The manager of Daiwa House Logistics Trust (DHLT) DHLU has reported a distribution per unit (DPU) of 2.61 cents for the 1HFY2023 ended June, 0.4% higher than the DPU of 2.60 cents for the same period the year before.
Gross revenue fell by 4.3% y-o-y to $30.9 million due to the weaker Japanese yen (JPY). In JPY terms, gross revenue rose by 7.4% y-o-y to 3.12 billion yen ($29.2 million) due to higher utilities recoverable income given the higher utilities rate, higher rental income underpinned by higher occupancy as well as the contribution from acquisitions completed in December 2022.
Net property income (NPI) fell by 6.6% y-o-y to $23.1 million due to the weaker JPY. In JPY terms, NPI rose by 5.2% y-o-y.
Distributable income rose by 3.2% y-o-y to $18.1 million mainly due to realised exchange gain, lower finance costs and other JPY-denominated expenses after the conversion to Singapore dollars (SGD) due to the weaker JPY.
As at June 30, the trust’s portfolio occupancy stood at 98.6% and at 100% as at July 31 after the remaining vacant space in DPL Koriyama was leased in the same month. Its weighted average lease expiry (WALE) stood at 6.6 years by gross rental income (GRI).
According to the trust, there are less than 10% of the leases by GRI left that will be expiring in the 4QFY2023. “The manager has started to proactively engage the tenants of these leases as well as the lease of a built-to-suit property that is expiring in July 2024,” it says.
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The trust’s aggregate leverage stood at 35.7% with an interest coverage of 11.7 times. The trust’s proportion of fixed rate loans stood at 100%.
“We are pleased to announce DPU of 2.61 cents for 1HFY2023, which was a marginal improvement of 0.4% y-o-y despite the foreign exchange volatility. Positive contribution from the properties acquired in December 2022 resulted in a strong portfolio performance in 1H FY2023, with a NPI growth of 5.2% y-o-y in JPY term. While the strong performance was impacted by weaker JPY, realised exchange gains as well as lower finance cost and other JPY-denominated expenses after conversion to SGD mitigated the impact,” says Jun Yamamura, CEO of the manager.
“The portfolio remained stable with a relatively long WALE of 6.6 years backed by a strong tenant profile, with more than 80% of the tenants by GRI involved in the growing third party logistics (3PL) and e-commerce sectors. We believe that these attributes strengthened the resilience of the portfolio which will stand us in good stead against challenges ahead,” he adds.
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The 3PL sector in Japan is expected to grow with a CBRE survey in March indicating that most logistics operators and consignor firms in Japan are potentially exploring expansion plans.
Unitholders will receive their DPUs on Sept 26.
Units in DHLT closed flat at 61.5 cents on Aug 2.
