Logistics S-Reit with pure Japan assets lists on SGX

DAIWA House Logistics Trust DHLU : DHLU 0% (DHLT), which has an initial portfolio (IPO portfolio) of 14 logistics properties in Japan with an aggregate appraised value of approximately 80,570.0 million yen (S$952.9 million), made its debut on the Singapore Exchange last Friday (Nov 26).

The initial public offer (IPO) attracted strong support from institutional, corporate, and retail investors.

The placement tranche was 4.9 times subscribed while the public tranche was 9.5 times subscribed.

In addition, cornerstone investors, including Bangkok Life Assurance Public Co, Credit Suisse, DBS, DWS Investments Australia, Kuang Ming Investments, Nomura Singapore, Hazelview Securities, and Metro ARC Investments, have subscribed for an aggregate of 336 million units, which represents 49.8 per cent of the total number of outstanding units at the IPO.

Despite having an IPO portfolio of pure Japan assets, DHLT is established with the investment strategy of principally investing in a portfolio of income-producing logistics and industrial real estate assets located across Asia.

The Reit believes that there is strong growth potential for logistics and industrial assets throughout South-east Asia, where its sponsor, Daiwa House Industry, has completed 9 logistics assets across the region and has 5 logistics facility projects under development across Vietnam, Indonesia and Malaysia as at Sep 30, 2021.

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DHLT offers a diversified initial IPO portfolio of 14 assets which are spread across various regions in prime industrial locations in Japan.

The Reit manager believes that this diversified portfolio will minimise concentration risk and allow it to take advantage of markets which have traditionally been overlooked by existing Japanese-listed and private Reits.

The 14 properties are closely interlinked with transportation and shipping networks, which is attractive for DHLT's large third-party logistics (3PL) and e-commerce tenant base.

The Reit manager has strong commitment to environment, social and governance (ESG) principles, and noted that approximately 95.7 per cent of the IPO portfolio by NLA is certified green by the Development Bank of Japan (DBJ) Green Building Certification Programme, a rating system in Japan which evaluates and measures the environmental and social awareness characteristics of real estate properties.

As at Oct 1, 2021, the IPO portfolio's occupancy rate is 96.3 per cent with 26 tenants.

All of the properties are fully occupied, apart from DPL Sapparo Higashi Kariki and DPL Koriyama.

The aggregate weighted average lease expiry (WALE) for the IPO portfolio by occupied net lettable area (NLA) is 7.2 years as at Jun 30, 2021.

According to the IPO prospectus, the forecasted annualised distribution yield for the period between Oct 1, 2021 and Dec 31, 2021 is 6.3 per cent while the projected distribution yield for financial year 2022 is 6.5 per cent, representing respective spreads of 625 bps and 645 bps compared to the 10-year Japan government bond yield of 0.05 per cent as at Oct 1, 2021.

Following the listing of DHLT, the Singapore Reit and property trust sector now consists of 43 listed trusts of which 9 are industrial Reits (including DHLT).

The average distribution yield of the 9 industrial Reits is 6.1 per cent, including DHLT's forecasted annualised yield of 6.3 per cent for 2021. SGX RESEARCH

• For more research and information on Singapore's Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.

• Source: SGX Research S-Reits & Property Trusts Chartbook.