Daiwa House Logistics Trust

Daiwa House Logistics Trust (DHLT) recently made a presentation to investors, highlighting the performance of its portfolio. Here are some key points:

• Portfolio Performance: The average exchange rate of JPY against SGD was weaker in 1H FY2024 by approximately 10% compared to 1H FY2023. This exchange rate movement affected the portfolio’s performance in SGD terms, resulting in lower year-over-year gross revenue and net property income. However, this decline was partially offset by lower JPY-denominated expenses and higher realized exchange gains. In JPY terms, the underlying performance remained stable, with gross rental income and net property income growing by 1.5% and 2.8%, respectively.
• Recent Acquisitions: DHLT acquired DPL Ibaraki Yuki on March 15, 2024, which contributed positively to the portfolio. This acquisition was funded through a JPY3.03 billion unsecured term loan, which increased total borrowings to S$307.7 million and gearing to 36.8%.
• Leasing Activity: DHLT renewed four leases in 1H FY2024, with a new tenant occupying the DPL Kawasaki Yako facility as of August 2024. The lease for the D Project Kuki S facility was extended for 10 years.
• Outlook:
  • Japan: The supply of logistics facilities is expected to remain high, with an additional 11.6 million square meters of space projected between 2024 and 2026. Demand for logistics space is forecasted to remain healthy, driven by e-commerce growth, the 3PL market, and limited availability of modern facilities.
  • Vietnam: Demand for logistics facilities is also expected to grow, fueled by the rise of e-commerce and an expanding middle class. Additionally, cold storage facilities are likely to be in demand due to increased supermarket activity.

At a market cap of S$446 million, DHLT currently trades at a 1.0x price-to-book (P/B) ratio, offering an annualized dividend yield of 7.7%. The consensus target price is S$0.71, representing a 10.9% upside from the current price.

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