Daiwa House Logistics Trust posts 1HFY2024 DPU of 2.45 cents, 6.1% lower y-o-y

Felicia Tan
3-min read

DHLT's gross revenue and NPI for the 1HFY2024 fell due to the weaker JPY.

Daiwa House Logistics Trust (DHLT) has reported a distribution per unit (DPU) of 2.45 cents for the 1HFY2024 ended June 30, 6.1% lower y-o-y.

Gross revenue fell by 10.7% y-o-y to $30.9 million due to the weaker Japanese yen (JPY). In JPY terms, gross revenue dipped by 0.1% y-o-y to 3.12 billion yen ($28.1 million) due to the lower rental from lower occupancies and lower utilities recoverable income. This was offset by rental income contributed by the REIT’s new acquisition, DPL Ibaraki Yuki. The acquisition was completed on March 15.

Net property income (NPI) fell by 8.2% y-o-y to $23.1 million also undermined by the weaker JPY. In JPY terms, NPI rose by 2.8% y-o-y to 2.4 billion yen mainly due to the acquisition of DPL Ibaraki Yuki as well as lower property expenses.

Distributable income for the period fell by 5.7% y-o-y to $18.1 million.

As at June 30, portfolio occupancy stood at 96.6%, down from the 100.0% as at Dec 31, 2023. The REIT’s weighted average lease expiry (WALE) by gross rental income (GRI) stood at 6.3 years.

Of the leases that expired in the 1HFY2024, two spaces were vacated while the rest were renewed. The lease of D Project Kuki was renewed for another 10 years while the REIT manager managed to negotiate for higher rent for a built-to-suit property in its portfolio with a contractual annual rent escalation over the next five years. Assuming the commencement of the new lease at DPL Kawasaki Yako and space to be vacated in 2HFY2024 took place on June 30, portfolio occupancy and WALE would’ve been at 97.5% and 6.9 years respectively.

In its outlook statement, the REIT says demand for logistics facilities are expected to remain healthy amid high new levels of supplies in the Japanese logistics sector due to growth in Japan’s e-commerce and third-party logistics sector, limited modern logistics facilities, reshoring of manufacturing facilities and restrictions on truck drivers’ overtime. Based on a survey conducted in March, about 51% of 200 logistics operators and consignor firms polled say they plan to expand their floor area. About 35% of the same survey participants intend to expand the number of sites.

As of March 2022, proportion of modern logistics facilities was relatively low at 16% of the total stock of logistics space while 54% were built more than 30 years ago.

“We are pleased to complete the first acquisition outside of Japan and look forward to the contribution of both DPL Ibaraki Yuki and D Project Tan Duc 2 in years to come. In relation to the acquisition of D Project Tan Duc 2, DHLT obtained its first unsecured facility and this is a strong testament to the track record of DHLT’s portfolio since listing as well as its credit standing,” says Jun Yamamura, CEO of the manager.

“While a weaker JPY has affected DHLT’s results in 1 FY2024, operations have remained steady. Proactive asset management approach with good market knowledge has also allowed us to achieve strong rental growth for one of the vacated spaces, and we will continue to seek opportunities to improve the earnings of the properties,” he adds. “Most of the tenants for the leases expiring in 2H FY2024 have indicated intention to renew, and we expect some of these renewals to achieve modest rent uplift.”

As at 9.25am, units in DHLT are trading flat at 58 cents.

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