Prologis Group could have a material adverse effect on our business”.

In the event that Prologis, Inc. fails to perform its obligations under the sponsor support agreement intentionally or due to gross negligence, we have the right to terminate the agreement. However, if Prologis, Inc. remedies its default under the agreement by the date of any such termination, the termination will be rendered ineffective. In the event that the Asset Manager is no longer a subsidiary or an affiliate of Prologis Japan or ceases its responsibility as our Asset Manager, the sponsor support agreement will terminate without any prior notice required.

Pipeline Support

Under the sponsor support agreement, Prologis, Inc. will provide us with the following support:

• Potential for exclusive negotiation rights for logistics facilities developed by the Prologis Group. By the end of October of each year, Prologis, Inc. has agreed to provide us with information on a preferential basis regarding logistics facilities the Prologis Group manages in Japan that are owned directly or indirectly (including through vehicles held jointly with third parties) by the Prologis Group or are subject to future development by the Prologis Group, and which Prologis, Inc. determines meet our investment objectives. By the end of the month following notification by the Asset Manager of an intention to consider acquiring any such properties, the Asset Manager and Prologis, Inc. will negotiate in good faith, and use best efforts to execute, a memorandum on exclusive negotiation rights with respect to the acquisition of such property. However, if a Prologis Group company or the owner of the property has executed a separate agreement with respect to the provision of information related to a relevant logistics facility, such other agreement will take precedence.

• Terms of exclusive negotiation rights and acquisition price. For any properties subject to exclusive negotiation rights, we and Prologis, Inc. have agreed to negotiate in good faith the terms of a potential acquisition of the property during the exclusive negotiation period commencing on the execution of the memorandum and ending two months later from the time Prologis, Inc. provides notice that the property is ready for sale. During this exclusive negotiation period, we and Prologis, Inc. have agreed to negotiate in good faith a purchase agreement with respect to such property, and Prologis Japan and the Asset Manager have agreed to use best efforts to ensure the execution of such an agreement. In principle, the acquisition price will be based on an appraisal report obtained by us from an agreed upon list of third-party appraisal companies. However, we and Prologis, Inc. may mutually agree on a price that differs from the appraisal value, which may in no event be higher than such appraisal value.

• Exclusive negotiation rights for eight initial properties. With respect to the eight properties for which Prologis, Inc. has already granted us preferential negotiation rights, Prologis, Inc. has agreed to use best efforts to ensure the execution of a purchase agreement for such properties. For a description of these properties, see “Our Business—Our Investment Strategy—External Growth Strategies”.

• Preferential information rights for proposed sales by the Prologis Group. Under the sponsor support agreement, in the event that Prologis, Inc. intends to commence disposition activities as to any logistics facility in Japan held or under development by the Prologis Group and managed by Prologis Japan (other than those for which exclusive negotiation rights are provided), Prologis, Inc. has agreed to provide us with information regarding such property no later than the time such information is provided to third parties, unless the provision of such information would constitute a violation of applicable law or a contractual obligation of the Prologis Group.

69 • Preferential information rights for proposed sales by third parties. To the extent Prologis, Inc. acquires information regarding the proposed sale of a logistics facility by a third party that it determines meets our investment criteria, Prologis, Inc. has agreed to provide such information to us and the Asset Manager on a preferential basis unless doing so would constitute a violation of applicable law or a contractual obligation of the Prologis Group or the owner of such property.

Master Property Management

Pursuant to the sponsor support agreement, we will appoint Prologis Japan as master property manager to any properties that we acquire through the pipeline support provided under the sponsor support agreement. In addition, we may appoint Prologis Japan as property manager for any properties that we do not acquire through the pipeline support, and Prologis, Inc. will cause Prologis Japan to accept such appointment unless otherwise agreed. We will enter into a separate property management agreement with Prologis Japan for each property with the following terms, unless otherwise agreed:

• Term and renewal of agreement. The term of each property management agreement will be one year. In renewing a property management agreement, starting from three months prior to the expiration of the agreement the Asset Manager will review the performance and the compensation of Prologis Japan. If the Asset Manager determines the performance of Prologis Japan is inadequate, the Asset Manager will provide notice of such determination no later than two months prior to the expiration of the agreement. Prologis Japan will promptly submit a plan to improve its property management services for such property. If the Asset Manager determines that improvements set forth in such plan have not been realized within one month after the notice was provided by the Asset Manager, or a plan for improvement has not been submitted, the Asset Manager may choose not to renew the property management agreement. If the Asset Manager determines that the compensation of Prologis Japan is unreasonable in light of the services provided, the Asset Manager can request Prologis Japan to negotiate the fee by notice delivered at least two months prior to the execution of such property management agreement. If no agreement is reached within one month after the Asset Manager has provided such notice, the Asset Manager may choose not to renew the property management agreement.

• Termination of agreement. In the event that Prologis Japan fails to perform its obligations under the property management agreement intentionally or due to gross negligence, we have the right to terminate the agreement. However, if the failure is not intentional and Prologis Japan remedies its default under the agreement by the date of any such termination, the termination will be rendered ineffective.

Other Operational Support

Pursuant to the sponsor support agreement, we and the Asset Manager expect to receive the following operational support:

• Market research support. Prologis, Inc. will provide macro-level market research support on the logistics market (including research on trends in the logistics market and trends in the provision of properties in the logistics market) as well as micro-level market research support on the logistics market (including research and analyses on trends in customer needs or in the supply of logistics facilities in a particular geographical area).

• Personnel support. At the request of the Asset Manager, Prologis, Inc. will, to the extent reasonably possible, cooperate by seconding or dispatching officers or employees of the Prologis Group to fill the necessary positions indicated by the Asset Manager.

• Use of the “Prologis” trade name and logo. Prologis, Inc. has agreed to license the Prologis trade name to us and the Asset Manager at no charge.

• Other support. In addition, Prologis, Inc. has agreed to provide various other necessary support upon the Asset Manager’s request, such as (i) advice and support regarding the acquisition and operation of properties, (ii) provision of necessary documentation and information in connection with investment decisions and (iii) provision of training to employees of the Asset Manager.

70 Investment by Our Sponsor

Under the sponsor support agreement, in the event of any new issuance of our investment units, at our request Prologis, Inc. intends to consider in good faith the purchase of a portion of such units either directly or through the Prologis Group. In addition, Prologis, Inc. has confirmed in the sponsor support agreement that to the extent the Prologis Group holds any of our investment units, Prologis, Inc. intends to hold or have the Prologis Group hold, such units on a long-term basis.

71 ASSET MANAGER

The Asset Manager is Prologis REIT Management K.K., a Japanese limited liability joint stock company incorporated under Japanese law on June 14, 2012. The Asset Manager is a wholly-owned subsidiary of Prologis Japan. As of the date of this document, the Asset Manager has four full-time directors and nine full-time employees, including real estate and finance professionals with extensive experience in property acquisitions and dispositions, leasing management, marketing, finance, tax, financial reporting and data processing, risk assessment and management.

Asset Management Agreement

We have entered into an asset management agreement with the Asset Manager in which we entrust the operation and management of our properties. This agreement will remain in effect as long as we exist, unless terminated upon six-months’ prior written notice by us or the Asset Manager, subject in general to the approval at a unitholders’ meeting, and in certain other cases. We have no current intention to terminate the asset management agreement.

Asset Management Fees

Management Fees. Under the asset management agreement as currently in effect, we pay two different types of asset management fees to the Asset Manager:

• Type 1 management fee. We pay to the Asset Manager a type 1 asset management fee for each fiscal period. This type 1 asset management fee is payable within three months following the last day of the fiscal period and is up to an amount equal to 7.5% of net operating income, which is (i) the total operating income of the property lease business received during the fiscal period, (ii) less the operating costs of the property lease business during the fiscal period (excluding allowances for depreciation), rounded down to the nearest yen.

As of the date of this document, we and the Asset Manager have agreed to a type 1 asset management fee equal to 7.5% of net operating income as calculated in (i) and (ii) above.

• Type 2 management fee. We pay to the Asset Manager a type 2 management fee within three months following the last day of each fiscal period. The type 2 management fee is up to an amount equal to 6% of (i) the total net income during the fiscal period (before the deduction of the type 2 management fee and consumption and local taxes), (ii) less the total profit and loss incurred from the sale of specified assets and retirement of fixed assets, rounded down to the nearest yen.

As of the date of this document, we and the Asset Manager have agreed to a type 2 management fee equal to 6% of the sum calculated in (i) and (ii) above.

Acquisition Fees. For each new property and real estate security that we acquire, the Asset Manager receives an acquisition fee, which is up to an amount equal to 1.0% of the purchase price (excluding national and local consumption taxes and acquisition expenses), or up to an amount equal to 0.5% in the case of a related- party transaction (according to rules that are adopted by the Asset Manager regarding related-party transactions), rounded down to the nearest yen and payable by the end of the month following the month of the acquisition (when transfer of property rights becomes effective). The Prologis Group has caused the Asset Manager to agree to waive the acquisition fees for the properties to be acquired as part of the anticipated initial portfolio.

As of the date of this document, we and the Asset Manager have agreed that the acquisition fee is equal to 1.0% of the purchase price and 0.5% of the purchase price in the case of a related-party transaction.

Disposition Fees. For each property that we dispose of, the Asset Manager receives a disposition fee, which is up to an amount equal to 0.5% of the disposition price (excluding national and local consumption taxes and disposition expenses), or up to an amount equal to 0.25% in the case of a related-party transaction, rounded down to the nearest yen and payable by the end of the month following the month of the disposition (when transfer of property rights becomes effective). However, the Asset Manager does not receive any disposition fee for any disposition of properties that incurs a loss.

As of the date of this document, we and the Asset Manager have agreed that the disposition fee is equal to 0.5% of the disposition price and 0.25% of the disposition price in the case of a related-party transaction.

72 Services Provided by the Asset Manager

The Asset Manager provides the following services to us:

• Property acquisition and disposition. The Asset Manager is responsible for finding and evaluating acquisition targets and formulating and executing plans for disposing of properties.

• Day-to-day asset management. The Asset Manager formulates and executes asset management and leasing plans; manages assets and their income and expenses; selects and supervises property management service providers and building management companies; and analyzes real estate and logistics industries.

• Financing. The Asset Manager is responsible for our financing and other financial affairs, including planning and budgeting functions, management of debt and equity issuances and borrowings, and management of surplus funds.

• Investor relations and financial reporting. The Asset Manager is responsible for our investor relations, including the disclosure of information to investors and maintaining investor relations.

• Human resources and general affairs. The Asset Manager is responsible for general affairs and human resources functions, including negotiations with authorities, managing unitholders’ meetings and the Asset Manager’s board of directors’ meetings, formulating and managing internal policies and managing corporate information, countermeasures and recurrence prevention measures regarding material claims brought against the Asset Manager.

• Other. The Asset Manager also provides other services related to the above matters.

Management Structure of the Asset Manager

The Asset Manager has a fiduciary responsibility for exercising a duty of care and a duty of loyalty to us. Under the management organization shown below, the Asset Manager operates while seeking to avoid conflicts of interest.

Organization of the Asset Manager

Shareholders Meeting

Corporate Auditor

Asset Manager’s Board of Directors

Investment Committee Compliance Committee

President & CEO

Compliance Officer

Investment & Strategic Planning & Operations Division Finance Division

Investor & Public Financial Control HR & Administration Investment Team Operations Team Treasury Team Relations Team Team Team

Note: (1) The Asset Manager is a wholly-owned subsidiary of Prologis Japan.

73 Investment Committee

The Investment Committee is responsible for the formulation and revision of basic investment guidelines and asset management plans, including investment guidelines, annual management plans and other related matters. The Investment Committee is also responsible for managing each property, including acquisitions and sales of assets, managing assets that were not discussed in annual management plans, approving plans to raise capital, the revision and repeal of internal policies for the Investment Committee and other related matters.

The Investment Committee comprises the Asset Manager’s President and CEO as the committee chair, and other directors, the head of the Investment and Operations Division, the head of the Strategic Planning and Finance Division, the CIO (if already appointed) and the CFO (if already appointed), as well as the Compliance Officer, who does not have a voting right, and one or more outside experts. Outside experts for the Investment Committee are licensed real estate appraisers selected by the board of directors of the Asset Manager. As of the date of this document, one such appraiser has been selected as an outside expert.

Meetings of the Investment Committee are held with a quorum of more than half of the Investment Committee members and the mandatory attendance of the Compliance Officer and all outside experts. The Compliance Officer has the right to suspend meetings in the event that the Compliance Officer determines there are compliance issues during a meeting.

Any approval by the Investment Committee requires the attendance of more than half of all voting members, the Compliance Officer and all outside experts in addition to approval by more than half of the voting members and all outside experts. However, related-party Investment Committee members with voting rights, related-party board members and board members with voting rights who are current officers or employees of the related party (including concurrent positions, but not those who have been seconded or transferred to the Asset Manager) are not allowed to participate in the Investment Committee’s review of related-party transactions.

Compliance Committee

The Compliance Committee is responsible for the formulation and revision of the compliance manual and compliance program; evaluation of risk management, revision and repeal of compliance policies for the Asset Manager and policies for the Compliance Committee; remedial measures against acts which are inadequate or suspected to be inadequate in terms of compliance; and determination of compliance issues regarding related- party transactions and compliance matters judged to be questionable from a compliance viewpoint by the Compliance Officer that require decisions by the Investment Committee, including any matters requested by the Compliance Officer and countermeasures and recurrence prevention measures regarding material claims brought against the Asset Manager.

The Compliance Committee comprises the President and CEO, the director in charge of the Investment and Operations Division, the director in charge of the Strategic Planning and Finance Division, the CIO (if already appointed) and the CFO (if already appointed), as well as the Compliance Officer and one or more outside experts. Outside experts for the Compliance Committee are licensed professionals such as attorneys or certified public accountants and are selected by the board of directors of the Asset Manager. As of the date of this document, one attorney has been selected as an outside expert.

Meetings of the Compliance Committee are held with a quorum of more than half of the Compliance Committee members and mandatory attendance of the Compliance Officer and all outside experts. Any approval by the Compliance Committee requires attendance of more than half of Compliance Committee voting members, the Compliance Officer and all outside experts in addition to approval by more than half of voting members and all outside experts. However, related-party Compliance Committee members with a voting right, related-party board members and board members with a voting right who are current officers or employees of the related party (including concurrent positions, but not those who have been seconded or transferred to the Asset Manager) are not allowed to participate in the Compliance Committee’s determination of compliance issues regarding related- party transactions.

Investment Guidelines and Acquisition Approval Process

Approval Process for Investment Guidelines

The Asset Manager’s approval process for formulating investment guidelines relating to the investment policy for our assets is as follows. The Investment and Operations Division drafts proposals to formulate investment guidelines. The Compliance Officer reviews the compliance status of such proposals with the

74 applicable laws and regulations and determines whether or not there are any other issues from a compliance viewpoint. If there are no compliance issues, the Investment Committee reviews the proposals. However, the Compliance Committee reviews the proposals under the supervision of the Compliance Officer before the Investment Committee reviews in the following situations: when formulating or repealing guidelines regarding related-party transactions and when the Compliance Officer determines that there are issues to be discussed from a compliance viewpoint after reviewing the compliance status of the proposals with the applicable laws and regulations or that there are issues that need to be reviewed by the Compliance Committee. Once the Compliance Committee approves, the Investment Committee reviews the proposals. The proposals approved by the Investment Committee become formulated investment guidelines and the head of the Investment and Operations Division immediately reports them to the Asset Manager’s board of directors and our board of directors. The same approval process also applies to modifying existing investment guidelines.

The following chart summarizes the Asset Manager’s approval process for formulating and modifying investment guidelines in the investment policy for our assets:

Summary of Investment Guidelines Approval Process

Investment and Operations Division drafts proposals Instruct to modify and resubmit, or drop investment proposals Instruct to modify based on points made by Approval of Compliance Officers Investment Disapproved Committee (Determine the existence of legal, regulatory issues and other compliance issues)

a. For formulating or repealing investment guidelines regarding related-party transactions b. If Compliance Officers deem necessary to discuss Compliance Committee checks the Disapproved proposals

Approved

The head of Investment and Operations Division proposes investment policies for acquisition and sale of properties to Investment Committee Point out issues and instruct to modify and resubmit, or drop investment proposals Investment Committee deliberation and resolution (Compliance Officers may order suspension of deliberations if any procedural issues are observed)

Report to our board of directors

Report to the Asset Manager’s board of directors

Approval Process for Acquisitions and Dispositions

The Asset Manager’s approval process for acquisitions is as follows. The Investment and Operations Division drafts proposals for acquisitions of properties. The Compliance Officer reviews the compliance status of such proposals with the applicable laws and regulations and determines whether or not there are any other issues from a compliance viewpoint. If there are no compliance issues, the Investment Committee reviews the proposals. However, the Compliance Committee reviews the proposals under the supervision of the Compliance Officer before the Investment Committee reviews in the following situations: when acquiring properties from

75 related parties and when the Compliance Officer determines that there are issues to be discussed from a compliance viewpoint after reviewing the compliance status of the proposals with the applicable laws and regulations or that there are issues that need to be reviewed by the Compliance Committee. Once the Compliance Committee approves, the Investment Committee reviews the proposals. The proposals approved by the Investment Committee become approved acquisition transactions. The head of the Investment and Operations Division immediately reports the acquisitions to the Asset Manager’s board of directors and our board of directors either before or after the execution of the acquisitions. The same approval process also applies to disposing assets under management.

The following chart summarizes the Asset Manager’s approval process for acquisitions and dispositions of assets under management:

Summary of Acquisitions and Dispositions Approval Process

Investment and Operations Division drafts proposals Instruct to modify and resubmit, or drop investment proposals Instruct to modify based on points made by Approval of Compliance Officers Investment Disapproved Committee (Determine the existence of legal, regulatory issues and other compliance issues)

a. For acquisitions from related- parties b. If Compliance Officers deem necessary to discuss

Compliance Committee checks the Disapproved proposals

Approved

The head of Investment and Operations Division proposes investment policies for acquisition and sale of properties to Investment Committee Point out issues and instruct to modify and resubmit, or drop investment proposals Investment Committee deliberation and resolution (Compliance Officers may order suspension of deliberations if any procedural issues are observed)

Report to our board of directors

Report to the Asset Manager’s board of directors

Formulation and Modification of Asset Management Plan Approval Process

The Asset Manager’s approval process for formulation and modification of asset management plans is as follows. The Investment and Operations Division drafts necessary proposals for asset management plans pursuant to investment guidelines and the rules and regulations regarding real estate investment trusts and real estate investment corporations set by The Investment Trusts Association, Japan. Once the Compliance Officer reviews the compliance status and approves the proposals, if there are no compliance issues, the Investment Committee reviews them. However, the Compliance Committee reviews the proposals under the supervision of the Compliance Officer when the Compliance Officer determines that there are issues to be discussed from a compliance viewpoint after reviewing the compliance status of the proposals with the applicable laws and regulations or that there are issues that need to be reviewed by the Compliance Committee. Once approved by the

76 Compliance Committee, the Investment Committee reviews the proposals. The proposals approved by the Investment Committee become formulated asset management plans. The head of the Investment and Operations Division reports the plans to the Asset Manager’s board of directors and our board of directors immediately after the approval of the plans.

The following chart summarizes the Asset Manager’s approval process for formulation and modification of asset management plans:

Summary of Formulation and Modification of Asset Management Plan Approval Process

Investment and Operations Division drafts asset management proposals Instruct to modify and resubmit, or drop investment proposals Instruct to modify based on points made by Approval of Compliance Officers Investment Disapproved Committee (Determine the existence of legal, regulatory issues and other compliance issues)

If Compliance Officers deem necessary to discuss

Compliance Committee checks Disapproved the proposals

Approved

The head of Investment and Operations Division proposes asset management proposals to Investment Committee Point out issues and instruct to modify and resubmit, or drop investment proposals Investment Committee deliberation and resolution (Compliance Officers may order suspension of deliberations if any procedural issues are observed)

Report to our board of directors

Report to the Asset Manager’s board of directors

Corporate Governance of the Asset Manager

The Asset Manager’s board of directors consists of five members. The Asset Manager has one corporate auditor. The Asset Manager’s articles of incorporation provide for no fewer than three directors, and no fewer than one corporate auditor. All directors and corporate auditors are elected at general meetings of shareholders of the Asset Manager by a majority of the voting rights of the shareholders in attendance representing in the aggregate more than one-third of the total number of voting rights of all shareholders. The normal term of office of directors and corporate auditors is one year and four years, respectively, although they may serve any number of consecutive terms.

Fiduciary Duty of the Asset Manager

In addition to the Asset Manager’s contractual obligations to us under the asset management agreement, the FIEA provides that an asset management company owes the J-REIT a fiduciary duty and must conduct its activities as an asset management company in good faith. The FIEA also prohibits an asset management

77 company from engaging in certain specified conduct, including entering into transactions outside the ordinary course of business or with related parties of an asset management company that are contrary to or violate the J-REIT’s interests. An asset management company is subject to potential liability for damages from breaches of its duties to the J-REIT under the FIEA. See “Regulation—Act Concerning Investment Trusts and Investment Corporations and Other Related Regulations—Conflicts of Interest” for additional discussion of the an asset management company’s duties to us under the FIEA.

Rules Regarding Related-party Transactions

The Asset Manager has adopted an internal set of rules that apply to all related-party transactions, which include property acquisition, disposition and leasing, property management outsourcing, real estate brokerage services outsourcing (such as for trades and leases) or placing construction orders. These rules require the Asset Manager to obtain approval from the Compliance Officer, who determines whether there is any compliance issue from a compliance viewpoint after reviewing the compliance status of the transactions with the applicable laws, regulations and rules set by us and the Asset Manager, prior to entering into the transactions.

For the purpose of these rules, a related party includes: • those determined under the FIEA to be parent or subsidiary corporations of the Asset Manager; • those determined under the ITA and the enforcement order of ITA to be related parties of the Asset Manager; and • any special purpose entity over which any of the above related parties is likely to exert significant influence.

When one of the parties involved in the sale or purchase of any property or other transaction is a related party, the rules that apply include the following: • Asset acquisition and disposition. In the case of an acquisition from or disposition to a related party in respect of real estate, real estate leasehold rights, surface rights or trust beneficiary interests in any of the foregoing, we will in principle conduct the transaction at a price based on an appraisal (which does not include taxes, acquisition fees, trust-related fee, reserve in trust accounts, income from trust and other pro-rated expenses, such as property taxes) by a qualified independent real estate appraiser. In the case that a property is temporarily acquired by a related party, such as a special purpose company formed in order to transfer the property to us subsequently, we may acquire the property at a price based on the appraisal value plus all the expenses for the property acquisition incurred by the related party. The appraised value should generally be the upper limit of any anticipated acquisition transaction price and the lower limit of any anticipated disposition transaction price. In the case of an acquisition from or disposition to a related party in respect of other assets, we will in principle conduct the transaction at market price, or at a fair price if the market price is difficult to determine. When making determinations regarding such acquisition from or disposition to a related party, we will make disclosure promptly in accordance with the internal rules. • Real estate leasing. When leasing a property to a related party, the terms must be deemed appropriate based on a consideration of market rent and standard leasing terms. Reference may also be made to the opinion of an unrelated third party. When making determinations regarding such leasing to a related party, we will make disclosure promptly in accordance with the internal rules. • Services related to property management. When appointing a related party as property manager in accordance with and pursuant to the terms of the investment guidelines, the related party must be judged to have reasonably met our criteria for evaluation, which includes consideration of past results and management efficiency and takes into account details of the services to be provided and the total volume of services. When appointing a related party as property manager other than as outlined above, along with inspecting past results and the credibility of the relevant company, a decision regarding property management fees would also take into consideration market levels, the details of services to be provided as well as the total volume of services. If the related party has provided property management services for a property to be acquired by us prior to our acquisition, outsourcing of property management to the related party may continue under the same conditions as before the acquisition, but property management fees will be subject to the same process of evaluation explained above and negotiations. In the event that a related party is appointed as property manager, we will make disclosure promptly in accordance with the internal rules.

78 • Real estate brokerage services such as trading and leasing properties. Brokerage and other commissions must be within the range specified in the Building Lots and Building Transaction Business Act and in line with market rent and market prices. When making determinations regarding retaining such brokerage services, we will make disclosure promptly in accordance with the internal rules.

• Placing construction orders. Construction orders should be placed at an appropriate price determined with reference to an estimate provided by a qualified third party. When placing such construction orders, we will make disclosure promptly in accordance with the internal rules.

In order to prevent conflicts of interest, the Asset Manager shall comply with relevant laws and regulations for all transactions, including with parties other than related parties, and shall not conduct its business in a way which causes conflicts of interest or which undermines our interest when conducting transactions with related parties and shall not conduct unnecessary transactions. The Asset Manager shall comply with the provisions stipulated in the FIEA, ITA, the enforcement order of ITA and other regulations regarding related- party transactions to prevent conflicts of interest when conducting transactions with a related party.

See “Regulation—Act Concerning Investment Trusts and Investment Corporations and Other Related Regulations—Conflicts of Interest” for additional discussion of the Asset Manager’s duties to us under the FIEA. See also “Related-party Transactions” for additional information regarding currently anticipated related-party transactions.

Management of the Asset Manager

Directors

The Asset Manager’s directors are as follows:

Masahiro Sakashita. Mr. Sakashita has been the President and Chief Executive Officer of the Asset Manager since June 2012, as well as our Executive Director since November 2012. He previously served as the Managing Director and Chief Investment Officer of Prologis Japan. He oversaw leasing, capital deployment and investment management. Mr. Sakashita has over 28 years of experience in the finance and real estate industry and over seven years at Prologis Japan, expanding the Prologis Group’s platform in Japan by identifying attractive development opportunities and building strong relationships with key customers in the market. Prior to joining Prologis Japan, Mr. Sakashita worked for The Sumitomo Trust and Banking Co., Ltd., a leading trust bank and brokerage firm in Japan, involved in real estate financing and advisory services.

Satoshi Yamaguchi. Mr. Yamaguchi has been a director and Chief Investment Officer of the Asset Manager since June 2012, in charge of property acquisition and asset management. He previously served as First Vice President of the Strategic Planning & Investment division of Prologis Japan. Mr. Yamaguchi has over 22 years of experience in the finance and real estate industry and over four years at Prologis Japan. Since joining Prologis Japan, Mr. Yamaguchi has led several strategic initiatives such as structuring JV schemes in Japan and has built strong relationships with key customers in the market by utilizing his industry knowledge and also experience in the Prologis Japan group operation. Prior to joining Prologis Japan, Mr. Yamaguchi worked for Sumitomo Mitsui Trust Bank, Limited, a leading trust bank and brokerage firm in Japan, involved in real estate investment and advisory services.

Atsushi Toda. Mr. Toda has been a director and Chief Financial Officer of the Asset Manager since December 2012, in charge of corporate planning, financing and investor relations activities. He previously served as a Senior Vice President of Prologis Japan. Mr. Toda has over 18 years of experience in the real estate investment banking and fund management industry. Prior to joining Prologis Japan, he held management positions within the real estate industry including Kenedix, Inc., following an extended career with investment banks in Tokyo. During his career as an investment banker, he was a key management member of UBS Securities Japan Ltd. Prior to UBS, he worked at Nikko Salomon Smith Barney and Morgan Stanley Japan Securities Co., Ltd., leading a wide range of transactions such as the equity financings of J-REITs and corporate M&A.

Hitoshi Tanaka. Mr. Tanaka has been a director and chief engineer of the Asset Manager since December 2012. He previously served as First Vice President and Vice President of the Construction

79 Management division of Prologis Japan. Mr. Tanaka was responsible for managing many large-scale projects in Japan before taking on his position as the head of Construction Management. Prior to joining Prologis Japan, Mr. Tanaka held several key positions within Fujita Corporation, where he was involved in various construction projects since 1984, including involvement in project planning and development, project management and construction management.

Hirokuni Tadokoro. Mr. Tadokoro has been a part-time director of the Asset Manager since June 2012. He has also served as First Vice President of the finance division of Prologis Japan since January 2010. In addition, he served as Finance Team Leader and Vice President of the finance team of Prologis Japan and Asset Manager of the asset management team of Prologis Japan. Previously, he held a position at Sanwa Bank, Limited.

Corporate Auditor

Ken Takagi. Mr. Takagi has served as a part-time corporate auditor of the Asset Manager since June 2012. He has also served as Accounting Team Leader and Vice President of the finance team of Prologis Japan since January 2007. In addition, he served as Accountant of the accounting team within the financial control team of Prologis Japan. Previously, Mr. Takagi held positions at Crédit Lyonnais, IBJ Nomura Financial Products PLC, Arthur Andersen and Daiwa House Industry Co., Ltd.

80 ANTICIPATED INITIAL PORTFOLIO

Overview of the Anticipated Initial Portfolio

We currently do not own any properties. We intend to acquire 12 properties for our anticipated initial portfolio. We expect that the properties we intend to acquire will contain a total leasable area of 890,346 square meters. We anticipate that we will own nine of the 12 properties in the form of trust beneficiary interests.

We note that information for the properties is given as of September 30, 2012. The information does not refer to subsequent changes resulting from, for example, the addition, or expected addition, of new tenants or the loss, or expected loss, of former or current tenants. We do not believe, however, that any such changes have had or will have a material adverse effect on the anticipated initial portfolio.

For a description of this trust beneficiary ownership structure, see “Description of the Trust Agreements and the Statutory Rights Regarding the Property Trusts”.

Anticipated Acquisitions

The following table provides summary information for the 12 properties we intend to acquire for our anticipated initial portfolio:

Location (city or Anticipated Anticipated Number Gross ward, acquisition Year Property annual Security of Land floor Leasable Leased Occupancy No. Property name prefecture) price (1) constructed (2) age (3) rent (4) deposit (5) tenants (6) area (7) area (7) area (8) area (9) rate (10) (in millions) (years) (in millions) (in millions) (m2)(m2)(m2)(m2) (%) Multi-Tenant: 1 Prologis Park Ichikawa, ¥ 33,900 2008 3.9 ¥ 2,032 ¥ 874 12 65,954 138,735 125,014 124,169 99.3 Ichikawa 1 Chiba 2 Prologis Park Zama, 27,900 2009 3.4 1,838 567 7 59,475 118,688 113,471 113,471 100.0 Zama 1 Kanagawa 3 Prologis Park Hiki, 25,600 2011 1.3 1,783 540 6 76,830 157,721 145,036 144,037 99.3 Kawajima Saitama 4 Prologis Park Osaka, 25,000 2007 5.4 1,694 616 9 33,092 139,211 130,565 129,608 99.3 Osaka 2 Osaka 5 Prologis Park Osaka, 13,500 2008 4.6 937 382 5 28,145 79,991 74,925 74,030 98.8 (12) Maishima 3 Osaka 6 Prologis Park Kasugai, 12,500 2007 4.8 1,007 407 10 65,538 93,988 91,806 88,348 96.2 Kasugai Aichi 7 Prologis Park Kitanagoya, 6,500 2009 3.3 529 165 3 21,942 43,655 42,751 42,751 100.0 Kitanagoya Aichi 8 Prologis Park Tagajo, 5,370 2009 3.5 443 214 4 19,877 36,851 39,098 39,098 100.0 (13) Tagajo Miyagi

Build-to-Suit: 1 Prologis Park Osaka, 11,500 2010 2.1 -(11) -(11) 1 19,559 57,194 57,234 57,234 100.0 Maishima 4 Osaka 2 Prologis Park Takatsuki, 4,410 2012 0.7 -(11) -(11) 1 10,704 20,117 19,898 19,898 100.0 Takatsuki Osaka 3 Prologis Park Tosu, Saga 3,030 2012 0.2 -(11) -(11) 1 15,591 21,932 21,778 21,778 100.0 Tosu 2 4 Prologis Park Tosu, Saga 3,810 2012 0.7 -(11) -(11) 1 23,384 29,430 28,765 28,765 100.0 Tosu 4 Total ¥173,020 3.4 ¥11,740 ¥4,193 60 440,095 937,518 890,346 883,192 99.2

Notes: (1) The anticipated acquisition price is the transfer price of the property in the relevant sale and purchase agreement rounded to the nearest million yen and does not include national or local consumption taxes or expenses which will be incurred in the acquisition. (2) Year constructed is based on the date in the property registry and may differ from actual years of construction. (3) Property age for each property is calculated based on the property registry as of September 30, 2012 and rounded to the nearest tenth. Total amount is a weighted average based on anticipated acquisition prices. (4) Anticipated annual rent for each property is based on total annual rent (including common area charges) as of September 30, 2012 as indicated in the relevant lease agreements for all warehouses, offices and stores for each property or property in trust. If the relevant agreements include monthly contracted rent, anticipated annual rent is calculated by multiplying the monthly contracted rent by 12. Figures are rounded down to the nearest million yen. (5) Calculated as the total security deposit as indicated in the relevant lease agreements for all warehouses, offices and stores for each property or property in trust as of September 30, 2012, rounded down to the nearest million yen. (6) Based on the total number of lease agreements with tenants for warehouses, offices and stores for each property or property in trust as of September 30, 2012. For properties with pass-through master lease agreements, this is the total number of end-tenants. (7) Calculated based on the property registry and may differ from the actual area. Area has been rounded down to the nearest square meter. (8) Equal to the gross leasable space in each property or property in trust based on lease agreements and floor plans included in lease agreements plus available space based on floor plans, rounded down to the nearest square meter. (9) Equal to gross floor area of leased space in property or property in trust as of September 30, 2012, based on the lease agreements and floor plans included in lease agreements. Area has been rounded down to the nearest square meter.

81 (10) Occupancy rate is as of September 30, 2012, calculated by dividing total leased area for each property by the total leasable area. Figures are rounded to the nearest tenth. (11) We have not obtained permission from the tenant of these properties to release the information missing from this table. (12) The lease agreements with two tenants at this facility expire on December 31, 2012 and February 28, 2013, respectively. Upon the expiration of the lease agreements with the two tenants, the occupancy rate will decrease to 83.9%, assuming the space vacated is not released to replacement tenants. (13) The lease agreement with one of the tenants at this facility expires on April 30, 2013. Upon the expiration of the lease agreement, the occupancy rate will decrease to 86.7%, assuming the space vacated is not released to replacement tenants.

Status of the Properties We Intend to Acquire

For the 12 properties we intend to acquire for our anticipated initial portfolio on February 15, 2013, we have entered into an agreement to purchase trust beneficiary rights from each current holder of the trust beneficiary interest in each of the nine of the properties we will own in trust, and we have entered into purchase agreements for the remaining three properties. All of these purchase agreements are substantially similar, and the closing of each of these 12 properties is scheduled to take place in February 2013, upon the satisfaction of certain conditions.

The acquisition of each property we intend to acquire for our anticipated initial portfolio is considered a related-party transaction under the internal rules of the Asset Manager for related-party transactions. In accordance with those rules, the Asset Manager reported to our board of directors, on December 18, 2012, about the acquisition of each of these properties following prior approval on December 17, 2012 by the Asset Manager’s Investment Committee and Compliance Committee. See “Asset Manager—Investment Guidelines and Acquisition Approval Process” and “Asset Manager—Rules Regarding Related-party Transactions”.

Portfolio Diversification (As of September 30, 2012)

The following tables provide various breakdowns of our anticipated initial portfolio based on several different criteria:

Distribution by Location

Anticipated acquisition Percentage of total anticipated Location Number of properties price acquisition price (1) (in millions) (%) Global Markets ...... 7 ¥141,810 82.0 Kanto Area ...... 3 87,400 50.5 Kansai Area ...... 4 54,410 31.4 Regional Markets ...... 5 31,210 18.0 Chubu Area ...... 2 19,000 11.0 Tohoku Area ...... 1 5,370 3.1 Kyushu Area ...... 2 6,840 4.0 Others ...... - - - Total ...... 12 ¥173,020 100.0

Note: (1) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated acquisition price may differ from the portfolio total.

Distribution by Property Type

Anticipated acquisition Percentage of total anticipated Property Type Number of properties price acquisition price (1) (in millions) (%) Multi-Tenant Logistics Facilities ...... 8 ¥150,270 86.9 Build-to-Suit Logistics Facilities ...... 4 22,750 13.1 Total ...... 12 ¥173,020 100.0

Note: (1) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated acquisition price may differ from the portfolio total.

82 Distribution by Property Age

Anticipated acquisition Percentage of total anticipated Property Age Number of properties price acquisition price (1) (in millions) (%) Less than 3 years ...... 5 ¥ 48,350 27.9 3 to 5 years ...... 6 99,670 57.6 More than 5 years ...... 1 25,000 14.4 Total ...... 12 ¥173,020 100.0

Note: (1) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated acquisition price may differ from the portfolio total.

Distribution by Leasable Area

Anticipated acquisition Percentage of total anticipated Leasable Area (1) Number of properties price acquisition price (2) (in millions) (%) Less than 50,000m2 ...... 5 ¥ 23,120 13.4 50,000m2 to 100,000m2 ...... 3 37,500 21.7 More than 100,000m2 ...... 4 112,400 65.0 Total ...... 12 ¥173,020 100.0

Notes: (1) Leasable area is equal to the gross floor area for lease in each property or property in trust based on lease agreements or floor plans included in lease agreements plus available space based on floor plans. (2) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated acquisition price may differ from the portfolio total.

Distribution by Lease Term

Lease Term Average Lease Term (1) ...... 7.7years Multi-Tenant Logistics Facilities ...... 6.9years Build-to-Suit Logistics Facilities ...... 12.8 years Average Remaining Lease Term (2) ...... 5.2years

Notes: (1) Calculated as a weighted average lease term based on the rent indicated in each lease agreement in relation to each property or property in trust, rounded to the nearest tenth. (2) Calculated as a weighted average remaining lease term based on the rent indicated in each lease agreement in relation to each property or property in trust, rounded to the nearest tenth.

Distribution by Total Lease Term

Percentage of total Total Lease Term Anticipated annual rent (1) anticipated annual rent (2) (in millions) (%) Less than 5 years ...... ¥ 2,106 17.9 5 to 10 years ...... 5,357 45.6 More than 10 years ...... 4,276 36.4 Total ...... ¥11,740 100.0

Notes: (1) Anticipated annual rent for each property is based on total annual rent (including common area charges) as indicated in the relevant lease agreements for all warehouses, offices and stores for each property or property in trust. If the relevant agreements include monthly contracted rent, anticipated annual rent is calculated by multiplying the monthly contracted rent by 12 and rounding down to the nearest million yen. (2) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated annual rent may differ from the portfolio total.

83 Distribution by Remaining Lease Term

Percentage of total Lease Term Remaining Anticipated annual rent (1) anticipated annual rent (2) (in millions) (%) Less than 3 years ...... ¥ 5,224 44.5 3 to 5 years ...... 2,021 17.2 5 to 10 years ...... 2,983 25.4 More than 10 years ...... 1,511 12.9 Total ...... ¥11,740 100.0

Notes: (1) Anticipated annual rent for each property is based on total annual rent (including common area charges) as indicated in the relevant lease agreements for all warehouses, offices and stores for each property or property in trust. If the relevant agreements include monthly contracted rent, anticipated annual rent is calculated by multiplying the monthly contracted rent by 12 and rounding down to the nearest million yen. (2) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated acquisition price may differ from the portfolio total.

Net Operating Income Yield

We present below information related to net operating income or NOI yield, with respect to each of the 12 properties in our anticipated initial portfolio, as well as our anticipated initial portfolio as a whole. We define net operating income of a property for this purpose as operating revenues, less operating expenses, plus depreciation, and NOI yield of a property as net operating income of the property divided by the anticipated acquisition price. We consider net operating income to be a useful measure because it provides a performance measure that reflects the revenues and expenses directly associated with owning and operating the properties we expect to acquire. In addition, we consider NOI yield to be a useful measure because it can be used as a rough measure to value a property based on net operating income. Other companies, however, may not hold the same view regarding NOI yield or use different methodologies for calculating NOI yield, and accordingly, our NOI yield may not be comparable to those used by other companies.

Because we have not acquired or operated any of the properties in our anticipated initial portfolio, all NOI yields presented below are estimates related to these properties and have been derived using one of the following methods:

• Adjusted Forecast NOI yield: based on the relevant assumptions regarding operating revenues and operating expenses for the fiscal period ending November 30, 2013 set forth under “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013”, except that we have adjusted capitalized initial property-related taxes as if they were expensed; and

• Appraisal NOI yield: based on the stabilized net operating income assumed by the appraiser of the relevant property for the direct capitalization analysis contained in the relevant appraisal report.

All NOI yields presented below are therefore forward-looking information subject to various risks, uncertainties and assumptions about our business. Thus, our actual results may differ materially from those implied by the NOI yields. In addition, each NOI yield is subject to a considerable degree of subjectivity. Different assumptions or judgments could lead to different NOI yields with respect to any property under the same set of facts and circumstances. Prospective investors should read the following NOI yield discussion together with the risks and uncertainties contained in “Risk Factors” and elsewhere in this document and make their own independent assessments of our future performance and prospects. Potential risks and uncertainties that could cause our actual results to differ materially from the Adjusted Forecast NOI yields or the Appraisal NOI yields include, without limitation:

• our lack of operating history; • the Asset Manager’s limited experience in operating a J-REIT; • lack of full financial statements for any of the 12 properties in our anticipated initial portfolio; • adverse conditions in the Japanese economy; • our ability to close all or any of our anticipated acquisitions of properties; 84 • our ability to complete the expected debt financing;

• our ability to acquire properties to execute our growth and investment strategy;

• the past experience of the Prologis Group in the Japanese real estate market being no indicator or guarantee of our future results;

• our reliance on the Prologis Group;

• potential conflicts of interest between us and the Prologis Group, including the Asset Manager;

• competition in seeking tenants;

• any natural or man-made disaster;

• our concentration of properties in the Kanto area and the Kansai area;

• our strategy of investing in Class-A logistics facilities, which may subject us to risks uncommon to other J-REITs that invest primarily in a broader range of real estate or real estate-related assets;

• our ability to find replacement tenants for our properties that are customized for specific use;

• unique risks associated with reclaimed land, on which certain properties in our anticipated initial portfolio are located;

• illiquidity in the real estate market;

• our ability to obtain financing for future acquisitions;

• liquidity and other limitations on our activities under debt financing arrangements;

• increased expenses due to increases in prevailing market interest rates;

• decreases in rental revenues due to lease terminations, decreases in lease renewals or defaults;

• our reliance on appraisals and other expert reports, which are subject to significant uncertainties;

• the performance of the Asset Manager and any key third-party service providers to which we are required to assign our business, administrative and management functions; and

• tight supervision by the regulatory authorities.

We make no representation that we will achieve the results anticipated by any Adjusted Forecast NOI yield or Appraisal NOI yield presented below. We do not intend and we disclaim any duty to update the assumptions used in connection with the Adjusted Forecast NOI yields and Appraisal NOI yields. Neither the Adjusted Forecast NOI yields nor the Appraisal NOI yields may represent or indicate the current or future operations and results of the properties that we intend to acquire.

Adjusted Forecast NOI Yield

The Adjusted Forecast NOI yields we present below are calculated on an annualized basis by using the relevant assumptions regarding operating revenues and operating expenses for the fiscal period ending November 30, 2013 set forth under “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013”, except that we have adjusted capitalized initial property-related taxes as if they were expensed. Such forecast assumptions are subject to various risks and uncertainties, and the actual results of the properties we expect to acquire may differ materially from those contained in such forecasts and assumptions. One or more forecast assumption may turn out to be incorrect. See “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013”.

85 The following table shows the Adjusted Forecast NOI yield for each of the 12 properties we intend to acquire for our anticipated initial portfolio.

Adjusted Property Forecast NOI yield (%) Prologis Park Ichikawa 1 ...... 5.0 Prologis Park Zama 1 ...... 5.7 Prologis Park Kawajima ...... 5.8 Prologis Park Osaka 2 ...... 5.5 Prologis Park Maishima 3 ...... 5.6 Prologis Park Kasugai ...... 6.3 Prologis Park Kitanagoya ...... 6.5 Prologis Park Tagajo ...... 5.0 Prologis Park Maishima 4 ...... 5.6 Prologis Park Takatsuki ...... 5.1 Prologis Park Tosu 2 ...... 6.3 Prologis Park Tosu 4 ...... 5.8

Note: (1) In general, property-related taxes are settled at the time of acquisition between the seller and the purchaser based on their respective periods of ownership in relation to the relevant tax year. However, any property-related taxes allocated to the purchaser are not expensed at the time of acquisition because they are treated as a part of the acquisition price for accounting purposes. The above Adjusted Forecast NOI yields have been adjusted as if capitalized initial property-related taxes were to be expensed for the periods covered.

The following table shows information regarding the portfolio Adjusted Forecast NOI yield of the 12 properties we intend to acquire for our anticipated initial portfolio.

Portfolio Adjusted Forecast NOI yield (1) ...... 5.6%

Note: (1) Portfolio Adjusted Forecast NOI yield is portfolio Adjusted Forecast NOI, divided by the aggregate anticipated acquisition price of ¥173,020 million.

Appraisal NOI Yield

We present below the Appraisal NOI yield of each of the 12 properties that we intend to acquire as well as the portfolio Appraisal NOI yield for our anticipated initial portfolio, based on net operating income assumptions used for the direct capitalization analysis included in the appraisal report on each such property. The Appraisal NOI yield of a property is calculated as the stabilized annual net operating income estimated as part of the relevant direct capitalization analysis, divided by the anticipated acquisition price. Although appraisers typically estimate net operating income as part of their discounted cash flow analyses as well as direct capitalization analyses, we extracted the net operating income estimate based on the direct capitalization analysis for the purpose of presenting Appraisal NOI yields, as each such net operating income is generally based on the appraiser’s estimation of operation of the property under stabilized conditions, as explained in “Appraisals and Engineering, Environmental and Seismic Reviews—Appraisals—Methodology”. The portfolio Appraisal NOI yield for our anticipated initial portfolio is calculated as the sum of each net operating income estimate based on the direct capitalization analysis, divided by the aggregate anticipated acquisition price.

We present Appraisal NOI yield information below for investors who may be interested in comparing such information with the Adjusted Forecast NOI yield information presented in “—Adjusted Forecast NOI Yield” above. However, we make no representation whatsoever as to whether such comparison should inform any investor’s decision as to whether to invest in our units. As discussed in greater detail in “Appraisals and Engineering, Environmental and Seismic Reviews—Appraisals—Limitations of Appraisals”, appraisal values, along with any measures used to generate appraisal values such as net operating income, are inherently speculative and subject to various assumptions, estimations and judgments. We thus provide the following information regarding Appraisal NOI yields to you “as is” without warranty or guarantee of any kind as to its accuracy or usefulness to us, the Asset Manager or you.

86 In addition to the potential risks and uncertainties that are listed above in “—Net Operating Income Yield”, there are potential risks and uncertainties specific to Appraisal NOI yields that may significantly diminish the utility of comparing any Adjusted Forecast NOI yield to Appraisal NOI yield, including but not limited to the following:

• Information that an appraiser uses to estimate the net operating income of a property may be more limited than the information we or the Asset Manager have to estimate the net operating income of the same property, as an appraiser can make this estimation only based on information that it can acquire or that is disclosed to it. For instance, the appraiser’s ability to enter a property to inspect buildings and observe tenant activities is more limited, and the appraiser must rely more heavily on documents and other written materials to analyze the property. Limitations in the information used to appraise the value of a property could magnify the subjectivity of the appraisal process.

• In estimating anticipated operating revenues or operating expenses, an appraiser may be at an inherent disadvantage in analyzing the impact of factors that are internal to the operations of the Asset Manager, such as the benefit of the Prologis Group’s support or leases with related parties. For example, an appraiser may underestimate our ability to leverage the Prologis Group’s value chain to bring down operating expenses, while overestimating our ability to retain certain related parties as long-term tenants. In addition, the appraiser may give undue weight to market data to supplement its analysis.

• As discussed in further detail in “Appraisals and Engineering, Environmental and Seismic Reviews—Appraisals”, we have retained two appraisers, CBRE K.K. and Jones Lang LaSalle K.K., to appraise the value of the 12 properties in our anticipated initial portfolio. Because each appraiser employs its own appraisal methodology subject to a unique set of assumptions, estimations and judgments, to the extent that there is any meaningful value in comparing various Adjusted Forecast NOI yields and Appraisal NOI yields, such value is likely to be significantly diminished by different appraisers’ uses of inconsistent appraisal methodologies.

In general, when estimating anticipated net operating income of a property, the appraiser makes its own independent assumptions, estimates and judgments with respect to anticipated operating revenues and operating expenses, which in turn require making assumptions, estimates and judgments generally with respect to the same set of factors that are described under “Operating Revenues” and “Operating Expenses” in “Forecasts for the Fiscal Periods Ending May 31, 2013 and November 30, 2013—Key Assumptions Underlying the Forecasts Announced on February 4, 2013”. Such items typically include the following:

• Operating revenues: rent, common area charges, utilities, parking and other revenues, loss from vacancy and delinquent payments, primarily based on review of each tenant’s business, comparable transactions and other market data; and

• Operating expenses: repair and maintenance, utilities, property management fees, advertisement and other leasing costs, taxes, insurance and other costs, primarily based on review of engineering reports, rent rolls and other historical financial data, comparable transactions, projections from us, public tax records and insurance cost estimates.

Any difference in the assumptions, estimates and judgments between us and an appraiser with respect to any of these items or other relevant factors could result in a material difference in Adjusted Forecast NOI yield and Appraisal NOI yield with respect to the same property. In particular, the proximity of an Appraisal NOI to an Adjusted Forecast NOI yield with respect to the same property may not imply at all the reasonableness of the forecast assumptions used for the Adjusted Forecast NOI yield or the likelihood that we will in fact achieve the results anticipated by the Adjusted Forecast NOI yield.

87 The following table shows the Appraisal NOI yield for each of the 12 properties we intend to acquire for our anticipated initial portfolio.

Property Appraisal NOI yield (%) Prologis Park Ichikawa 1 ...... 5.2 Prologis Park Zama 1 ...... 5.5 Prologis Park Kawajima ...... 5.8 Prologis Park Osaka 2 ...... 5.5 Prologis Park Maishima 3 ...... 5.6 Prologis Park Kasugai ...... 6.4 Prologis Park Kitanagoya ...... 6.0 Prologis Park Tagajo ...... 6.7 Prologis Park Maishima 4 ...... 5.5 Prologis Park Takatsuki ...... 5.7 Prologis Park Tosu 2 ...... 5.9 Prologis Park Tosu 4 ...... 6.0

The following table shows information regarding the portfolio Appraisal NOI yield of the 12 properties we expect to acquire for our anticipated initial portfolio.

Portfolio Appraisal NOI yield (1) ...... 5.7%

Note: (1) Portfolio Appraisal NOI yield is portfolio Appraisal NOI, divided by the aggregate anticipated acquisition price of ¥173,020 million.

Tenants

Key Tenants

The following table provides information regarding each of our key tenants as of September 30, 2012, which we define as a tenant that leases 4.5% or more of the total leased area of our anticipated initial portfolio:

Overview of Key Tenants

Percentage of total anticipated annual Percentage of total anticipated Key tenant rent (1) leased area (1) (%) (%) Amazon Japan Logistics KK ...... 6.3 6.9 Hamakyorex Co., Ltd...... 6.0 6.5 SENKO Co., Ltd...... 6.4 6.5 Hitachi Transport System, Ltd...... 6.7 6.4 Nipro Corporation ...... 4.2 4.6 Subtotal ...... 29.4 30.8 Portfolio Total ...... 100.0 100.0

Note: (1) Rounded to the nearest tenth. Therefore, the sums of the percentages of each key tenant may differ from the portfolio subtotals.

88 Twenty Largest Tenants

The following table provides information regarding the twenty largest tenants in our anticipated initial portfolio by leased area as of September 30, 2012:

Twenty Largest Tenants by Leased Area

Percentage of total No. Property name Business type anticipated leased area (1) (%) 1 Amazon Japan Logistics KK Ordinary warehousing service 6.9 2 Hamakyorex Co., Ltd. 3rd-party logistics providers 6.5 3 SENKO Co., Ltd. 3rd-party logistics providers 6.5 4 Hitachi Transport System, Ltd. 3rd-party logistics providers 6.4 5 Nipro Corporation Related medical services 4.6 6 Konoike Transport Co., Ltd. 3rd-party logistics providers 4.4 7 Hitachi Collabonext Transport System Co., Ltd. Freight and ship brokers 4.3 8 Panasonic Logistics Co., Ltd. 3rd-party logistics providers 3.8 9 Daikin Industries, Ltd. Refrigerator and air-conditioning apparatus manufacturing 3.6 10 Vantec Corporation 3rd-party logistics providers 3.5 11 Japanet Takata Co., Ltd. General merchandise mail order industry 3.4 12 Sagawa Global Logistics Co., Ltd. (Sagawa Miscellaneous services incidental to transport Group) 3.4 13 Costco Wholesale Japan, Ltd. General merchandise stores 3.2 14 Rakuten, Inc. Miscellaneous business service 2.8 15 Honda Logicom Co., Ltd. Packing and crating companies 2.5 16 KRS Corporation Freight forwarding companies excluding collect- and-deliver transport companies 2.4 17 DNP Logistics Co., Ltd. 3rd-party logistics providers 2.3 18 Trancom Co., Ltd. 3rd-party logistics providers 2.1 19 Arata Corporation General merchandise wholesale trade 2.0 20 Sankyu Inc. 3rd-party logistics providers 2.0 Total 76.4

Note: (1) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated leased area for each property may differ from the portfolio total.

Key Properties

The following table provides information regarding our key properties, which we define as any property that represents 10% or more of the total annual rent of our anticipated initial portfolio as of September 30, 2012:

Percentage of Anticipated annual anticipated annual Property name rent (1) rent (2) (in millions) (%) Prologis Park Ichikawa 1 ...... ¥ 2,032 17.3 Prologis Park Zama 1 ...... 1,838 15.7 Prologis Park Kawajima ...... 1,783 15.2 Prologis Park Osaka 2 ...... 1,694 14.4 Subtotal ...... 7,349 62.6 Portfolio Total ...... ¥11,740 100.0

Notes: (1) Rounded down to the nearest million. Therefore, the sum of the anticipated annual rent may differ from the portfolio subtotal. (2) Rounded to the nearest tenth. Therefore, the sum of the percentage of total anticipated annual rent for each property may differ from the portfolio subtotal.

89 Property Descriptions

Top Four Properties by Anticipated Acquisition Price of our Anticipated Initial Portfolio

The following are brief property descriptions of our top four properties by anticipated acquisition price of our anticipated initial portfolio:

Prologis Park Ichikawa 1. Prologis Park Ichikawa 1 is a landmark logistics facility in Ichikawa, Chiba prefecture. The property comprises a six-story, large-scale multi-tenant logistics facility, which was completed in October 2008. The building provides office and warehouse space, as well as a restaurant and a convenience store for tenant workers. Current tenants include internet retail, retail and 3PL firms. The property is located approximately 16 kilometers from central Tokyo and has good connectivity to the Shuto Wangan Expressway, the closest interchange of the Chidoricho Interchange and National Route 357, the coastal road, providing convenient access to a large-scale consumption area. It is regarded as an ideal major distribution base since the property is located between Narita airport and central Tokyo. For these reasons, it recently has been especially attractive for tenants such as internet retailers. Also, the property is within walking distance (1.3 kilometers) from Ichikawa-Shiohama station on the JR Keiyo line, providing easy access for tenant workers. The property had 12 tenants as of September 30, 2012, a gross floor area of approximately 138,000 square meters (with the warehouse space per floor customizable to meet tenant needs from at least 8,000 square meters per floor), a floor weight capacity of 1.5 tons per square meter, ceiling heights of 5.5 meters, a span between columns of more than 10 meters and two spiral ramps that allow direct access to each floor for 40-foot container trucks. The facility also has 25 truck berths on each floor (18 on the west side of the warehouse) and 34 shared truck parking spaces on the ground floor, a separate building for housing potentially dangerous goods and parking for 250 vehicles.

Prologis Park Zama 1. Prologis Park Zama 1 is a landmark logistics facility in Zama, Kanagawa prefecture. The property comprises a five-story, large-scale multi-tenant logistics facility, which was completed in May 2009. The building provides office and warehouse space, as well as a restaurant and a convenience store for tenant workers. The property is located two kilometers from National Route 246, five kilometers from the Yokohama-Machida Interchange on the Tomei Expressway and National Route 16 and 9.8 kilometers from the Atsugi Interchange on the Tomei Expressway. The property enjoys convenient access to western Tokyo, Kawasaki, Yokohama and the Tama area. Also, the property is regarded as an ideal distribution base because it is located between the Chubu/Kansai areas and central Tokyo. The property had seven tenants as of September 30, 2012, a gross floor area of approximately 118,000 square meters, a floor weight capacity of 1.5 tons per square meter, ceiling heights of 5.5 meters, a span between columns of more than 10 meters, two spiral ramps, 190 truck berths and a large-scale parking lot for 370 vehicles. As a sustainability feature, the logistics facility has solar panels covering approximately half of the rooftop (approximately 12,000 square meters) to generate electricity, and also features structural seismic isolation that can help protect against damage to goods stored on-site and provide safety for workers at the facility in the event of an earthquake.

Prologis Park Kawajima. Prologis Park Kawajima is a landmark facility in Kawajima Town, Hiki, Saitama prefecture. The property comprises a five-story multi-tenant logistics facility, which was completed in June 2011. The property is one of the largest logistics facilities in Japan. The building provides office and warehouse space as well as a restaurant and convenience store as amenities for tenant workers. Current tenants include internet retail, medical device and logistics companies. Although the property is not within walking distance of the closest train station, the large parking lot at the facility makes it easy for tenant workers to commute by car. The property also enjoys good connectivity from the Kawajima Interchange on the Ken-O Expressway to the Kan-Etsu Expressway through the Tsurugashima junction, which provides convenient access to the greater Tokyo area and Hokuriku area. The property also has convenient access to central Tokyo through National Route 254 and to areas of western Tokyo, such as Hachioji, and the Saitama area through National Route 16. For logistics businesses, the location of the property has the potential to increase in value as the Ken-O Expressway extension to connect the Tohoku Expressway and the Joban Expressway is ongoing. The property had six tenants as of September 30, 2012, a gross floor area of approximately 157,000 square meters, a floor weight capacity of 1.5 tons per square meter, ceiling heights of 5.5 meters, a span between columns of more than 10 meters, two spiral ramps that allow direct access to each floor for 40-foot container trucks, approximately 200 truck berths and a parking lot for approximately 500 vehicles.

Prologis Park Osaka 2. Prologis Park Osaka 2 is a landmark facility in Osaka, Osaka prefecture. The property comprises an eight-story multi-tenant logistics facility, which was completed in May 2007. The building provides office and warehouse space as well as a restaurant and convenience store as amenities for tenant workers. The property is two kilometers from the Hokko-Nishi Interchange on the Hanshin Expressway and

90 close to a large-scale consumption area in the Osaka area. The property had nine tenants as of September 30, 2012, a gross floor area of approximately 139,000 square meters (with over 16,000 square meters of warehouse space on a single floor that can be further divided to meet a tenant’s needs), a floor weight capacity of 1.5 tons per square meter, ceiling heights of 5.5 meters, a span between columns of more than 10 meters, two spiral ramps on each floor providing access to both upper and lower floors to increase operational efficiency and parking spaces on the roof to accommodate both tenant passenger vehicles as well as large trailer trucks. The facility has various sustainability features such as increased greenery, small-scale wind generators and photocatalytic pavement that absorbs pollutants from car exhaust.

91 APPRAISALS AND ENGINEERING, ENVIRONMENTAL AND SEISMIC REVIEWS

We rely on third parties for appraisals, as well as engineering, environmental, seismic and other reports. For a description of the limitations of such third-party reports, see “Risk Factors—Property and Business Risks— We rely on expert appraisals and engineering, environmental and seismic reports, which are subject to significant uncertainties”.

Appraisals

Prior to our determination to acquire any property, the Asset Manager, on our behalf, retains a qualified real estate appraiser to conduct an appraisal of the property and provide an appraisal report, which it takes into account in making an investment decision. The Asset Manager also retains real estate appraisers to provide us with follow-up appraisal reports or valuation reports on properties in our portfolio at the end of each fiscal period, and we publicly disclose the revised appraisal values in Japan, as is customary for J-REITs. We make these disclosures solely to comply with legal requirements and market practice in Japan.

Limitations of Appraisals

We have included below for informational purposes only the appraisal values determined by Jones Lang LaSalle K.K. and CBRE K.K. for the 12 properties that we intend to acquire as described in this document. Property appraisals are largely based on forward-looking information that is inherently speculative and difficult to verify. We cannot represent to you or guarantee that the appraisal values in this section reflect the prices that we could obtain upon a sale of the relevant property. The appraisal values of the properties provided to us represent the analysis and determination of the relevant appraiser based on their particular assumptions, estimations and judgments about the value of the properties appraised, which necessarily include subjective elements. Different sets of assumptions and/or different estimations and judgments based on a set of assumptions may result in significantly different appraisal values of the same property. Thus, other qualified appraisers could have reached materially different conclusions than those reached by the appraisers in their reports to us with respect to the value of the properties currently in our portfolio and those that we intend to acquire. We thus provide the appraisal values to you “as is” without warranty or guarantee of any kind as to their accuracy or usefulness to us, the Asset Manager or you.

There are also certain factors regarding real estate appraisals in Japan that may reduce the reliability of the appraisal reports to us, including the following:

• the utilization of cash flow based property valuation techniques involves a large number of estimates and reductions;

• the methodologies of the appraiser involve a significant amount of professional discretion, which may be affected by customs and practices in the real estate markets in Japan (for example, the appraiser makes a discretionary professional judgment in choosing between relative weightings of the cost method, discounted cash flow method or direct capitalization method in determining the final value for a particular property);

• the liquidity of the Japanese real estate market has historically been relatively low, limiting the amount of comparable sales data that are available to an appraiser; and

• the uncertain condition of the Japanese economy and, specifically, certain areas of its logistics sector may make it more difficult to accurately forecast the cash flows that will be generated by certain types of logistics properties, which may reduce the reliability of property appraisals.

The appraisal reports we receive are valid only as of the date of the appraisal of each property. The appraisers rely on the reports prepared by independent firms regarding the engineering, environmental, seismic and other conditions of the properties.

Jones Lang LaSalle K.K. and CBRE K.K. are solely responsible for the appraisal reports of the properties we intend to acquire as described in this document. Neither we nor the Asset Manager give any representation or other assurance with respect to the accuracy or completeness of the appraisal values and other information they provide to us, and the publicly released appraisal information should not be relied upon by you in making an investment decision. You should carefully read the appraisal values and other information below with the rest of this document and make your own independent assessment of our future performance and prospects

92 Methodology

Jones Lang LaSalle K.K. and CBRE K.K. derived the appraisal values of the properties in accordance with the guidelines issued by the Japanese Association of Real Estate Appraisers. Under the guidelines, when retained by a J-REIT to appraise property for purchase or follow-up appraisal, an appraiser must provide the specified value (tokutei kakaku) as appraisal value, which is based on the cash flow method after examining the cost method. The cash flow-based method used is the discounted cash flow method, and to supplement the result of derivations based on that method, the appraiser also derives the value based on the direct capitalization method.

We used two appraisers to reduce the risk of delays and cost-inefficiencies in the appraisal process that may be brought by a single appraiser handling all of the appraisal work. Although the two appraisers generally used the methods described below in similar ways, each appraiser derived key numerical assumptions and values subjectively, considering multiple factors with different weights placed on different factors based on such appraiser’s broad discretion, subject to assumptions, estimations and judgments.

Cost Method. According to this method, the value of a property is the current replacement cost of the property, adjusted to reflect any increase or reduction in value. Both the current replacement cost and the reduction in value with respect to each appraised property are subject to a number of assumptions, estimations and judgments regarding the utility, geographic conditions, conditions of the relevant market, construction costs, estimated useful life and available information regarding comparable transactions. This method is generally used to corroborate the following cash flow-based methods and does not have significant weight in appraisals for J-REIT transactions.

Discounted Cash Flow (DCF) Method. According to this method, the value of a property is the sum of assumed discounted cash flows from the property during a certain holding period and the discounted terminal value of the property. Future cash flows and their fluctuations, the terminal capitalization rate and the discount rate are key components of the discounted cash flow method and are subject to assumptions, estimations and judgments regarding factors such as the occupancy rate, competition, rental revenues and expenses, growth potential, lease agreements, anchor or core tenants’ business performance, macro-economic conditions and available information regarding comparable properties.

Direct Capitalization (DC) Method. According to this method, the value of a property is the stabilized net cash flow from the property, discounted by an expected rate of return, or capitalization rate. The direct capitalization method focuses on stabilized annual net cash flow (rather than estimating cash flows for multiple years), using it as a basis to calculate the value of the property. Net cash flow generated in the first stabilized year and the capitalization rate are key components of the direct capitalization method and are subject to assumptions, estimations and judgments regarding factors such as the occupancy rate, competition, rental revenues and expenses, lease agreements, anchor or core tenants’ business performance, macro-economic conditions and available information regarding comparable properties.

93 Appraisal Values and Assumptions for the 12 Properties We Intend to Acquire

The following table shows the initial appraisal values, as of October 15, 2012, of the 12 properties that we intend to acquire, as well as the key numerical assumptions. These logistics properties were appraised by Jones Lang LaSalle K.K. and CBRE K.K.

Discounted cash flow method Direct capitalization method Appraisal Terminal value as of Discount capitalization Estimated Capitalization Estimated October 15, rate rate value rate value 2012 Logistics Properties: (in millions of yen, except percentages) Prologis Park Ichikawa 1 ...... 4.9% 5.3% ¥ 33,900 5.1% ¥ 34,500 ¥ 33,900 Prologis Park Zama 1 ...... 5.3 5.7 27,900 5.5 27,900 27,900 Prologis Park Kawajima ...... 5.5 5.9 25,600 5.7 25,900 25,600 Prologis Park Osaka 2 ...... 5.3 5.6 25,000 5.5 24,900 25,000 Prologis Park Maishima 3 ...... 5.4 5.7 13,500 5.6 13,400 13,500 Prologis Park Kasugai ...... 6.0 6.3 12,800 6.1 12,900 12,800 Prologis Park Kitanagoya ...... 5.9 6.2 6,500 6.0 6,510 6,500 Prologis Park Tagajo ...... 6.3 6.7 5,470 6.5 5,540 5,470 Prologis Park Maishima 4 ...... 5.3 5.6 11,500 5.4 11,600 11,500 Prologis Park Takatsuki ...... 5.4 5.8 4,410 5.7 4,410 4,410 Prologis Park Tosu 2 ...... 5.6 6.0 3,070 5.8 3,010 3,070 Prologis Park Tosu 4 ...... 5.6 6.0 3,810 5.9 3,830 3,810 Total ...... ¥173,460 ¥174,400 ¥173,460

Engineering, Environmental, Seismic and Other Reviews

The Asset Manager, on our behalf, retained third-party experts to conduct engineering, environmental, seismic and other reviews of the properties that we intend to acquire for our anticipated initial portfolio as described in this document. The Asset Manager selects experts that it believes to be nationally recognized in Japan for such services.

Limitations of Engineering, Environmental, Seismic and Other Reviews

These reviews are not intended to present a representation as to the past, present or future engineering, environmental, seismic and other conditions of any of those properties. These reviews did not reveal any engineering, environmental or seismic liabilities that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. However, because these risks are often hidden or difficult to evaluate, these reviews may not meaningfully assess these risks. Furthermore, these reviews may have a more limited scope than similar reviews conducted in similar situations in other jurisdictions.

If there is any significant unidentified engineering, environmental or seismic liability, the value of the properties could fall and we may incur costs and require time to discharge the liability. If different methodologies are employed or different sets of assumptions are used, the engineering, environmental, seismic and other reviews of the same properties, and the conclusions drawn from them, may differ. Other experts may reach significantly different conclusions from those reached by the independent engineering firm we have retained regarding the same properties.

We have no duty to review or revise the engineering, environmental, seismic and other reviews of any of our properties after the dates of the reports that present these reviews, and we do not intend to do so. None of the third-party experts have updated their assessments, reviews or investigation of these properties. Thus, with respect to each property, the assessment, review or investigation by the relevant third-party expert is effective only as of the date of its engineering report.

Engineering Reviews

The Asset Manager typically engages Earth-Appraisal Co., Ltd. to conduct an engineering review prior to our decision to acquire a property. These engineering reviews are typically not subsequently revised or updated. In connection with these reports, the engineering firm assesses the structural condition of, and estimated capital expenditures for, the buildings on properties we may acquire.

94 The report prepared by the engineering firm generally covers the following with respect to the relevant property:

• an analysis of the condition of the building with respect to deterioration;

• an analysis of maintenance and repair requirements;

• an environmental assessment with respect to soil pollution, poisonous substances, hazardous substances and asbestos, among other things;

• an analysis of earthquake resistance; and

• the state of compliance with building regulations.

The engineering reviews conducted by the engineering firm in support of its report in respect to a property typically include:

• an on-site visual inspection of the property;

• an examination of current and historical uses of the property and the surrounding areas;

• discussions with persons in charge of property management; and

• a review of relevant historical documents.

The scope of each engineering firm’s on-site inspection is typically limited to the examination of the exterior of the building, areas not occupied by tenants and to those areas for which the tenants’ consents to enter are obtained. In general, the engineering firm categorizes the maintenance and repairs it views as necessary into categories such as immediate, short term (which generally means within one year), and long term (which generally means within 12 years), depending on the urgency with which such maintenance or repairs should be conducted.

Based on these engineering reviews, which were provided to us prior to our acquisition of each property and have not been updated, we believe the properties we intend to acquire comply with all applicable building codes in Japan in all material respects.

Environmental Reviews

The engineering firm conducted their environmental reviews of the properties we intend to acquire, as described in this document, based on publicly available documents and other information provided primarily by the former owners and property managers of the properties. The environmental reviews covered a wide range of possible sources of environmental problems, including asbestos, lead, PCBs, substances harmful to the ozone layer, water and air, and garbage. Based on these reviews, which were provided to us prior to our acquisition of each property and have not been updated, we believe the properties we intend to acquire comply with all environmental laws and regulations in Japan in all material respects.

Seismic and Other Reviews

The Asset Manager engaged Engineering & Risk Services Corporation and OYO RMS Corporation to conduct seismic reviews of the properties we intend to acquire, as described in this document, as is customary in Japan for managers of portfolios of such properties. Based on the seismic reviews, we believe all such properties complied with all applicable engineering and seismic codes in Japan as of the dates of their reports, which were provided to us prior to our acquisition of each property and have not been updated.

The seismic reviews are based on information such as the design and engineering drawings of the properties and visual assessments. For each property and for our portfolio as a whole, the firm estimated potential damage from earthquakes based on complex modeling tools that take into account factors such as historical frequencies and magnitudes of earthquake events, building construction, site soils and site distances to known fault lines, but do not include estimates for secondary damage from items such as fires after earthquake events. The firm reports the results of its analysis as the PML that a property will experience over the next 50 years due

95 to a large earthquake event of a scale expected to occur once in 475 years (with a 10% probability of occurrence in the next 50 years). This PML is typically the estimated total cost associated with restoring a property damaged in connection with such an earthquake event to its condition prior to that event, expressed as a percentage of the replacement cost associated with the property.

PML percentages are based on complicated, highly speculative building engineering reports that include many subjective factors and are based on numerous assumptions. Neither we nor the Asset Manager are experts in earthquake risk and analysis, nor do we have the ability to assess or independently verify the analysis of PML percentages provided to us, and the uncertainties inherent in such reports limit the value of them to us. There is no assurance that a property’s PML will correspond to the actual loss suffered in the event of an earthquake. In addition, the currently available PML data for our anticipated portfolio do not reflect the effects of the Great East Japan Earthquake, and otherwise may not be up-to-date or reliable.

In connection with your decision to invest in our units, you should not refer to or rely on any of the PML information that has been or may be released by us in Japan or otherwise, which is released solely in accordance with market practices in Japan.

We currently do not intend to obtain earthquake insurance for any of the 12 properties we intend to acquire for our anticipated initial portfolio.

96 RELATED-PARTY TRANSACTIONS

Since our incorporation on November 7, 2012, we have not entered into material transactions with our executive or supervisory directors, or companies with whom they have a relationship, or with any of our principal unitholders or affiliates other than those discussed below. See “Asset Manager—Rules Regarding Related-party Transactions” for additional information regarding internal rules governing related-party transactions that have been adopted by the Asset Manager.

We believe that the terms of each transaction described below are at least as favorable to us as those that we could have obtained from an unaffiliated party in an arms’ length transaction.

Transactions with the Asset Manager

As of the date of this document, Prologis Japan owns 100% of our outstanding units. The Asset Manager is a wholly-owned subsidiary of Prologis Japan.

Asset Management

We expect to pay the Asset Manager asset management fees for each fiscal period, as well as acquisition or disposition fees with respect to any property acquisition or disposition. See “Asset Manager—Asset Management Agreement—Asset Management Fees” for further discussion of the asset management fees.

Transactions with the Prologis Group

Our material transactions with the Prologis Group since the date of our incorporation are as follows:

Property Acquisitions

We have the following arrangements with the Prologis Group with respect to certain properties in its pipeline:

• Anticipated Initial Portfolio. All of the properties in which we intend to acquire an interest for our anticipated initial portfolio will be acquired in related-party transactions involving the Prologis Group. The aggregate anticipated acquisition price of these 12 properties will be ¥173,020 million.

The following table provides a list of anticipated acquisitions from related parties:

Related party (1) Properties Anticipated acquisition price (2) (in millions) Ichikawa 1 Special Purpose Company ...... Prologis Park Ichikawa 1 ¥33,900 Zama 1 Special Purpose Company ...... Prologis Park Zama 1 27,900 Kawajima Special Purpose Company ...... Prologis Park Kawajima 25,600 Prologis Osaka 2 Special Purpose Company ...... Prologis Park Osaka 2 25,000 Maishima 3 Special Purpose Company ...... Prologis Park Maishima 3 13,500 Kasugai Special Purpose Company ...... Prologis Park Kasugai 12,500 Kasugai Special Purpose Company ...... Prologis Park Kitanagoya 6,500 Kasugai Special Purpose Company ...... Prologis Park Tagajo 5,370 Maishima 4 Special Purpose Company ...... Prologis Park Maishima 4 11,500 Takatsuki 2 Special Purpose Company ...... Prologis Park Takatsuki 4,410 Tosu 2 Special Purpose Company ...... Prologis Park Tosu 2 3,030 Tosu 4 Special Purpose Company ...... Prologis Park Tosu 4 3,810

Notes: (1) Ichikawa 1 Special Purpose Company, Zama 1 Special Purpose Company, Kawajima Special Purpose Company, Prologis Osaka 2 Special Purpose Company, Maishima 3 Special Purpose Company, Kasugai Special Purpose Company, Maishima 4 Special Purpose Company, Takatsuki 2 Special Purpose Company, Tosu 2 Special Purpose Company and Tosu 4 Special Purpose Company are regarded here as related parties since they are special purpose companies with the aim to acquire, hold and dispose of trust beneficiary rights and properties in which affiliates of Prologis Japan invest and for which Prologis Japan, the parent company of the Asset Manager, provides asset management services. However, these special purpose companies are not related parties under the ITA. (2) The anticipated acquisition price is the transfer price of the property in the relevant sale and purchase agreement rounded to the nearest million yen and does not include national or local consumption taxes or expenses which will be incurred in the acquisition.

97 Leasing of Property and Other Property Interests

We expect the trustees of each property to enter into a master lease agreement with the Prologis Group with respect to nine of the 12 properties in our anticipated initial portfolio. See “Our Anticipated Initial Portfolio—Anticipated Acquisitions”.

The following table provides the current status of leases to related parties as of the date of this document:

Lessee Properties Anticipated annual rent (1) (in thousands) ProLogis Park Ichikawa Y.K...... Prologis Park Ichikawa 1 ¥2,032,219 ProLogis Park Zama One GK ...... Prologis Park Zama 1 1,838,992 ProLogis Park Kawajima Y.K...... Prologis Park Kawajima 1,783,206 ProLogis Park Osaka Two Y.K...... Prologis Park Osaka 2 1,694,850 ProLogis Park Maishima Three Y.K...... Prologis Park Maishima 3 937,966 Prologis Park Kasugai Y.K...... Prologis Park Kasugai 1,007,730 ProLogis Park Kita Nagoya GK ...... Prologis Park Kitanagoya 529,027 Prologis Park Tagajo Y.K...... Prologis Park Tagajo 443,573 ProLogis Park Maishima Four GK ...... Prologis Park Maishima 4 - (2) Prologis Japan (3) ...... Prologis Park Ichikawa 1 3,348 Prologis Park Kawajima 3,540 Prologis Park Kasugai 2,448 Prologis Park Kitanagoya 972 Prologis Park Tagajo 750 Prologis Park Tosu 2 828

Notes: (1) Anticipated annual rent for each property is based on annual rent as indicated in each lease agreement in relation to each property or property in trust (including common area charges) as of September 30, 2012, rounded down to the nearest thousand yen. In the event that the agreements include monthly contracted rent, anticipated annual rent is calculated by multiplying the monthly contracted rent by 12 and rounding down to the nearest thousand yen. (2) We have not obtained permission from the tenant to release the information. (3) The lease agreements entered into with Prologis Japan were for the purpose of installing solar panels on the roofs of each property or property held in trust.

Outsourcing of Property Management

We plan to select Prologis Japan as the property manager for the logistics properties in our anticipated portfolio and in principle for all properties we may acquire in the future. See “Our Business—Operational and Property Management Policies—Property Management”.

The following table provides the planned outsourcing of property management to related parties as of the date of this document:

Contractor Properties Prologis Japan ...... Prologis Park Ichikawa 1 Prologis Park Zama 1 Prologis Park Kawajima Prologis Park Osaka 2 Prologis Park Maishima 3 Prologis Park Kasugai Prologis Park Kitanagoya Prologis Park Tagajo Prologis Park Maishima 4 Prologis Park Takatsuki Prologis Park Tosu 2 Prologis Park Tosu 4

Purchases of Our Units

At the time of our incorporation, we issued 400 units to Prologis Japan in return for a capital contribution of ¥200 million. Prologis Property Japan SPC will purchase 27,352 units and Prologis Property Japan will purchase 9,118 units.

98 PRINCIPAL UNITHOLDERS

The following table provides the number of units held by our principal unitholder and the percentage of total outstanding units as at the date of this document and as anticipated.

Percentage of Percentage of total Number of units total Number of units units outstanding owned units outstanding Principal unitholder owned (actual) (actual) (anticipated) (anticipated) Prologis Japan ...... 400 100% 400 0.2%

99 CUSTODIAN, GENERAL ADMINISTRATOR AND TRANSFER AGENT

Sumitomo Mitsui Trust Bank, Limited is the custodian of our assets, general administrator of our affairs and our transfer agent. We and SMTB are parties to an asset custody agreement, a general administration agreement and a transfer agency agreement. Each of the asset custody agreement and the general administration agreement has a contract up to November 2017, which is automatically extended for successive three-year periods unless six-months’ advance termination notice is provided. The transfer agency agreement has an indefinite term.

Under the asset custody agreement and the general administration agreement, we pay SMTB a biannual fee calculated as a percentage of our total assets as of the end of each month in the fiscal period. Pursuant to the asset custody agreement and the general administration agreement, SMTB provides custodial and administrative services to us, including the following:

• custody of our assets;

• administration of accounting matters;

• administration of directors’ meetings;

• administration of unitholders’ meetings (except for services concerning dispatch of documents related to unitholders’ meetings and acceptance and counting of voting instructions);

• preparation of financial documents; and

• administration of tax payments.

Under the transfer agency agreement, we pay transfer agent fees based on the number of unitholders and the amount of transfer agency services it provides. We also reimburse SMTB for certain expenses. Pursuant to the transfer agency agreement, SMTB provides transfer agency services to us, including the following:

• registration of our unitholders;

• administration of issuance of our units;

• administration of distributions to our unitholders; and

• communication of certain requests to us on behalf of our unitholders.

100 OTHER POLICIES WITH RESPECT TO INVESTMENT AND OTHER ACTIVITIES

Basic Policies Under Our Articles of Incorporation

We seek to achieve our investment objectives within the framework of the following basic policies, which are reflected in our articles of incorporation as follows:

• We intend to invest in properties that will provide stable profits in the medium to long term and allow for our continued growth. We will consider investments in real properties, real property equivalents such as land leasehold rights and surface rights and real property based securities such as trust beneficiary interests in real property.

• Our selection of investment properties will be largely based on consideration of the location, size and functionality of the properties while also considering other factors such as geographical dispersion of the properties in our portfolio, population distribution, overall regional production and suitability for logistics facilities.

Other Policies Under the Asset Management Agreement

The Asset Manager has established other policies with respect to our activities pursuant to the asset management agreement. Subject to the basic policies set forth in our articles of incorporation, the Asset Manager may amend or revise these other policies from time to time without a vote of our unitholders or our approval. These policies are internal rules of the Asset Manager, are reported to us and are intended to guide the implementation of our investment objectives and management of our operations. The Asset Manager has broad discretion to develop our business strategies and to manage our operations. See “Asset Manager”. At any given time our business operations or the characteristics of our property portfolio may not be fully consistent with these policies. Various strategies with respect to the achievement of our investment objectives are described above under “Our Business”, and certain other policies with respect to the operation of our business are described elsewhere in this document and below.

Methods, Standards and Reference Dates for Asset Evaluation

The asset evaluation methods and standards to be used will depend on the type of invested asset, as follows:

• Real estate, surface rights and real estate leasehold rights. Evaluation will be made at the value obtained by deducting the accumulated depreciation amount from the acquisition price. Depreciation, in principle, will be calculated on a straight-line basis for both the building and the facilities; provided, however, that if the calculation performed on a straight-line basis becomes inappropriate due to any justifiable reason, a different method may be used for such calculation, as long as it can reasonably be determined that no problems will arise with respect to the protection of unitholders.

• Beneficiary interests in trusts of real estate, surface rights or real estate leasehold rights or money in trusts of real estate, surface rights or real estate leasehold rights. Real estate, surface rights or real estate leasehold rights of the trust assets will be evaluated following the previous item, and the financial assets and liabilities contained in the trust assets will be evaluated following generally accepted accounting principles and other common corporate accounting practices, after which the trust beneficiary interests will be evaluated by subtracting the total amount of trust liabilities from the total amount of trust assets to obtain the trust net asset value.

• Equity interests in real estate anonymous associations (tokumei kumiai) or money in trusts of real estate anonymous associations. Real estate assets of anonymous associations, which are similar to silent partnerships, will be evaluated following both of the items above. Financial assets and liabilities of anonymous associations will be evaluated following generally accepted accounting principles and other common corporate accounting practices. The equity interests in anonymous associations will then be evaluated by subtracting the total amount of anonymous association liabilities from the total amount of anonymous association assets, obtaining the amount equivalent to the investment corporation’s equity interest in the net asset value of the anonymous association.

101 • Securities.

O When such securities are listed, an evaluation will be made at a value based on the market price.

O For all other securities, we will evaluate all other securities based on a price calculated reasonably.

• Monetary claims. Evaluations will be made at the amount equivalent to the acquisition price less any allowance for bad debt; provided, however, that if the difference between the acquisition price and the face value is deemed to be attributable to interest adjustment, the monetary claims that have been acquired at a price lower or higher than the face value thereof will be evaluated at the amount equivalent to the value, as based on the amortized cost method, less the allowance for bad debt.

• Rights in derivative transactions.

O For a derivative listed on a financial instruments exchange, an evaluation will be made at a value based on the final price (which is equal to the closing price, but if there is no closing price, then it will be made based on the quoted price, which is the lowest public offer price or highest public bid price, or if both are public then the average of those prices). If there is no final price on that day, the evaluation will be made at a value based on the final price on the most recent previous day.

O For an unlisted derivative without a market price, evaluation will be based on a value arrived at through a reasonable estimation from the value of a market equivalent. When such an estimate of the fair value would be exceedingly difficult, evaluation will be based on the acquisition price.

O Notwithstanding the above, we may apply hedge accounting for derivatives deemed as hedging transactions pursuant to the generally accepted accounting principles in Japan applicable to J-REITs. In addition, we may apply certain special treatment for derivatives satisfying certain criteria for interest rate swaps under applicable financial instruments accounting standards and guidelines.

• Other. Unless otherwise provided for above, the assets will be evaluated pursuant to the evaluation rules of The Investment Trusts Association, Japan or in accordance with generally accepted accounting principles and other common corporate accounting practices.

If another asset evaluation method is used other than that mentioned above to indicate values in a securities registration statement, annual securities report or asset management report, we will evaluate assets in the following manner:

• Real estate, surface rights and real estate leasehold rights. Real estate, surface rights and real estate leasehold rights will be evaluated based on appraisal value.

• Beneficiary interests in trusts of real estate, surface rights or real estate leasehold rights. While trust assets that are real estate, surface rights or real estate leasehold rights will be evaluated as described in the previous item, financial assets contained in the trust assets will be evaluated in accordance with generally accepted accounting principles, and the trust beneficiary interests will be evaluated by subtracting the total amount of trust liabilities from the total amount of trust assets to obtain the trust net asset value.

• Equity interests in real estate anonymous associations. Assets that are equity interests in real estate anonymous associations will be evaluated following the method described under “Real estate, surface rights and real estate leasehold rights” above. Financial assets that are equity interests in anonymous associations will be evaluated following generally accepted accounting principles and other common corporate accounting practices. The equity interests in anonymous associations will then be evaluated by subtracting the total amount of liabilities for equity interests in anonymous associations from the total amount of assets for equity interests in anonymous associations to obtain the net asset value of equity interests in the anonymous associations.

102 The reference date for asset evaluations, in principle, will be the last day of each fiscal period; however, in the case of securities or other assets, which may be evaluated at a value based on market price, the reference date will be the last day of each month.

Net asset value per unit, based on the book values of our assets, will be calculated by subtracting our total liabilities from our total assets and dividing the result by our total outstanding units, and is to be presented in the notes to our financial statements. We will prepare such financial statements (including balance sheets and statements of income) for each fiscal period as well as an asset management report, and statements related to the distribution of cash for approval by our board of directors. If approved by our board of directors, our unitholders are to be notified of such approval, and all financial statements, along with an audit report, are to be delivered to our unitholders without delay.

Continued Application of Asset Evaluation Methods and Standards

In accordance with the consistency principle of accounting, we will not change the asset evaluation methods and standards delineated above. However, if the asset evaluation methods and standards which we have adopted become inadequate, and if we can make a reasoned decision that investor protections will not be compromised, we may change these methods and standards.

103 Structure and Formation

We were incorporated as an investment corporation (to¯shi ho¯jin) in Japan under the ITA on November 7, 2012. The following chart shows our anticipated structure.

Sponsor Support Company

Prologis, Inc.

approximately 15% equity Public unitholders interest (4)

approximately 85% equity interest

Asset Manager (1) Prologis REIT Management K.K. Nippon Prologis REIT, Inc.

(2) (3)

Custodian, General Administrator and Master Property Management Company Transfer Agent

Prologis Japan Sumitomo Mitsui Trust Bank, Limited

Notes: (1) We have entered into an asset management agreement with the Asset Manager, which is a wholly-owned subsidiary of Prologis Japan. See “Asset Manager—Asset Management Agreement”. (2) We and the Asset Manager have entered into a sponsor support agreement with Prologis, Inc. and Prologis Japan. See “Sponsor Support Agreement”. (3) We have entered into an asset custody agreement, a general administration agreement and a transfer agency agreement with Sumitomo Mitsui Trust Bank, Limited. See “Custodian, General Administrator and Transfer Agent”. (4) Equity interest to be held through indirect subsidiaries.

104 DESCRIPTION OF THE TRUST AGREEMENTS AND THE STATUTORY RIGHTS REGARDING THE PROPERTY TRUSTS

We plan to acquire nine properties as described in this document through trusts as a trust beneficiary pursuant to a trust agreement with a major financial institution. Our beneficiary interests represent interests in the principal in and profits from the trusts, pursuant to the trust agreements and the Trust Act of Japan, which was amended in September 2007. In this section, the “New Trust Act” refers to the Trust Act as amended in September 2007, which applies to trust agreements entered into after such amendment took effect. The “Old Trust Act” refers to the Trust Act before the September 2007 amendment, which continues to apply to trust agreements entered into before the amendment took effect.

Trust Agreements

With respect to nine properties expected to constitute part of our initial portfolio, we will purchase the trust beneficiary interests therein directly from the seller.

The trust agreements currently in effect will expire at various times. However, the term may be extended upon our request three months prior to expiration and with the trustee’s consent to the extension.

Management of Properties

Under trust agreements, the property trustee is generally required to manage and dispose of the trust property in accordance with the provisions of the trust agreement and the instructions from the beneficiary interest holder made pursuant to such trust agreement, subject to certain exceptions. In addition, the trust agreement usually gives the trustee the right to dispose of the trust assets if fees, expenses and damages are not paid after the lapse of a grace period. The trust agreement generally provides that the trustee is not obligated to sell a property of the trust to a certain purchaser, even if directed to do so by the trust beneficiaries, if the trustee will owe warranty liabilities to that purchaser as a result of such sale.

The trust agreements generally provide that the trustee is not liable to us or any third party for any damages as long as the trustee uses due care as a good manager.

Beneficiary Interests

Our beneficiary interests represent interests in the principal in and profits from the trusts. Pursuant to our instructions, the trustee deposits the rents collected from our tenants after deduction of expenses to a bank account designated by us.

Fees and Expenses

The trustee is generally entitled to the trust fee as agreed in the trust agreements. The trust expenses and fees are payable from the trust funds. In the event that the trust funds are insufficient to pay trust expenses, the trustee may generally request us to pay all or part of the amount of the trust expenses, unless such costs and expenses arise from breaches of its duty of care.

Termination Events

Under the Old Trust Act, trust agreements terminate upon the occurrence of one of the following events: • the termination events provided in the trust agreement; or • the objective of the trust has been attained or has become impossible to attain. In addition, under the New Trust Act, trust agreements terminate when: • a court with competent jurisdiction so orders; • the trust itself commences a bankruptcy procedure; • the trustee has held all of the beneficial interests of the trust for one year; • the trust is merged into another trust; • there has been no trustee with respect to the trust for one year; or 105 • the trustee receives no payment for its trust fees or expenses from the beneficiary upon the trustee’s request when the trust funds are insufficient to pay the trustee’s fees and expenses.

Settlement of Accounts Following Termination

Disposition of Property Prior to Termination. If the property is disposed of prior to the termination of the trust agreement, the trustee pays us the proceeds from the disposition of the property after deduction of the aggregate unpaid balance of the trust expenses and fees from the trust funds.

Delivery of Property Following Termination. If the property is not disposed of prior to the termination of the trust agreement, the trustee must deliver to us the property after deduction of the aggregate unpaid balance of the trust expenses and fees from the trust funds. The trustee is also required to file an application with the real estate registry for the transfer.

Insufficient Funds for the Trustee. If the trust funds are insufficient to fulfill our monetary obligations, the trustee may generally demand that we pay the obligations. In the event that we do not pay the obligations within a certain number of days after receipt of the notice, the trustee is entitled to sell the related trust property and apply the proceeds of the sale to the deficiency.

Governing Law and Submission to Jurisdiction

The laws of Japan govern each of our trust agreements, and the Tokyo District Court is the exclusive forum for any legal action, suit or proceedings in connection with our trust agreements.

Statutory Rights Regarding the Property Trusts

Under the Trust Act, a trustee has numerous statutory rights, including the following:

• a preferential right to collect its fees and expenses relating to a trust from the assets owned by the trust to a certain extent;

• a right to receive compensation from the assets owned by the trust for certain damages which the trustee has suffered; and

• a right to retain possession of the trust assets after the underlying trust agreement terminates or expires until outstanding fees, expenses and damages are paid in full.

The assets of a trust under the Old Trust Act are generally believed to belong to the trust and not to the trustee in the event the trustee becomes subject to insolvency proceedings such as bankruptcy, civil rehabilitation or corporate reorganization, although the Old Trust Act does not provide clear conclusion as to this issue. As long as the real estate which constitutes part of the trust property has been registered in the trust’s name and the trust assets are booked and maintained separately from the trustee’s own assets (or the assets belonging to other trusts), the risk that the real estate will be deemed to belong to the trustee is small. Under the New Trust Act, the assets of a trust must belong to the trust, not the trustee.

106 DESCRIPTION OF THE UNITS

The following is a summary of material information concerning our units, our articles of incorporation, the ITA and related laws and regulations. This summary is not exhaustive and is qualified in its entirety by reference to the full provisions of our articles of incorporation and the ITA and related laws and regulations.

General

We are authorized by our articles of incorporation to issue up to 2,000,000 units, of which 400 units were issued and are outstanding as of the date of this document. All issued units have no par value and are fully paid.

Under the Act Concerning Book-Entry Transfer of Corporate Bonds, Stocks etc., or the Clearing Act, a central clearing system was established and the units of all Japanese investment corporations listed on any Japanese stock exchange are subject to the clearing system of book-entry of units handled by a central clearing system, JASDEC. The transfer of such units may be effected exclusively through entry in the books maintained under the system. However, in any event that any such clearing organization will cease to handle our investment units in future or other similar events take place, unit certificates will be issued, and units may then be transferred by delivery of certificates of units to the transferee under the ITA.

A non-resident unitholder is required to appoint a standing proxy in Japan or to provide a mailing address in Japan. Japanese securities firms and commercial banks customarily act as standing proxies and provide related services for a standard fee.

Distributions

By resolution of our board of directors, we may pay distributions in cash to our unitholders or pledgees whose names are recorded in our register of unitholders as of the last day of February and August in each year, respectively, in proportion to the number of units held by them. Under our articles of incorporation, we are not required to pay any distributions unclaimed for a period of three years after the date on which such distributions first become payable.

Voting Rights

A unitholder is entitled to one vote for each unit. Unitholders whose names appear in our register of unitholders on the record date that we set in advance by public notice with respect to each general meeting of unitholders are entitled to vote at the relevant general meeting of unitholders (for such meetings held on a day within the first three months of an accounting period, the last day of the immediately preceding accounting period will be the record date). Except as otherwise provided by law or by our articles of incorporation, unitholders may adopt a resolution at a general meeting of unitholders by a majority vote cast in writing, by electromagnetic method (in accordance with applicable law and upon our approval) or through a proxy who is also a unitholder having voting rights. Unitholders who do not attend and do not exercise their voting rights at the meeting are deemed to be in agreement with proposals submitted at such meeting, except in the case of proposals for which contrary proposals are also being submitted at the meeting.

Unitholders may vote on the following matters, which require a quorum of a majority of the total issued units and a majority of the voting rights represented at the meeting unless otherwise provided by our articles of incorporation:

• election or removal of any of our executive directors, supervisory directors or our independent auditors;

• approval of asset management agreement with the asset management company except for the asset management company at the time of our incorporation;

• approval of the termination of asset management agreement except under specific cases set forth under the ITA; and

• other matters as required by the ITA, our articles of incorporation or any other law. 107 The following resolutions, in particular, require a quorum of a majority of the total issued units and at least a two-thirds vote of the voting rights represented at the meeting:

• reverse split of our units; • partial exemption of executive director, supervisory director or independent auditor from liability for damages to us;

• amendment of our articles of incorporation; • our dissolution; and • mergers, except where we are the surviving corporation and the units to be delivered to the non-surviving corporation, together with the outstanding units, will not exceed our authorized number of units.

Other Rights of Unitholders

In addition to the rights set out above, unitholders have, among other things, the following rights:

Derivative Action

Unitholders who have held units continuously for at least six months have the right to demand in writing that an action be brought against:

• the asset management company and/or general administrators to which we outsource administrative functions pursuant to the ITA;

• the executive directors, the supervisory directors and/or our independent auditors; and • the executive liquidator or supervisory liquidators, in the event of liquidation.

Right to Sue for Cancellation or Nullification of Resolutions

Unitholders have the right to file a lawsuit demanding that a resolution passed at a general meeting of unitholders be cancelled within three months from the date of such resolution, in the following circumstances:

• the convocation of the meeting or voting procedures by which the resolution was passed were in breach of our articles of incorporation or any law or regulation, or were particularly inequitable;

• the resolved matter is in breach of our articles of incorporation; or • the resolution is particularly unfair due to the exercise of voting right by a unitholder with a special interest in the resolution.

In addition, unitholders have the right to file a lawsuit confirming that a resolution had been null if the contents of the resolutions were in breach of law. Unitholders also have the right to file a lawsuit confirming the non-existence of the resolutions if the resolutions by unitholders have not existed.

Right to Request to Bar the Executive Director to Prevent Misconduct

If our executive director or, in the event of liquidation, the executive liquidator engage in, or if it is possible for our executive director or executive liquidator to engage in, activities:

• that are out of our corporate purpose or are in breach of our articles of incorporation or any law or regulation; and

• which may cause us to incur irreparable damages; then any unitholder who has held units continuously for at least six months may request to bar such activities of our executive director or, in the event of liquidation, the executive liquidator.

108 Right to Sue for Nullification of Newly Issued Units

Unitholders are entitled to sue for the nullification of our newly issued units if the issue of such units is in serious breach of any law or regulation or our articles of incorporation. However, they must bring the suit within six months of the date of such issuance.

Right to Sue for the Nullification of Merger

Unitholders are entitled to sue for the nullification of any merger if there is a material flaw in the merger procedure. However, they must bring the suit within six months from the effective date of the merger.

Right to Make Submissions of Agenda for General Meeting of Unitholders

Any unitholder who has held at least 1% of the issued units continuously for at least six months is entitled to request that the executive director add certain items to the agenda for the general meeting of unitholders. Such unitholder is also entitled to request that the executive director provide the unitholders with a summary of the proposal made by the relevant unitholder with respect to the agenda for the general meeting of unitholders. The unitholder must make this request at least eight weeks prior to the general meeting.

Right to Convene a General Meeting of Unitholders

Any unitholder who has held at least 3% of the issued units continuously for at least six months is also entitled to request that a general meeting of unitholders be convened. The unitholder must set out in the request the relevant agenda items for the meeting, which are limited to items for which the unitholder can exercise its voting rights, and the reason for the meeting. If the executive director does not convene the requested meeting without delay or the executive director does not convene the meeting to be held no later than eight weeks from the date of the request, the unitholder can convene the meeting with the permission of the director of the local finance bureau of the Ministry of Finance.

Right to Request the Appointment of an Inspector

Any unitholder who has held at least 1% of the issued units continuously for at least six months is entitled to request the director of the local finance bureau of the Ministry of Finance to appoint an inspector in advance of a general meeting of unitholders, to investigate the procedures for the convocation of the meeting and passing the proposed resolutions.

Any unitholder who holds at least 3% of the issued units is entitled to request the director of the local finance bureau of the Ministry of Finance to appoint an inspector to investigate our business and financial affairs if there is any reason to believe that there has been an act of dishonesty or material fact in breach of any law or regulation or provision of our articles of incorporation in connection with the administration of our affairs.

Right to Request the Dismissal of Directors

Any unitholder who has held at least 3% of the issued units continuously for at least six months is entitled to request a court to dismiss any of our directors if:

• such director has acted dishonestly or there is a material fact in breach of his or her fiduciary duties or any laws, regulation or our articles of incorporation in performing his or her duties; and

• the dismissal of such director has been rejected at a general meeting of unitholders. Such request must be made within 30 days from such general meeting of unitholders.

Right to Request Our Dissolution

Any unitholder who holds at least 10% of the issued units is entitled to sue for our dissolution if:

• either (i) our management has reached a deadlock in the course of business that causes or may cause irreparable damage to us; or (ii) assets are being administered or disposed of in a grossly improper way, thereby endangering our existence; and

• there are circumstances which make the dissolution unavoidable. 109 Right to Inspect Books and Records

Unitholders have the right to inspect or make copies of our accounting books and records or documents during business hours upon submission of a request to our executive director stating the reasons for which they wish to inspect the books.

Reverse Split of Units

We may, upon resolution of the general meeting of unitholders, conduct a reverse split of our units. In order to conduct a reverse split of our units, we must also give public notice at least two weeks prior to the effective date of the reverse split of our units stating the effective date of the reverse split and the ratio of units before and after the reverse split.

Unit Splits

We may at any time split the issued units into a greater number of units by resolution of our board of directors. Subsequent to the split, unitholders whose names appear in the register of unitholders on a record date we specify upon at least two weeks prior public notice will receive the units under the unit split.

Redemption of Units

As we are a closed-end investment corporation, unitholders are not entitled to request the redemption of their investment by us. See “Regulation—Act Concerning Investment Trusts and Investment Corporations and other Related Regulations—Open-End J-REITs or Closed-End J-REITs”.

Issuance of Additional Units

Unitholders have no pre-emptive rights with respect to issuance of additional units. We may issue units at the times and upon the terms resolved at the meetings of our board of directors up to the number prescribed by our articles of incorporation. The issue price of the units must be a fair price in view of the detail of the assets we hold.

Liquidation

In the event of our liquidation, the assets remaining after payment of all debt, liquidation expenses and taxes will be distributed to the unitholders in proportion to the number of units held.

Reporting of Substantial Unitholdings

The FIEA requires any person who has become, beneficially and solely or jointly (as the case may be in accordance with the FIEA), a holder of more than 5% of the total issued units of an investment corporation listed on any Japanese stock exchange, to file a report concerning such unitholdings with the director of the competent local finance bureau of the Ministry of Finance within five business days. A similar report must also be made if the percentage of such holding subsequently increases or decreases by 1% or more or if any change occurs in material matters set out in reports previously filed. Any report so filed will be made available for public inspection.

All reports must be filed only through the Electronic Disclosure for Investor’s Network system.

Notices and Reports to Unitholders

We furnish to unitholders: • financial statements, business reports and statements regarding distributions, together with supporting schedules of these documents for each fiscal period; • convocation notices of general meetings of unitholders; and • notices of resolutions adopted at general meetings of unitholders. Record Date of the Register of Unitholders

The record dates for the payment of distributions are the last day of May and November, respectively. In addition, we may at any time set a record date by a resolution of the board of directors upon at least two weeks prior public notice to determine the unitholders entitled to exercise their rights.

110 REGULATION

Act Concerning Investment Trusts and Investment Corporations and Other Related Regulations

Overview

Under the ITA, investment corporations must primarily make investments that are specifically prescribed by such law. Real estate is among the prescribed investments. Permitted investments are not limited to physical real estate, but include investments in specifically prescribed real estate-related rights, such as trust beneficiary interests in real estate. Investment corporations that invest primarily in real estate have come to be known as J-REITs.

The ITA provides for two different types of investment vehicles: investment trusts and investment corporations. To date, all listed J-REITs have been formed as investment corporations.

Investment corporations issue units similar to shares in joint stock corporations. Holders of units are called unitholders. A board of directors oversees investment corporations. Unitholders at a general meeting of unitholders make certain decisions of the investment corporation. See “Description of the Units—Voting Rights”.

Open-End J-REITs or Closed-End J-REITs

Under the ITA, investment corporations, including J-REITs, may be either open-end or closed-end. Unitholders of an open-end J-REIT are able to require that their units be redeemed at a fair value in view of the detail of the assets held by such J-REIT, and in accordance with its articles of incorporation. Units of an open-end J-REIT do not meet the listing criteria of the Tokyo Stock Exchange. Unitholders of a closed-end J-REIT cannot require that their units be redeemed. We are a closed-end J-REIT.

Investment Trusts Association, Japan Rules

J-REITs must comply with the J-REIT rules of The Investment Trusts Association, Japan, which is a self-regulatory organization of asset management companies and security firms registered under the FIEA. These rules in part, as applied to investment corporations, are as follows:

• J-REITs must be formed with the objective of investing, directly or through investment vehicles, more than 50% of their total assets in real estate or real estate-related rights;

• J-REITs must comply with the accounting requirements of The Investment Trusts Association, Japan, as well as legally prescribed corporate accounting procedures;

• J-REITs may only use the valuation methods prescribed in the rules of The Investment Trusts Association, Japan, which emphasize market price valuation;

• publicly listed closed-end J-REITs must calculate and announce the net asset value per unit at the end of each fiscal period (usually six months);

• closed-end J-REITs may return capital up to (i) 60% of their depreciation expense or (ii) the amount of taxable income for the relevant fiscal period in excess of retained earnings; and

• the asset management company to which a J-REIT outsources the management of its assets must keep and disclose to the J-REIT’s unitholders at its offices copies of asset management plans, which must include the prescribed information in addition to operating reports required by law.

Investment Assets

A J-REIT must primarily invest in specified assets as defined in the ITA. Specified assets include, but are not limited to, securities, real estate, leaseholds of real estate, surface rights (chijo-ken) (i.e., right to use land for the purpose of having a structure on it) or trust beneficiary interests for securities or real estate, leaseholds of real estate or surface rights.

111 A listed J-REIT must invest substantially all of its assets in real estate, real estate-related assets and liquid assets as provided by the listing requirements. Real estates in this context include, but are not limited to, real estate, leaseholds of real estate, surface rights, and trust beneficiary interests for these assets, and real estate- related assets in this context include, but are not limited to, anonymous association (tokumei kumiai) interests for investment in real estate.

Pursuant to the ITA, investment corporations may not develop land for housing or to construct buildings.

Registration

Investment corporations must register with the director of the relevant local finance bureau of the Ministry of Finance prior to commencing their investment activities. We registered with the director of the Kanto Local Finance Bureau on November 28, 2012.

Transfer of Units

The ITA prohibits an investment corporation from placing any restrictions on the transfer of its units.

General Meeting of Unitholders

General meetings of unitholders are held in accordance with the ITA and our articles of incorporation. We must give public notice two months prior to the meeting date, and we must notify each unitholder of the purpose of the meeting two weeks prior to the meeting date. In the case of unitholders residing outside of Japan, we send this notice to their standing proxy or mailing address in Japan pursuant to our unit handling regulations.

Corporate Governance

The corporate governance of J-REITs requires at least one executive director and at least one more supervisory director than the number of executive directors to constitute the board of directors. With respect to auditing of financial statements and certain rights of unitholders such as voting rights and derivative suits, J-REITs are structurally similar to joint stock corporations incorporated under the Companies Act of Japan.

Mandatory Outsourcing of Operations

Under the ITA, an investment corporation is required to entrust to external entities the functions pertaining to: • the management of its assets; • the custody of its assets; and • certain other administrative functions. An investment corporation must entrust the management of its assets to a third-party asset management company registered as such under the FIEA. Except for the asset management agreement entered into with the asset management company set forth in the articles of incorporation at the incorporation of the investment corporation, the asset management agreement does not become effective without the approval of the general meeting of unitholders.

An investment corporation must entrust the custody of its assets to a third party with the qualifications set forth in the ITA.

An investment corporation must entrust to third parties certain administrative functions, including: • the offering or placement of units or investment corporation bonds; • preparation and keeping of the register of holders of units or investment corporation bonds and other administrative functions relating to the register of holders of units or investment corporation bonds; • logistic matters upon issuance of units or investment corporation bonds; • administration of its organization; 112 • accounting matters; and • as otherwise provided in the relevant ministerial ordinance.

Conflicts of Interest

Certain conflicts of interest may arise with respect to transactions such as those between an investment corporation and the asset management company that manages such investment corporation.

The FIEA provides that an asset management company assume a fiduciary duty of loyalty and exercise its duties in good faith. In the event of damage to the investment corporation as a result of breach of these duties, the asset management company bears liability for damages. The FIEA specifically prohibits certain conduct, including the following:

• transactions between the investment corporation and the asset management company or their directors, officers, corporate auditors or employees, except in certain specified circumstances;

• transactions between investment corporations managed by the same asset management company, except in certain specified circumstances;

• transactions under terms that differ from ordinary transactions on an arm’s length basis that are contrary to the interests of the investment corporation;

• transactions by the asset management company for the benefit of its own or third parties and contrary to the interests of the investment corporation; and

• transactions by the asset management company with unjustifiable constraint under the control of third parties.

In addition, the asset management company must report to the investment corporation prescribed matters with regard to the transactions with related parties without delay, in addition to the periodic report to be made at least once every three months.

Investment Restrictions and Policy

In addition to the investments specifically permitted by the ITA and other laws and regulations, an investment corporation is subject to investment restrictions under the ITA and other laws and regulations. For instance, an investment corporation may not purchase or accept as security its own units, with limited exceptions under the ITA. The investment by the investment corporation must be made in accordance with the investment target and investment policy as set out in its articles of incorporation.

Capital of the Investment Corporation

Investment corporations are required to maintain a minimum amount of net assets at all times. Each investment corporation’s articles of incorporation set forth this amount, which must be equal to ¥50 million or more. Registered investment corporations are required to promptly notify the director of the relevant local finance bureau of the Ministry of Finance if their net assets are likely to fall below ¥100 million. If the registered investment corporation’s net assets fall below ¥50 million and do not recover within a certain period not less than three months after a notice from the director of the relevant local finance bureau of the Ministry of Finance, the director must revoke the investment corporation’s registration.

Under the ITA, an investment corporation is permitted to make distributions in excess of retained earnings, which we call surplus cash distributions, but it is not permitted to make distributions if it will cause its net assets to fall below ¥100 million. An investment corporation is required to establish unitholders’ capital surplus if:

• the unitholders’ capital and capital surplus used for any redemption exceeds the total redemption amount for the units; or

• the assumed assets of the non-surviving investment corporation upon a merger exceed the amount specified in accordance with the Accounting Rules for Investment Corporations.

113 Finance

An investment corporation may, with the approval of its board of directors, issue units up to the number specified in its articles of incorporation from time to time. The issue price of the units must be a fair price in view of the detail of the assets held by the investment corporation. Unitholders have no pre-emptive rights in relation to an issuance of new units.

A closed-end investment corporation may, by resolution of its board of directors, issue investment corporation bonds up to the amount specified in its articles of incorporation, and in accordance with the ITA.

An investment corporation may borrow money up to the amount specified in its articles of incorporation. In order for us to enjoy the favorable tax treatment available to J-REITs, we must borrow only from qualified institutional investors as defined in the FIEA (limited to institutional investors as defined in the Special Taxation Measures Act).

Merger

Investment corporations may merge with other investment corporations with the approval of at least two-thirds of the number of units having voting rights represented at a general meeting of unitholders, although such approval is not required for surviving corporation when the units to be delivered to the non-surviving corporation, together with the outstanding units, will not exceed the authorized number of units. The quorum of the general meeting is a majority of the total number of issued units. Any unitholder which expresses its opposition to the merger prior to the general meeting of unitholders and votes against the approval of such merger at the meeting is entitled to request the investment corporation to purchase its units at the fair price.

Disclosure Requirements Applicable to J-REITs under Tokyo Stock Exchange Rules

J-REITs and asset management companies thereof are subject to disclosure requirements under the rules of the Tokyo Stock Exchange that are similar to those imposed on other listed companies.

J-REITs and Asset Management Companies. Investment corporations’ decisions concerning the purchase of assets, the issuance of new units, unit splits or reverse split of units, among others, must be disclosed. Other matters to be disclosed include the receipt of orders to improve operations and information regarding the asset management companies.

Assets and performance of J-REITs. Any information over a certain threshold of assets of a J-REIT must be disclosed. In particular, the following must be disclosed:

• a transfer of assets the value of which as of the end of the latest fiscal period is ¥50 million or more;

• a purchase of assets the price of which is expected to be ¥50 million or more;

• a loss equivalent to 3% or more of net assets as a result of natural disaster or other damage; and

• differences in expected profit or loss from the original forecast for the period announced pursuant to the rules of the Tokyo Stock Exchange of 30% or more or differences in expected distributions from the original forecast of 5% or more.

Financial Results

As is the case of joint stock corporations, investment corporations and asset management companies are required to publicly announce summaries of investment corporations’ financial results once they are finalized. These reports include forecasted distributions and value of assets held by J-REITs.

Laws and Regulations Relating to Japanese Real Estate

Land Leases

Under Japanese law, buildings can be owned independently of the underlying land upon which they are built. It is not uncommon in Japan for the owner of a building to differ from the owner of the underlying land.

114 Perfection

Under the Civil Code of Japan, in order to perfect a leasehold interest in the underlying land, the lessee is required to register its leasehold interest in the real estate register. The Land and Building Lease Act and its precedent legislation provides, however, that the lessee is also able to perfect its leasehold interest in the underlying land by registering the ownership of the building standing on the land if the lessee owns such building. If the lessee does not duly perfect its leasehold interest in the land, the lessee cannot assert its leasehold interest against a new purchaser of the underlying land. The leasehold interest is also subject to any mortgage over the underlying land that is registered prior to the perfection of the leasehold interest in the land. The lessee, as a general rule, loses its leasehold interest to a prior registered mortgage if and when the mortgagee becomes entitled to foreclose on the land. The mortgagee or its successor could then require that the lessee vacate the land prior to the end of its lease term. Even in such a case, the person who has used the land before the mortgagee’s foreclosure could refuse to vacate it for a period of six months.

Transfer and Sublease

The transferability of a lessee’s interest in a land lease depends on whether the lease is a chijo-ken or a chinshaku-ken.Achijo-ken entitles a lessee to transfer its interest to a third party (or sublease the land) without the consent of the landlord. In the case of a chinshaku-ken, however, any transfer (or sublease) of a lessee’s interest is subject to the consent of the landlord, unless otherwise agreed in the land lease contract. In the event that the lessee transfers or subleases its leasehold interest in the land together with the transfer of the building standing on the land, if the landlord refuses to give consent, the lessee may seek judicial permission for the transfer or sublease. A court may authorize the transfer (or sublease) with or without payment to the landlord for compensation in lieu of consent, unless such transfer or sublease would prejudice the landlord’s rights. In making its decision, a court considers the length of the remaining term of the land lease, the history of the land lease contract, the circumstances requiring such transfer of the lease rights, and any other relevant facts.

In the event the owner of a building holds a subleasehold interest in the underlying land, and the contract between the owner of the land and the leaseholder thereof is terminated, depending on the circumstances of the termination, the owner of the building may not be able to assert its subleasehold interest against the owner and may lose the property.

Termination

There are four special fixed-term land lease contracts, or teiki shakuchi-ken:

• those with a nonrenewable term of at least 50 years containing a waiver by the lessee of its right to demand that the landlord purchase the building owned by the lessee at the end of the term;

• those with a nonrenewable term of at least 30 years providing that the building owned by the lessee must be sold to the landlord for reasonable consideration at the end of the term;

• those to be used only for business purposes (except for buildings used for residential purposes), with a nonrenewable term of between 10 and 30 years and without lessee’s statutory right to demand that the landlord purchase the building at the end of such term; and

• those to be used only for business purposes (except for buildings used for residential purposes), with a nonrenewable term of between 30 and 50 years and including a waiver by the lessee of its right to demand that the landlord purchase the building at the end of such term.

Except for the four special lease contracts above, the land lease contract will be subject to certain conditions favorable to the lessee as follows:

• the initial term of the contract is for a period of at least 30 years;

• the term of the contract is subject to extension by the lessee unless the landlord has a justifiable reason for not agreeing to such extension in light of a number of factors including the landlord’s and the lessee’s needs for the land for their own use, the history of the land lease contract, the present use of the leased land, and the amount of money the landlord is offering to pay the lessee to partially compensate the lessee for vacating the land; and

115 • the lessee has the right to demand that the landlord purchase at market price the building on the leased land owned by the lessee at the end of the term of the land lease contract when the contract is not extended or renewed.

Building Leases

Contract Period

A building lease may have either a fixed or an indefinite term. If the building lease provides for an indefinite term or a term of less than one year (which is deemed an indefinite term lease under the Land and Building Lease Act), then the lease may be terminated on six months’ prior notice by the lessor or on three months’ prior notice by the lessee, although, if the lease provides for a longer notice period, then this longer period notice must be given. If the building lease is for a fixed term with one year or more, then it cannot be terminated prior to the end of that term, unless the building lease specifically provides otherwise. In case of termination by the lessor, the lessor’s notice is subject to the conditions as below.

Even if the building lease is for a fixed term with one year or more, unless the lessor or the lessee notifies its intention not to extend the lease from one year to six months before the expiration of the term, the building lease is deemed to be extended without a fixed term.

The lessor may not make such notice for termination of, or intention not to extend, the building lease unless it has a justifiable reason. Factors to be considered in determining whether there is a justifiable reason include:

• the lessor’s and the lessee’s needs for the building for their own use;

• the history of the building lease contract;

• the present use of the leased building;

• the current condition of the building; and

• the amount of money the lessor is offering to pay the lessee to partially compensate the lessee for vacating the building.

It should be noted that under court rulings relating to the Land and Building Lease Act, the lessee’s non-payment of rent or other default is by itself considered as only one factor in establishing a justifiable reason. Based on a comprehensive review of facts by the court, it is possible that such non-payment or default alone may not be a justifiable reason for the lessor to terminate the lease, unless that default may be considered as a destruction of the relationship of confidence between lessor and lessee.

Notwithstanding the above, if the building lease contract is of a type known as teiki tatemono chintaishaku, for which it is clearly specified in writing, such as in a notarized document, that the building lease will not be extended and this feature is explained to the lessee in writing, the building lease will be terminable without justification upon expiration of the fixed term if notice of termination of the building lease is given between one year and six months before the expiration of such term.

Tenant Leasehold and Security Deposits

Upon execution of a building lease, the lessee is usually required to pay a tenant leasehold deposit. The tenant leasehold deposit is paid by the lessee as security for rent and other obligations. The tenant leasehold deposit does not bear interest and any outstanding amount after deduction for any charges is usually refundable after the buildings are vacated. Upon execution of a building lease, the lessee may also pay a tenant security deposit, which essentially guarantees the lessee’s obligations to the lessor and sometimes bears interest. The tenant security deposit is fully or partially refundable either after a specified period of time has passed under the building lease or at the end of the building lease, depending on the terms of the building lease. The amounts payable for a tenant leasehold deposit and tenant security deposit vary from location to location and from case to case in Japan.

116 Adjustment of Rent

Generally, either party to a building lease may demand that the rent be increased or decreased in response to market conditions, even where a properly executed lease exists. If the parties cannot come to an agreement, a court may order an adjustment after considering the following:

• whether there have been any changes in tax or other liabilities imposed on the building and/or the underlying land, the value of the building and/or the underlying land and any other relevant economic conditions; and

• the rent under comparable leases in neighboring areas.

If the court determines that the rent should be decreased, the lessor will be ordered to return any excess rent collected and pay interest at a rate of 10% per annum for the excess amount.

With respect to a special type of building lease known as teiki tatemono chintaishaku, the rent may not be subject to such adjustment if so agreed in the building lease.

Property Subject to Co-ownership

Co-ownership refers to a type of ownership where one party owns a certain percentage interest in the whole building or property or trust beneficiary interest, while other owners own the remaining percentage interest.

Sale of Co-ownership Interest

A co-owner of a property subject to co-ownership is entitled under the Civil Code of Japan to sell its co-ownership interest to any person or entity without the consent of the other co-owners, unless an agreement between the co-owners requires the consent or grants a right of first refusal. In the case of trust beneficiary co-ownership interests, any co-owner may sell its co-ownership interest without the consent of the other co-owners, unless an agreement between the co-owners requires the consent or grants a right of first refusal, but in each case, the sale of the trust beneficiary co-ownership interests requires the trustee’s consent.

Sale of Property under Co-ownership and the Right to Partition

Sale or any other disposal of a property under co-ownership may not be made without the consent of the other co-owners. A co-owner may demand that a co-owned property be partitioned, giving each co-owner a right to a specific portion of the property that each co-owner may dispose of at its discretion. If co-owners cannot agree upon a partition, a court may be asked to intervene. If partition is not practicable, or may cause a significant decrease in the value of the co-owned property, the court may order that the property be sold by public auction. Each co-owner would then receive the proceeds of the sale of the co-owned property on a pro rata basis. The Civil Code of Japan permits the co-owners to agree not to exercise their right to demand partition of the co-owned property, subject to the following limitations:

• the agreement must be for a period of not more than five years, and any period of renewal must be limited to not more than five years;

• the agreement is not effective against a third-party purchaser of a co-ownership interest unless the agreement is registered; and

• the agreement is not effective against a trustee, etc. of a co-owner in relation to which bankruptcy, corporate reorganization or civil rehabilitation proceedings have been commenced, although in these cases, the other co-owner(s) may purchase the co-ownership interest of the co-owner subject to such proceedings.

Administration of the Property

Co-owners generally decide on matters relating to the administration of co-owned properties by majority vote on the basis of co-owned property interest value, unless otherwise agreed among the co-owners; provided, however, that any conduct pertaining to the preservation of the co-owned property may be performed by each co-owner without such majority approval. Accordingly, a co-owner that is not able to get a majority share of the co-owned property interests may not participate in the administration of the co-owned property.

117 Claims and Obligations Relating to Properties under Co-ownership

When an underlying property that is co-owned is leased to tenants, the obligation of the co-owners to hold and refund the tenant leasehold deposits paid by the tenants is generally considered to be indivisible and the rents receivable by the co-owners are also deemed to be indivisible.

Properties Subject to Compartmentalized Ownership

Compartmentalized ownership refers to a type of ownership recognized under the Act on Unit Ownership, etc. of Buildings in Japan, or the Unit Ownership Act, whereby the building is divided into different portions, the majority of which are owned separately. The separate individual portions may be used for a variety of purposes, such as a private dwelling, shop, office or warehouse. Properties subject to compartmentalized ownership have two parts:

• private-use portions of the building, which a unit owner owns exclusively and can independently transfer; and

• common-use portions, which all, or several of, the unit owners of the building (such as the entrance area) own together and are able to use jointly.

Compartmentalized owner meetings are held at least once a year, and approvals by: (i) the majority of all of the owners, and (ii) those owners who, in the aggregate, have a majority of the voting rights, are required to make decisions, unless otherwise provided in the Unit Ownership Act or the rules agreed upon by the compartmentalized owners. Voting rights are granted to compartmentalized owners in proportion to their interest in the compartmentalized building unless otherwise provided in the rules agreed upon by the compartmentalized owners.

For the administration of certain matters, such as modifications that will significantly change the shape or function of a common use area, a decision is required by approval by: (i) 75% or more of all the compartmentalized owners of the compartmentalized building, and (ii) those owners who, in the aggregate, have 75% or more of the total voting rights, unless the owners agree to change such 75% to a lower percentage (not less than 50%). Similarly, the rules agreed upon by the compartmentalized owners can only be amended with the approval of: (i) 75% or more of all of the compartmentalized owners of the property, and (ii) those owners who, in the aggregate, have 75% or more of the total voting rights.

Moreover, with respect to a decision to rebuild the property, approval by: (i) 80% or more of all of the compartmentalized owners of the compartmentalized building, and (ii) those owners who, in the aggregate, have 80% or more of the total voting rights, is required.

Owners of compartmentalized ownership interests are entitled to sell their interests at their discretion. The consent of the other unitholders is not necessary, unless the rules of the unit owners provide otherwise. The Unit Ownership Act prohibits separation of a unit owner’s right to sell its compartmentalized ownership interest in the building from the right to use the underlying building site except as otherwise set forth in the rules of the unit owners.

Real Estate Registration System

There is a real estate registration system in Japan under which ownership to real estate as well as certain other real estate-related rights, such as the right to use real estate or security rights over real estate is registered. An owner of an unregistered real estate or a holder of other unregistered rights cannot assert its title or rights against a third party, with certain exceptions such as the perfection of the land leasehold interest described above.

The real estate register, however, does not necessarily reflect the true holder of the title or right. In practice, parties who plan to enter into a real estate transaction usually rely upon the register, as it is generally the best indication of the true owner of the real estate-related title or right. However, a party has no recourse to anyone but the seller if, relying on the register, it purchases real estate or a related right from a seller and the information contained in the register turns out to be incorrect. The purchaser may seek reimbursement from the seller pursuant to statutory or contract-based warranties, but in general cannot acquire the ownership of or title to the real estate.

118 Liabilities of the Owner of Real Estate

Under Japanese law, if any damage has been caused to another person by reason of any defect in the construction or maintenance of a structure on land, the person in possession of the structure is liable to compensate the injured person for damages it suffers; provided, however, that if the person in possession has exercised due care in order to prevent the occurrence of such damage, the owner of the structure is liable for such damage.

It is customary to obtain third-party liability insurance over real estate. However, in certain circumstances, insurance may not be available, or even if obtained, the insurance may not cover a liability in relation to the property.

A purchaser of real estate may in some instances seek reimbursement from the seller pursuant to statutory or contract-based warranties for liability to a third party that was caused by a defect in the property existing at the time of the sale. However, these warranties are sometimes limited or excluded or may prove insufficient if the seller lacks funds to compensate the purchaser for its loss.

Warranty Obligations

Unless contractually excluded, a seller of real estate owes statutory warranty obligations to a purchaser for any latent defect in the real estate. Statutory warranties are generally effective for one year from the date on which the purchaser becomes aware of the existence of the latent defect and can be enforced during this period by a cancellation of the underlying sale or by requesting damages from the seller. These statutory warranty obligations may be contractually excluded or substantially reduced in the sale and purchase agreement under which the real estate is purchased.

Soil Contamination Countermeasures Act of Japan

Under the Soil Contamination Countermeasures Act of Japan, a current owner of real estate may be held strictly liable for the removal or remediation of hazardous or toxic substances on or under such property, whether or not the current owner knew of, or was responsible for, the presence of such hazardous or toxic substances. Moreover, if the contamination of the real estate property were to cause damage to a third party, the owner of such contaminated property may be obligated to compensate such third party for such damages under the Civil Code of Japan. In addition, the presence of hazardous or toxic substances, or the failure to properly remediate such substances, may adversely affect the owner’s ability to dispose of the real estate or borrow using the real estate as collateral.

City Planning Act and Building Standards Act

All construction in Japan is regulated by the City Planning Act and the Building Standards Act. The main objective of the City Planning Act is to ensure balanced land development and promote public welfare, and the main objective of the Building Standards Act is to establish minimum standards concerning the site, structure, equipment and building use. Under the City Planning Act, developers must obtain permission from the prefectural governor (or the mayor, if the construction is planned in a city designated by the government) prior to beginning any development action (as defined in the City Planning Act) on land that has been designated as a city planning area or a quasi-city planning area by the prefecture (or city) in which such land is situated. The permitted use of buildings that are constructed in each use zone is designated pursuant to the Building Standards Act.

119 JAPANESE FOREIGN EXCHANGE REGULATIONS

Overview

The Foreign Exchange and Foreign Trade Act of Japan, as amended, and the cabinet orders and ministerial ordinances thereunder (the “Foreign Exchange Regulations”), govern certain matters relating to the acquisition and holding of units by non-residents of Japan.

The Foreign Exchange Regulations define “non-residents of Japan” as:

• individuals who are not resident in Japan; or

• corporations whose principal offices are located outside Japan. Generally, branches and other offices of non-resident corporations located within Japan are regarded as residents of Japan, and branches and other offices of Japanese corporations located outside Japan are regarded as non-residents of Japan.

Acquisition of Investment Units

In general, the acquisition of units of a J-REIT by a non-resident of Japan from a resident of Japan may be made without any restriction. However, a resident of Japan who transfers units to a non-resident of Japan must file a report to the Minister of Finance following the transfer of units to the non-resident of Japan, unless:

• the consideration for the transfer is ¥100 million or less; or

• the transfer is made through a bank or financial instruments firm licensed or registered as such under relevant Japanese laws.

Distributions and Proceeds of Sale

Under the Foreign Exchange Regulations, distributions paid on, and the proceeds of sales in Japan of, investment units of a J-REIT held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad subject to certain exceptions. The acquisition of investment units by non-resident holders by way of a unit split is not subject to any notification or reporting requirements.

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