Overall net property income rises 3.3% year on year

 

[SINGAPORE] The manager of   Daiwa House Logistics Trust (DHLT)   : DHLU 0% on Wednesday (Nov 12) posted a distributable income of S$23.4 million for the nine months ended September, an 8.4 per cent drop from S$25.5 million in the prior year.

 

This was mainly on the back of greater interest expenses with higher interest rates from borrowings refinanced in November 2024, additional borrowings to finance acquisitions, as well as lower realised foreign exchange gains. 

 

Overall net property income (NPI) rose 3.3 per cent year on year, due to the full 9M contribution from D Project Tan Duc 2 &ndash acquired in July 2024. 

 

For its Japan portfolio, rental income for the period edged up 1.1 per cent to 4.2 billion yen (S$35.6 million), while NPI dropped 0.3 per cent to 3.61 billion yen, from 3.62 billion yen in the same period the year before. 

 

Net asset value per unit attributable to unitholders was S$0.67 as at Sep 30. This was down from S$0.69 as at Dec 31, 2024. 

 

The total borrowings recorded were S$379.2 million as at end-September. Portfolio occupancy stood at 92 per cent, a slight decline from the 93 per cent as at end-June. The weighted average lease expiry of the portfolio stood at 6.5 years.

 

Aggregate leverage was 41.2 per cent as at Sep 30, with an interest coverage ratio of six times. 

 

Jun Yamamura, CEO of the manager of DHLT, said that the acquisitions of the trust &ndash D Project Tan Duc 2 in July 2024, and DPL Gunma Fujioka in March &ndash have contributed positively. 

 

&ldquo Each of these acquisitions has also added new blue-chip tenants to DHLT, strengthening its tenant base. While there are vacancies in certain properties, there are ongoing discussions with potential new tenants,&rdquo he said. 

 

The manager noted that it will continue to work closely with the property manager and leverage the sponsor&rsquo s network to improve overall portfolio occupancy. 

Net property income for the half year stands at S$22.5 million

 

[SINGAPORE] The manager of Daiwa House Logistics Trust : DHLU -0.87% (DHLT) on Friday (Aug 8) posted a distribution per unit (DPU) of S$0.0224 for its first half ended Jun 30, down 8.6 per cent from S$0.0245 in the previous corresponding period. 

 

This was attributed to higher interest expenses and lower realised exchange gains. 

 

The higher interest expenses came mainly from new borrowings drawn for acquisitions and a higher interest rate, as a result of the refinancing and restructuring of onshore yen borrowings in November 2024, said the manager.

 

Net property income (NPI) for the period stood at S$22.5 million, up 6.1 per cent from S$21.2 million previously, in light of the contributions from D Project Tan Duc 2 in Vietnam and newly added freehold logistics property DPL Gunma Fujioka in Japan.

 

Gearing stood at 40.7 per cent as at Jun 30, with a weighted average lease expiry of 6.5 years. The interest coverage ratio, including distribution for perpetual securities, was 6.6 times, and portfolio occupancy was 93.2 per cent.

 

For the Japan portfolio, NPI in yen terms declined 0.5 per cent this half year to 2.39 billion yen (S$20.8 million) from 2.4 billion yen in the corresponding year-ago period, as contributions from DPL Gunma Fujioka, DPL Ibaraki Yuki and DPL Kawasaki Yako were offset by vacancies and higher property-related expenses.

 

Gross rental income in yen was 1.1 per cent higher at 2.8 billion yen for the period, from 2.77 billion yen. 

 

The manager warned that the new supply of logistics space in Japan is expected to decline due to rising costs of construction and land, though the fundamentals of the Japan logistics market are expected to remain strong. However, industries such as e-commerce are expected to still have demand.

 

As for Vietnam, its other market, DHLT&rsquo s manager said occupancy rates for industrial and logistics facilities generally improved because of the growing economy and e-commerce activities.

 

Jun Yamamura, chief executive of the manager, said: &ldquo Apart from the vacated space in DPL Sendai Port, leasing activities have been healthy in H1 FY2025... We will continue to work on the remaining vacant space in DPL Koriyama and DPL Sendai Port.&rdquo

 

The manager also stated that US trade policy is likely to bring about near-term uncertainty, even as long-term fundamentals of the logistics sectors in DHLT&rsquo s operating markets remain healthy.

 

&ldquo We remain vigilant over the near-term market uncertainties as we continue to focus on improving the occupancy of the portfolio,&rdquo said Yamamura.

 

On Jun 26, Daiwa House Asset Management Asia non-independent executive director CEO Jun Yamamura acquired 30,000 units of Daiwa House Logistics Trust (DHLT) at S$0.565 apiece. This took his direct interest to 0.02 per cent. 

 

Yamamura has over two decades of experience in real estate development and Reit management at Marubeni Corp, including key roles in Reit mergers and IPOs, and most recently served as senior chief of business development at Daiwa House Industry before joining the manager of the Reit. 

 

During Q1FY25 (ended Mar 31), DHLT acquired DPL Gunma Fujioka in Greater Tokyo, secured new tenants with a 13 per cent rent uplift, and maintained a strong portfolio occupancy of 92.1 per cent with a weighted average lease expiry of 6.7 years, further enhancing its tenant base and lease profile.

Net property income of the overall portfolio for the quarter stands at S$11.1 million in Singdollar terms

 

[SINGAPORE] Daiwa House Logistics Trust (DHLT) announced on Friday (May 9) that its distributable income for the quarter was 9.9 per cent lower at S$8.2 million, from S$9.2 million in the same year-ago period.

 

This was mainly attributed to increased interest expenses from additional borrowings, higher interest rates due to the refinancing and restructuring of loans, and lower realised exchange gains.

 

Net property income (NPI) of the overall portfolio for the quarter stood at S$11.1 million in Singapore-dollar terms, up 2.7 per cent from S$10.8 million, in light of the acquisition of a single-storey cold-storage warehouse D Project Tan Duc 2 in Vietnam in July 2024. This was the real estate investment trust (Reit)&lsquo s first foray into Vietnam.

 

Meanwhile, for the Japan portfolio, NPI in yen terms declined 1 per cent this quarter to 1.19 billion yen (S$10.6 million) from 1.2 billion yen in the corresponding year-ago period, as contributions from two-storey warehouse DPL Ibaraki Yuki acquired in March 2024 was offset by vacancies in the Japan portfolio and higher property-related expenses.

 

Gross rental income in yen was 0.1 per cent higher at 1.39 billion yen for the period, from 1.389 billion yen.

 

The Japan logistics market faced near-term challenges due to large supply of logistics space in certain sub-markets in recent years, said the manager.

 

&ldquo However, the logistics sector in Japan is expected to be stable in the long term with demand well-supported by factors such as the growth of e-commerce, which is a key driver of the demand for logistics space, continued expansion of the third-party logistics sector, and increased demand for distribution bases in relay points due to restrictions on overtime of truck drivers,&rdquo it added.

 

The logistics segment in Vietnam is similarly expected to be positive, supported by the country&rsquo s economic expansion, e-commerce sector growth and further infrastructure investments.

Declines come amid weaker Japanese yen

 

The manager of Daiwa House Logistics Trust : DHLU 0% on Friday (Feb 28) posted a distribution per unit (DPU) of S$0.0234 for its second half ended Dec 31, down 10.3 per cent from S$0.0261 in the previous corresponding period. 

 

This brings the total DPU for FY2024 to S$0.0479, down 8.2 per cent from S$0.0522 in FY2023. 

 

Its H2 distributable income stood at S$16.4 million, down 10 per cent from S$18.2 million in FY2023. The distribution will be paid out on Mar 26, after the record date of Mar 10. 

 

Its half-year revenue stood at S$29.5 million, up slightly by 2 per cent from S$29 million previously. The marginal top-line growth for the period was mainly due to the contributions from two acquisitions in 2024, but partly offset by a weaker Japanese yen. 

 

It acquired its first non-Japan property, a single storey cold storage warehouse in Vietnam, D Project Tan Duc 2, in July as well as DPL Ibaraki Yuki, a freehold logistics property in Greater Tokyo, in March. 

 

Jun Yamamura, CEO of DHLT&rsquo s manager, said the acquisition of the Vietnam warehouse &ldquo marked an important milestone for DHLT&rdquo as its first property beyond Japan. 

 

&ldquo The logistic sector in Vietnam is expected to be supported by factors such as growing foreign investments, improving infrastructure as well as growth of the ecommerce market,&rdquo said DHLT&rsquo s manager on Thursday. 

 

As Japan&rsquo s e-commerce penetration rate of 9.4 per cent is low relative to other matured e-commerce markets such as China, US and the UK, it has potential for further growth, the manager added. 

 

Net property income for the half-year inched up 2.1 per cent to S$22.7 million from S$22.2 million in the year-ago period. 

 

Its property expenses for H2 rose 1.5 per cent to S$6.9 million from S$6.8 million in the year-ago period, largely due to the acquisitions, higher leasing commissions, and green certification costs for its Japan portfolio. 

 

Finance expenses likewise climbed 16.5 per cent to S$3.6 million from S$3.1 million in the previous year due mainly to additional borrowings taken to fund the acquisitions. 

 

Full-year distributable income dropped 7.8 per cent to S$33.5 million from S$36.4 million year on year. Gross revenue for FY2024 contracted 4.6 per cent to S$57.1 million from S$59.9 million for FY2023, as NPI eased 3.2 per cent to S$43.9 million from S$45.3 million. 

 

The full-year declines were mainly due to the weaker Japanese yen, which mediated contributions from its acquisitions. 

 

This was despite its Japanese portfolio achieving a gross revenue 1.2 per cent higher than that of the previous financial year on contributions from the DPL Ibaraki Yuki acquisition, although this was partly offset by lower occupancy.

 

As at Dec 31, 2024, the trust&rsquo s net asset value per unit was down 6.8 per cent year on year at S$0.69, from S$0.74, mainly due to the weaker Japanese yen. 

 

The value of its total assets declined marginally by S$18.2 million or 1.7 per cent, but remained largely unchanged from the S$1.1 billion recorded the year before.

 

Its portfolio valuation was up 0.5 per cent at S$835.9 million from S$831.9 million the prior year. Portfolio occupancy dropped to 97.6 per cent from 100 per cent, but remained healthy, with 17 of its 18 properties occupied. 

 

The weighted average lease expiry of its portfolio was 6.6 years, with nearly 50 per cent of leases expiring in or after 2030. Aggregate leverage ratio was up at 38.5 per cent, from 35.2 per cent previously. 

 

Near-term challenges ahead

While supply increases pose near-term challenges to Japan&rsquo s logistics sector, its fundamentals are set to remain strong in the long-run, with demand fuelled by the e-commerce sector&rsquo s growth and supply expected to moderate in the coming years, DHLT said. 

 

Regarding DHLT&rsquo s capital management, Yamamura said: &ldquo The security related to the borrowings in Japan onshore was released and as a result, no properties are currently encumbered. We believe that this will provide DHLT with more financing options, improving its financial flexibility.&rdquo  

Daiwa House Logistics Trust has reported an " improvement" in its core portfolio of warehouses in Japan for its 9MFY2024 ended Sept, lifted by contributions from new acquisitions.

 

DHLT adds that all leases that expired in 3QFY2024 were renewed except for one which was partially renewed, the manager says in its 3QFY2024 business update.

 

A space that was vacated in 2Q FY2024 was also leased in 3Q FY2024 at higher rent. 

 

In October 2024, the remaining expiring lease for FY2024 was renewed, concluding the lease renewals for FY2024. 

 

Thus far in FY2024, the weighted average rent uplift achieved was approximately 5%.

 

The manager says it has secured higher rent for two leases which will only expire in 2025 and 2034, respectively. 

 

Including the new lease for the vacated space, the renewal rate for FY2024 was approximately 90%.

 

The healthy renewal rate helped hold the occupancy rate at 97.5% for the Japan portfolio as at Sept 30, contributing to weighted average lease expiry for the overall portfolio remained relatively long at 6.6 years.

 

DHLT notes that there has been " substantial" new supply in the Japan logistics market in 2024. Nonetheless, the total

 

for the year is expected to be lower than the peak in 2023. The increase in supply poses near-term challenges, especially for older and less accessible properties. 

 

While supply in 2025 is forecasted to be higher than 2024, supply beyond 2026 is expected to be limited, due to higher costs.

 

" From a longer-term perspective, the market fundamentals are expected to remain healthy, supported by growing demand from various industries such as e-commerce and manufacturing. 

 

" Further, due to restrictions imposed on the working hours of truck drivers, regional cities are emerging as key relay hubs.

 

Over in Vietnam, where DHLT has made its maiden acquisition outside Japan, the logistics market is seen to be supported by the flow of foreign direct investment and domestic consumption.

 

Vietnam is seen to be " buoyed" by diverted investment flow as part of the China+1 strategy of large manufacturers.

 

" With this acquisition, DHLT&rsquo s portfolio has grown from 14 properties at listing, to 18 properties currently," says Jun Yamamura, CEO of the manager, referring to the recently acquired D Project Tan Duc 2 in Vietnam.

 

" While certain leases in the Japan portfolio are not expected to be renewed in 1QFY2025 following their expiry, the manager is working closely with the property manager on these leases as well as the current vacant space within the portfolio," he adds.

 

Yamamura says DHLT is " on track" to refinance the loan by its maturity on Nov 26. He is also planning to unsecure the onshore borrowings of JPY36.5 billion which is expected to be beneficial for DHLT, allowing for greater financing flexibility.

Net property income falls 8.2% to S$21.2 million

 

distribution per unit (DPU) of Daiwa House Logistics Trust : DHLU +0.86% (DHLT) for the first half of fiscal year 2024 fell 6.1 per cent year on year to S$0.0245 from S$0.0261.

 

The manager of the trust on Monday (Aug 12) also posted H1 revenue of S$27.6 million, down 10.7 per cent from S$30.9 million.

 

Net property income (NPI) decreased 8.2 per cent to S$21.2 million from S$23.1 million. 

 

This was attributed to the weaker yen against the Singapore dollar. The manager added that the average exchange rate for the yen against the Singapore dollar was weaker by about 10 per cent in H1 FY2024, compared with H1 FY2023. 

 

The manager, however, noted that NPI in yen terms recorded a 2.8 per cent year-on-year increase. 

 

Distributable income for H1 FY2024 was S$17.1 million, down 5.7 per cent from S$18.1 million. The distribution will be paid out on Sep 26, after the record date on Aug 20. 

 

The trust has maintained a portfolio occupancy of 96.6 per cent, with a weighted average lease expiry of 6.3 years. Additionally, its interest coverage ratio was 11.7 times with an aggregate leverage of 36.8 per cent. 

 

&ldquo Most of the tenants for the leases expiring in H2 FY2024 have indicated intention to renew, and we expect some of these renewals to achieve modest rent uplift,&rdquo DLHT&rsquo s manager said.

 

In H1 FY2024, DHLT acquired two properties &ndash one in Japan and the other in Vietnam. This takes total net lettable area to 476,614 square metres.

 

DPL Ibaraki Yuki, located in Greater Tokyo, is a freehold logistics property.

 

D Project Tan Duc 2 in Vietnam &ndash a cold storage facility located between Ho Chi Minh City and the Mekong Delta region, marks the trust&rsquo s first property outside Japan as it expands into a new market. 

 

Assuming the acquisition of D Project Tan Duc 2 was completed on Jun 30, and the related borrowings were drawn on the same date, the aggregate leverage would be 38.7 per cent.

 

Chief executive officer of the manager Jun Yamamura said: &ldquo While a weaker yen has affected DHLT&rsquo s results in H1 FY2024, operations have remained steady.&rdquo

 

He added: &ldquo Most of the tenants for the leases expiring in H2 FY2024 have indicated intention to renew, and we expect some of these renewals to achieve modest rent uplift.&rdquo  

 

Demand for logistics facilities in Japan is expected to remain robust due to the growth in the country&rsquo s e-commerce and third-party logistics markets, and a limited supply of modern logistics facilities, among others.

 

The country&rsquo s restrictions on overtime for lorry drivers could also boost demand for transition locations along routes, the manager noted.

 

In Vietnam, the growth of e-commerce and a growing middle class are projected to drive demand for logistics facilities in the country.

 

The manager noted that demand for cold storage facilities could grow as Vietnam&rsquo s demand for fresh products rises, as seen in the increasing number of supermarkets.

 

The manager said that e-commerce accounted for only 8.5 per cent of total retail sales of consumer goods and services in the country, even with strong growth in recent users.

 

With more than 70 million Internet users in Vietnam, there is potential for further growth, it added.

 

UOB Kay Hian (UOBKH) analyst Jonathan Koh highlights Daiwa House Logistics Trust DHLU 0.00% &rsquo s (DHLT) growth and stability in an unrated report.

 

In his June 19 report, Koh notes that DHLT has expanded its portfolio to 17 high-quality logistics properties with net lettable area (NLA) of 4.9 million sqft. Its portfolio of logistics properties has an average age of only 6.3 years. 

 

Of this, DHLT has seven logistics properties located in Greater Tokyo, which accounted for 42% of its portfolio valuation, with a long weighted average lease expiry (WALE) of 7.4 years weighted by gross rental income (GRI). Freehold properties accounted for 60% of its portfolio valuation, while the average leasehold land tenure is 39.3 years.

 

All of DHLT' s multi-tenanted logistics properties, which accounted for 77% of its portfolio valuation, are built to modern specifications. This is in stark contrast to the broader market in Japan, where the proportion of modern logistics facilities is still small at 15%, Koh points out.

 

Growth is supported by third-party logistics and e-commerce, which accounted for 75.7% and 8.1% of DHLT' s GRI respectively. There is huge room for growth as e-commerce penetration remains low at 9% in Japan, he further highlights. 

 

The trust is also backed by a strong and supportive sponsor &mdash Daiwa House Industry (DHI) is one of the largest construction and real estate development companies in Japan. It has developed 231 single-tenanted and 81 multi-tenanted logistics properties in the country, managing real estate funds with an aggregate assets under management (AUM) of $19.6 billion.

 

By tapping its sponsor pipeline, DHLT is expanding in Japan and Southeast Asia, making its maiden foray overseas by acquiring cold storage facility D Project Tan Duc 2 in Vietnam for VND483 billion.

 

Koh highlights that DLHT&rsquo s NPI grew 4.6% y-o-y in Japanese yen terms in 1QFY2024 due to portfolio occupancy improving 1.4 percentage points y-o-y to 100.0%, contribution from newly acquired DPL Ibaraki Yuki, as well as the absence of repair expenses due to damages caused by an earthquake in 1Q2023. 

 

DHLT also had a long WALE of 5.9 years weighted by GRI as at March, while built-to-suit property D Project Kuki S was renewed for 10 years in April.

 

The trust&rsquo s portfolio was fully occupied as of March. That said, occupancy has slipped 3.4 percentage points to 96.6% in April due to the expiry of two leases at DPL Kawasaki Yako and DPL Koriyama, which take up a total NLA of 167,670 sqft. DLHT is in advanced negotiations with a potential replacement tenant, a 3PL provider, to backfill the vacant space at DPL Kawasaki Yako, Koh notes.

 

He adds that DHLT is currently trading at an attractive 2024 distribution yield of 9% and P/NAV of 0.82x.

This is mainly due to realised gains from hedges

 

DAIWA House Logistics Trust&rsquo s distributable income for the first quarter ended March was up 0.6 per cent on the year to S$9.2 million, from S$9.1 million.

 

This was mainly due to realised gains from hedges, despite net property income (NPI) for the quarter being negated by a weaker yen against the Singapore dollar, said the manager in its Q1 business update on Wednesday (May 8).

 

NPI for the quarter stood at 1.2 billion yen (S$10.5 million), up 4.6 per cent in yen terms, but down 6.2 per cent in Singapore dollar terms.

 

Gross rental income (GRI) in yen was also 1.9 per cent higher at 1.4 billion yen.

 

&ldquo GRI and NPI for Q1 FY2024 in yen terms were higher year on year mainly due to higher portfolio occupancy and contribution from DPL Ibaraki Yuki which was acquired in March 2024, as well as absence of repair expenses relating to damage caused by an earthquake which was incurred in Q1 FY2023,&rdquo said the manager.

 

As at Mar 31, 2024, weighted average lease expiry (Wale) of its portfolio by gross rental income remained relatively long at 5.9 years, and portfolio occupancy stayed at 100 per cent.

 

&ldquo Subsequent to that, certain space were vacated following the expiry of the leases, resulting in portfolio occupancy rate of 96.6 per cent. Notwithstanding, the portfolio continue to maintain a high occupancy rate since listing,&rdquo said the manager.

 

Aggregate leverage, as at the end of Q1, was higher at 37.3 per cent due to an additional five-year loan drawn for the acquisition of DPL Ibaraki Yuki in Q1.

 

The real estate investment trust (Reit) continued to maintain a relatively high interest coverage ratio at 12 times, based on the last 12 months up to Mar 31.

 

Jun Yamamura, chief executive officer of the manager, highlighted that despite the continual weakening of yen, the Reit maintained steady portfolio performance and hedges that resulted in a stable distributable income for Q1 FY2024.

 

&ldquo We also look forward to the completion of the acquisition of D Project Tan Duc 2, expected in Q2 FY2024,&rdquo he added.

Delfi has reported better FY2023, with both revenue and earnings up over the preceding year. While CGS International' s Tay Wee Kuang is keeping his " add" call, he has trimmed his target price for the chocolate maker to take into account lower valuation multiples as growth is seen slower ahead.

 

In his Feb 28 note, Tay now rates Delfi at $1.47, down from $1.56 previously. 

 

Revenue for FY2023 was up 12.7% y-o-y to US$538.2 million but earnings for the same period was up by a lower 5.4% to US$46.3 million.

The management attributes the 2-percentage-point drop in gross margin to higher spending on marketing and promotion for new and existing products.

 

In line with the better bottom line, Delfi has declared a final dividend of 1.74 US cents per share, plus a special dividend of 0.52 US cents, bringing the total payout for FY2023 to 4.32 US cents, up slightly from 4.3 US cents paid for FY2022. 

 

However, Tay points out that due to the depreciation of the US dollar, for Singapore investors collecting their dividends in Singdollar, translating into a payout of 5.77 cents for FY2022 versus 5.75 cents for FY2023.

Nonetheless, the payout ratio, at 57%, represents a yield of 6% based on Delfi' s Feb 28 closing price of 95.5 cents, which is above the company' s guidance of a 50% payout ratio, plus a " commendable" yield of above 5% for the current FY2024.

 

According to Tay, Delfi is confident that its hedging can help it lock in prices amid record cocoa prices while allowing it to reevaluate product, sizing, and pricing strategy ahead of the cost pressures that are coming through. 

 

Delfi has also pointed out that some key ingredients such as milk and palm oil prices are moderating, thereby offsetting higher cocoa prices.

 

Costs aside, Delfi is achieving revenue growth via different sales channels across different markets.

 

" With their visibility on product sell-through across the markets, management is also positive about the structural growth in demand, highlighting that revenue growth observed in FY2023 was mostly driven by higher sales volume," says Tay.

 

His revised target price is to take into account lowered revenue and margin assumptions, thereby with a lowered valuation multiple of 13.8x earnings, its five-year mean, down from 15x.

 

" We continue to like Delfi for its market leadership in Indonesia," adds Tay, noting that the counter, trading valuation of 9x forward one-year multiple is unwarranted, given how regional peers are fetching 14.9x.

 

For Tay re-rating catalysts include easing cocoa prices and buoyant revenue momentum while downside risks include escalating cocoa prices resulting in lower gross profit margins, and depreciation of the rupiah against the greenback, resulting in lower revenues from translation impact.