Daiwa House Logistics Trust (DHLT) 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). Net property income (NPI) fell by 8.2% y-o-y to $23.1 million also undermined by the weaker JPY.
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.
See more: Daiwa House Logistics Trust posts 1HFY2024 DPU of 2.45 cents, 6.1% lower y-o-y
Following the results release, DBS Group Research is keeping its “buy” recommendation but with a lower target price of 70 cents from 75 cents previously, based on delay in Vietnam acquisition completion and weaker foreign exchange assumptions.
DHLT owns a portfolio of 18 newly built modern logistics facilities with an average age of only about six years. “With a presence in cities where modern logistics facilities supply is limited, DHLT’s portfolio continues to enjoy high occupancy rates and its tenants are expected to continue renewing their leases due to a lack of better alternatives,” say analysts Dale Lai and Derek Tan.
DHLT recently utilised its debt headroom to acquire two high-quality logistics facilities in Vietnam and Japan. The acquisition in Vietnam will be DHLT’s first foray outside of Japan, delivering on management’s promise to diversify its portfolio outside of Japan and into the Asean region.
The acquisitions are expected to generate an accretion of about 2%, delivering on the team’s promise to optimise its gearing to pursue accretive acquisitions. “The five acquisitions since IPO have been executed through its pipeline, and its sponsor’s support has been key in delivering attractive accretion for the REIT,” say the analysts.
DHLT continues to enjoy strong operating fundamentals with a high portfolio occupancy rate and a long WALE of about six years. However, it has suffered from translation losses, as the JPY has weakened against the SGD in the past year. “In our projections, we have assumed an exchange rate of SGD1:JPY105 for FY2024/FY2025,” say Lai and Tan.
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The analysts are also cautious on the recent Bank of Japan (BoJ) rate hikes to lead to JPY appreciation, but also higher financing costs.
As at 11.10am on Aug 19, units in DHLT are trading at 56 cents.
