Preface

Japan Logistics Fund, Inc. (JLF; Securities Code 8967) is the first and only Japanese REIT (real estate investment trust) dedicated to logistics properties. JLF was listed on the Tokyo Stock Exchange in May 2005 and started its history with 26 billion yen in portfolio assets.

JLF's asset management company, Mitsui & Co., Logistics Partners Ltd. (MLP), was established under the support of three leading companies, Mitsui & Co., Ltd. (MBK), The Chuo Mitsui Trust and Banking Co., Ltd. (CMTB) and Kenedix Inc. (KDX).

As for the allocation of MLP's shares, MBK owns a 51% stake, CMTB owns a 29% stake, and the remaining shares are owned by KDX. Each of the sponsors is expected to provide an edge through their respective expertise and track record in logistics related activities, the financial market, and the real estate business sector. The full integration of this expertise confers significant value to MLP and its operations.

Over JLF's nearly five-year history, its dividend per unit (DPU) rose to 17,234 yen from the 11,810 yen of the 1st fiscal period (this figure is derived after conversion of the actual DPU of 17,344 yen, which was finalized under a 268-day management period, to a six-month period).In addition, the total value of JLF's asset under management (AUM) increased to 123.6 billion yen (the number of properties also rose from 6 to 27) as of March 5, 2010.

In general, the commonly held image of a "warehouse" is that it is simply a place to store something or the proper place to perform such activities. However, those involved in the logistics business of late are well aware that such properties or facilities must be designed to suit much broader roles and functions in addition to mere storage, such as transportation, distribution processing, loading and unloading, and packaging. Accordingly, a key factor in the valuation of logistics properties is identifying what kinds of functions the properties can provide.

Furthermore, segregation of the owners and users of these properties has accelerated recently. Under such circumstances, the third party logistics (3PL) business model has spread significantly and has penetrated the market, and the emergence of other similar business opportunities has also been increasing. Therefore, entities such as real estate investment funds and J-REIT vehicles can perform a worthwhile function in the market place by acting as owners of the properties.

JLF's unique characteristic is that it was established under a management strategy dedicated to logistics properties. Investment in logistics properties has several distinct points, including (1) relatively stable rent through longer contracts with tenants, and (2) a correlation tendency between rent levels and consumer price indices (CPI). Specifically, one of the advantages of investment in the logistics business is that its rent movements differ from those of other asset classes.

In the short run, a recessionary trend is becoming somewhat clear, and as a result we will place the highest priority on maintaining our profit level from the current portfolio, while providing all of our unitholders with a stable DPU in the long run.

We would like to take this opportunity to express our deep appreciation to all of our stakeholders and hope to extend our expertise to obtain your further trust and support.

Sincerely yours,

Reiji Fujita,
Executive Director
Japan Logistics Fund, Inc.