Daiwa House Logistics Trust buys Vietnam logistics asset for S$26.5 million
Benjamin Cher
DAIWA House Logistics Trust (DHLT) has acquired a logistics asset in Vietnam for S$26.5 million from its sponsor, Daiwa House Industry.
The announcement was made on Friday (Dec 29), and is the real estate investment trust’s (Reit) first such deal outside of Japan.
The price is 3 per cent lower than the independent valuation of the property – which was at S$27.4 million – and the move shows support from the sponsor, says the Reit’s manager.
The asset, D Project Tan Duc 2, is located in Long An. That area is near Ho Chi Minh City, a key economic hub in Vietnam.
Fully leased for 20 years from October 2023 to a company that deals in frozen and chilled-food-transportation services, the facility was completed in September 2023.
The transaction will be financed through external debt financing, while the acquisition fee will be paid through the issue of units in DHLT. The deal is expected to be completed in the second quarter of 2024, and will increase the Reit’s aggregate leverage to 38.2 per cent from 36.2 per cent as at Sep 30, on a pro forma basis.
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The manager of DHLT expects the acquisition to be accretive to the Reit’s distribution per unit (DPU), on top of providing diversification into a growth market. Vietnam is one of the fastest-growing economies in South-east Asia, with an expected gross domestic product growth of 5.8 per cent and 6.9 per cent in 2024 and 2025, respectively.
It also believes that the logistics asset will minimise capital expenditure in the near-term, as it was recently completed. DHLT will ride on the demand for cold storage facilities, which is supported by Vietnam’s growing middle class, an improving economy and the e-commerce sector which is looking for high-quality food.
The tenant of the property is well-established in the region with two other facilities to distribute food and beverage products to local supermarkets. It is also part of a Tokyo Stock Exchange-listed entity specialising in cold chain logistics.
Jun Yamamura, chief executive officer of DHLT’s manager, said: “This is a landmark transaction ... and we are pleased to deliver a DPU-accretive acquisition to unitholders.”
Units of the Reit closed up 0.8 per cent or S$0.005 to S$0.655 on Friday.
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