Daiwa House Logistics Trust portfolio valuation up 14.1% from purchase consideration

THE initial portfolio of Daiwa House Logistics Trust (DHLT) DHLU : DHLU 0% has been revalued to 81.1 million yen (S$949.7 million) as at end-December 2021, announced the trust manager in a business update on Friday (Feb 11).

The portfolio's new valuation is 14.1 per cent up from the purchase consideration. This brings the trust's net asset value per unit to S$0.92.

Post the portfolio's revaluation, aggregate leverage was 37.7 per cent as at end-2021. This is compared to 43.8 per cent as at end-June 2021 based on pro-forma financials.

Total borrowings as at end-2021 stood at 35.6 million yen, implying a weighted average debt tenure of about 3.4 years.

DHLT's initial portfolio of 14 properties was acquired for 71.1 million yen when the trust listed on the Singapore Exchange mainboard on Nov 26, 2021. The purchase consideration represented a discount of 11.8 per cent to its aggregate valuation as at Jun 30, 2021.

Gross revenue of the trust was S$6.6 million for the period under review, up 0.7 per cent from pro-rated forecasts based on the trust's initial public offering (IPO) prospectus statements.

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Net property income as at end-2021 beat pro-rated IPO forecasts by 2.4 per cent at S$5.3 million, while distributable income was 0.4 per cent higher than projected at S$3.3 million.

DHLT's distribution policy is to distribute 100 per cent of its annual distributable income for the period from its listing date to Dec 31, 2022. It will pay unitholders its first distribution by Sep 30, 2022 for the period from Nov 26, 2021 to Jun 30, 2022.

Overall portfolio occupancy stood at 96.3 per cent at Dec 31, 2021. There were no requests for any form of rental relief or abatements amid the Covid-19 situation, said the manager, who believes this underscores the portfolio's resilience.

It added that it is currently in negotiations with potential tenants as part of its efforts to lease out the remaining vacant space.

Based on the manager's observations, supply-demand for logistics space in Japan has remained tight, resulting in generally low vacancy rates.

Despite expectations of increasing vacancy and moderation of rental rates growth in certain markets, particularly Greater Tokyo, the manager nonetheless anticipates demand to remain "robust in general" as Japan's e-commerce market continues to expand.

Units of Daiwa House Logistics Trust ended S$0.01 or 1.24 per cent higher at S$0.82 on Friday, after the business update was released. 

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