Daiwa House Logistics Trust posts 12.4% fall in Q1 NPI on weaker foreign currencies

[SINGAPORE] Daiwa House Logistics Trust (DHLT) reported a 12.4 per cent year-on-year decline in its net property income (NPI) for its first quarter ended Mar 31, to S$9.7 million from S$11.1 million a year earlier.

In a business update on Wednesday (May 13), the trust’s manager attributed the decline to the weakening of foreign currencies – specifically the Japanese yen and Vietnamese dong – against the Singapore dollar, as well as lower contributions from the trust’s Japan portfolio due to vacancies.

The Japan portfolio’s NPI fell by 4.9 per cent to 1.1 billion yen (S$8.9 million) due to higher vacancies.

Vietnam’s remained stable at 11.7 billion dong (S$565,063). However, the trust’s property in the country, D Project Tan Duc 2, improved its NPI on a cash basis by 2.7 per cent in dong terms, driven by built-in rent increases, the manager said. 

The update did not include figures on revenue.

The manager said that portfolio occupancy remained stable at 87.8 per cent as at Mar 31. Of the 19 properties in the group’s portfolio, 16 were at full occupancy.

“Of the three leases expiring in the second quarter of FY2026, one lease has been renewed, with another expected to be renewed, both at higher rent, while discussions with a potential tenant are ongoing for the space to be vacated,” the manager added. 

The trust maintained a “healthy” capital management profile with an aggregate leverage of 40.6 per cent and an interest coverage ratio of 5.1 times. 

The manager observed that the “demand and supply dynamics of logistics space in Japan are rebalancing”.

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It added that it expects demand for logistics facilities in Japan to “remain firm, supported by the continued growth of e-commerce and third-party logistics sectors".

“Following years of substantial supply to the logistics sector in Japan, new supply is expected to moderate going forward as rising construction costs impact future facility developments.”

The manager also expects the long-term prospects of Vietnam’s logistics sector to be “healthy, supported by a resilient economy, e-commerce expansion (and) government support”. 

Jun Yamamura, CEO of the manager, noted that the conflict in the Middle East has “added further uncertainties to global economies”.

“While no immediate direct impact on DHLT’s portfolio was observed, we remain cognisant that it may weigh on the wider economy of the markets that DHLT operates in, the interest rate environment, as well as foreign exchanges.”

Units of DHLT closed flat at S$0.49 on Wednesday, after the release of the business update.