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.

 

Dale Lai and Derek Tan of DBS Group Research have kept their " buy" call on Daiwa House Logistics Trust DHLU -0.78% , but with a trimmed target price partly to take into account the yen that has remained weak.

 

For FY2023, the owner of a portfolio of logistics assets in Japan has reported a distribution per unit of 5.22 cents, 2.4% better than what the DBS analysts were expecting.

 

When denominated in yen, DLHT' s revenue and net property income gained by 4.7% and 4.6% y-o-y, thanks to the full-year contributions from properties acquired in December 2022, but lower in Singdollar, the reporting currency.

 

Nonetheless, because of a weaker yen versus the Singdollar, distributable income increased by 3.1% y-o-y to $36.4 million, partly thanks to realised gains from hedging activities.

 

In the most recent 4QFY2023, DHLT was able to maintain a full occupancy rate, and it has maintained a weighted average lease expiry of 6.2 years.

 

The portfolio' s valuation was up 2% in yen but down 6% in Singdollar.

 

Its blended cap rate for its entire portfolio stands at around 5.2%- 5.3%, and Lai and Tan believe there will be room for further cap rate compressions in the coming year as more investors continue to compete for high-quality properties throughout Japan. 

 

Just a week ago, Daiwa House REIT, which is DHLT&rsquo s sister REIT listed in Japan, acquired a logistics facility in the Chiba prefecture at an estimated cap rate of 3.5%, demonstrating continued cap rate compressions for quality logistics assets.

 

For now, gearing remained healthy at 35.2% in 4QYF023, a slight improvement from the 36.2% reported in the preceding 3QFY2023, due to higher portfolio valuations in JPY terms.

 

" Overall, we remain upbeat about DHLT&rsquo s results and its DPU that has come in slightly above our estimates," state the analysts in their Feb 28 note.

 

" However, we remain slightly cautious about the 23.4% of leases that are expiring in FY2024," they add.

 

The analysts warn that although these two leases account for only a small proportion of DHLT&rsquo s overall portfolio, the backfilling of these properties may take time.

 

DHLT has two acquisitions of some $50.6 million generating 3% accretion that are pending completion, which will help defend its earnings against the rising borrowing costs and also the continued weakness in the yen.

 

" Despite some of the challenges highlighted above, we believe that DHLT&rsquo s portfolio will continue to deliver strong and stable earnings in the medium term through management&rsquo s various proactive initiatives, including the optimisation of debt headroom by tapping into accretive acquisitions from its sponsor," the DBS analysts state.

 

The sponsor, Daiwa House, has consistently demonstrated its support and commitment to DHLT, which Lai and Tan see as a " highly crucial plus-point" compared to some of its peers.

 

They see DHLT as trading at a " very attractive" forward yield of 8.2% and a price-to-NAV multiple of only 0.86x. 

 

" At the same time, we are also cognisant that the weak yen continues to be an overhang for DHLT, but we believe the REIT will immediately trade back up to its intrinsic value once there are signs of the yen strengthening," the analysts add.

 

DAIWA House Logistics Trust : DHLU -0.78%&rsquo s (DHLT) distribution per unit (DPU) remained unchanged for the second half ended Dec 31, 2023, at 2.61 Singapore cents.

 

Gross revenue was down 2.9 per cent to S$29 million for the half-year period, weighed down by a weaker Japanese yen. In the same period last year, gross revenue was $29.8 million.

 

In yen terms, gross revenue was up 4.6 per cent to 3.1 billion yen (S$28 million), supported by higher rental income due to a rise in occupancy, coupled with contributions from acquisitions completed in December 2022.

 

Net property income (NPI) fell 3.3 per cent on the year to S$22.2 million for the half-year period, from S$23 million. In yen terms, NPI rose 4.1 per cent to 2.4 billion for H2 2023.

 

Distributable income rose 3 per cent year on year to S$18.2 million from S$17.7 million. The distribution will be paid out on Mar 26, after the record date on Mar 7.

 

For the full year ended Dec 31, 2023, DPU was 0.2 per cent higher at 5.22 cents versus 5.21 cents recorded in the corresponding 12-month period. Distributable income grew 3.1 per cent to S$36.4 million.

 

Gross revenue was down 3.7 per cent to S$59.9 million, while NPI eased 5 per cent to S$45.3 million.

 

DHLT&rsquo s aggregate leverage stood at 35.2 per cent as at Dec 31, 2023, with all borrowings on a fixed-rate basis, the manager said.

 

All leases that expired in FY2023 were renewed, capping off the year with a full portfolio occupancy after the real estate investment trust leased its remaining vacant space at DPL Koriyama. Its portfolio&rsquo s weighted average lease expiry by gross rental income now stands at 6.2 years.

 

Meanwhile, property valuations grew 1.8 per cent on the year in Japanese yen terms.

 

DAIWA House Logistics Trust (DHLT) has entered into an agreement to acquire a freehold two-storey warehouse in Japan for 2.6 billion yen (S$24.1 million) from its sponsor, Daiwa House Industry.

 

The purchase consideration is 18.1 per cent lower than the average of two independent valuations of the property &ndash which was at S$29.4 million &ndash and the move shows support from the sponsor, said the manager in a bourse filing on Wednesday (Jan 31). 

 

The warehouse, DPL Ibaraki Yuki, is located in Yuki-shi in Ibaraki prefecture in Japan, approximately 100 km from central Tokyo. There are a few industrial parks established in the city where factories and distribution bases of major companies are located.

 

The multi-tenanted property has a net lettable area of 13,421 sq m and a 100 per cent occupancy rate. The entire property is leased to listed food products wholesaler Mitsubishi Shokuhin, an existing tenant in DHLT&rsquo s portfolio. The lease term for the building is four years from Feb 1, 2023.

 

The warehouse is located in a hub for food and machinery factories, with food processing factories concentrated in the neighbouring city of Chikusei.

 

As the property is easily accessible via highways, it may be used to serve as a regional distribution base for areas such as Oyama and Utsunomiya cities, said the manager. The warehouse is also connected to a wider region covering the Tohoku and Tokyo areas via the Tohoku Expressway.

 

In addition to the purchase consideration, the total acquisition cost also includes an acquisition fee, payable to the manager, of S$240,000, a refundable consumption tax of approximately S$1.9 million as well as debt-related costs, professional and other fees and expenses of approximately S$1.9 million.

 

This brings the total acquisition cost to approximately S$28.1 million.

 

The transaction will be financed through external debt financing, while the acquisition fee will be paid through the issue of units in DHLT. The deal is expected to be completed in the first quarter of 2024.

 

The manager of DHLT expects the acquisition to be accretive to the real estate investment trust&rsquo s (Reit) portfolio and improve returns to unitholders. It will also allow DHLT to strengthen its foothold in a market with &ldquo sound fundamentals over the long term&rdquo .

 

This is because demand for Japan logistics properties continue to be supported by e-commerce and third-party logistics sectors, said the manager.

 

Said Jun Yamamura, chief executive officer of DHLT&rsquo s manager: &ldquo With this acquisition, DHLT will add to its portfolio a newly completed freehold property that is anchored by a blue-chip tenant.&rdquo

 

&ldquo The accretive acquisition demonstrates our commitment to continually drive the growth of DHLT and improve returns to unitholders,&rdquo he said. &ldquo We will continue to explore opportunities to improve the DHLT portfolio while maintaining prudent capital management.&rdquo

 

DAIWA House Logistics Trust (DHLT) has acquired a logistics asset in Vietnam for S$26.5 million from its sponsor, Daiwa House Industry.

 

The announcement was made on Friday (Dec 29), and is the real estate investment trust&rsquo s (Reit) first such deal outside of Japan.

 

The price is 3 per cent lower than the independent valuation of the property &ndash which was at S$27.4 million &ndash and the move shows support from the sponsor, says the Reit&rsquo s manager.

 

The asset, D Project Tan Duc 2, is located in Long An. That area is near Ho Chi Minh City, a key economic hub in Vietnam.

 

Fully leased for 20 years from October 2023 to a company that deals in frozen and chilled-food-transportation services, the facility was completed in September 2023.

 

The transaction will be financed through external debt financing, while the acquisition fee will be paid through the issue of units in DHLT. The deal is expected to be completed in the second quarter of 2024, and will increase the Reit&rsquo s aggregate leverage to 38.2 per cent from 36.2 per cent as at Sep 30, on a pro forma basis.

The manager of DHLT expects the acquisition to be accretive to the Reit&rsquo s distribution per unit (DPU), on top of providing diversification into a growth market. Vietnam is one of the fastest-growing economies in South-east Asia, with an expected gross domestic product growth of 5.8 per cent and 6.9 per cent in 2024 and 2025, respectively.

 

It also believes that the logistics asset will minimise capital expenditure in the near-term, as it was recently completed. DHLT will ride on the demand for cold storage facilities, which is supported by Vietnam&rsquo s growing middle class, an improving economy and the e-commerce sector which is looking for high-quality food.

 

The tenant of the property is well-established in the region with two other facilities to distribute food and beverage products to local supermarkets. It is also part of a Tokyo Stock Exchange-listed entity specialising in cold chain logistics.

 

Jun Yamamura, chief executive officer of DHLT&rsquo s manager, said: &ldquo This is a landmark transaction ... and we are pleased to deliver a DPU-accretive acquisition to unitholders.&rdquo

 

DAIWA House Logistics Trust : DHLU +1.92% has posted a distributable income of S$27 million for the nine months ended Sep 30 the sum is up 2.2 per cent from S$26.4 million for the same period last year.

 

The income growth was supported by contributions from properties acquired in December 2022, and realised foreign exchange gains related to hedges put in place, the manager of the real estate investment trust (Reit) said on Friday (Nov 3).

 

This came as gross rental income and net property income (NPI) rose on a yen basis, although NPI in Singapore dollar terms fell by 6.4 per cent due to a weaker yen against the Singapore dollar.

 

Gross rental income rose 4.9 per cent on a yen basis to 4.1 billion yen (S$37.2 million) from 3.9 billion yen in the same period last year. Meanwhile, NPI was up 3.9 per cent on the year to 3.5 billion yen from 3.4 billion yen.

 

The Reit&rsquo s aggregate leverage stood at 36.2 per cent as at end September, up from 35.7 per cent recorded at the end of June.

 

Total borrowings stood at 34 billion yen, and borrowings were fully denominated in yen to provide a natural hedge, the manager said. All its borrowings were also made on a fixed-rate basis, mitigating interest rate risks amid a volatile interest rate environment.

 

The Reit&rsquo s interest coverage ratio remained high, at 11.8 times for the nine-month period. The manager added that there are no refinancing requirements until November 2024.

 

Portfolio occupancy remained full as at Sep 30, 2023, with a weighted average lease expiry of 6.3 years by gross rental income.

 

The manager noted that there were no leases up for renewal in the third quarter.

 

Jun Yamamura, chief executive of the manager, expects the operating environment to be challenging in the short term due to the substantial increase in new supply in the Japanese logistics market.

 

&ldquo However, demand is expected to remain healthy, supported by the 3PL (third-party logistics) and e-commerce sectors. Our portfolio is supported by a strong tenant base, with more than 80 per cent of the tenants by GRI (gross rental income) involved in such sectors.&rdquo

 

The Reit renewed a lease in October 2023. The manager noted that two remaining leases will expire in FY2023 the tenants have shown an intention to renew them, and term negotiations are underway.

DAIWA House Logistics Trust : DHLU 0% (DHLT) on Friday (May 19) announced that Takeshi Fujita, executive director and chief executive of the trust&rsquo s manager Daiwa House Asset Management Asia, will step down from both roles on May 31.

 

Fujita, 59, will be succeeded by Jun Yamamura on Jun 1, currently the manager&rsquo s head of planning. He works closely with the current chief executive and other members of the management team to develop, establish and execute the business strategies of DHLT, the trust said. 

 

The change in leadership is part of succession planning, DHLT said. Fujita will return to Japan to assume another appointment in Daiwa House Industry Co, the trust&rsquo s sponsor.

 

Yamamura, 46, joined the sponsor in April 2021 as part of the project team for the listing of a real estate investment trust (Reit) in Singapore. He then relocated to Singapore when he was transferred to the manager in August 2021, and was a key member of the team that listed DHLT on the Singapore Exchange (SGX). 

 

Before this, he spent more than two decades in Marubeni Corp, one of the largest general trading companies in Japan. There, he was involved in various functions, including real estate development and investment. 

 

Yamamura also has experience in Reits and was involved in the listing of United Urban Investment Corporation on the Tokyo Stock Exchange in 2003, DHLT said. 

 

Tan Jeh Wuan, chairman of DHLT, said that under Fujita&rsquo s leadership, the trust completed its maiden acquisition and met the forecast distribution per unit in its first financial year since listing, despite facing multiple challenges.

 

He added that Yamamura was actively involved in the initial public offering of DHLT and has been a key officer of the manager since its listing, therefore ensuring a &ldquo smooth transition during the change of leadership&rdquo .

 

DHLT said Yamamura has &ldquo no prior experience&rdquo in being a director of a listed issuer on SGX. 

 

&ldquo He will be attending training on the roles and responsibilities of a director of a listed issuer as prescribed by the exchange,&rdquo the trust said. 

 

Yamamura holds 90,000 units in DHLT, according to a bourse filing by the trust. 

DAIWA House Logistics Trust : DHLU +0.88% on Thursday (May 11) said its distributable income grew 2.5 per cent year on year to S$9.1 million, from S$8.9 million in Q1 FY2022.

 

Net property income for the real estate investment trust (Reit) rose 0.1 per cent in Q1 to 1.1 billion yen (S$11.3 million), while gross rental income gained 5.3 per cent to 1.4 billion yen, based on unaudited figures.

 

The Reit&rsquo s weighted average lease expiry by gross rental income &ndash based on monthly rent as at March 2023 &ndash was 6.9 years. Portfolio occupancy remained at 98.6 per cent, the same as recorded in the past four quarters.

 

Aggregate leverage rose slightly from 35.9 per cent to 36.2 per cent as at Mar 31, well below the 50 per cent limit imposed by the Monetary Authority of Singapore.

 

The manager aims to increase its supply of properties in Japan in 2023, mostly in Greater Tokyo. Demand for its properties is expected to be buoyed by third-party logistics companies, as well as those in e-commerce.

 

DAIWA House Logistics Trust posted a distribution per unit (DPU) of S$0.0261 for the half-year period from Jul 1 to Dec 31, 2022, to be paid on or around Mar 30, 2023.

 

This was in line with what was forecast on a pro-rated basis, said its manager on Thursday (Feb 23), despite gross revenue and net property income missing expectations due to currency effects.

 

Gross revenue for H2 came in 11.8 per cent lower than forecast at S$29.8 million, while net property income (NPI) missed expectations by 12.8 per cent at S$23 million.

 

Both were impacted by a weaker Japanese yen against the Singapore dollar (SGD), though partially offset by lower property expenses upon translation to SGD terms.

 

These were, however, offset by lower finance expenses, management fees and trust expenses, and a realised exchange gain from the settlement of hedges.

 

Notwithstanding the currency differences, the manager said higher returns of capital from the trust&rsquo s Japan entities &ndash as well as the lower issue cost defrayed by a government grant received in H2 &ndash helped to bring distributable income in SGD terms to meet the forecasted S$17.7 million.

 

Over the financial period from the trust&rsquo s listing date from Nov 26, 2021 to Dec 31, 2022, DPU was in line with what was forecasted at S$0.057.

 

Its manager highlighted Daiwa House Logistics Trust&rsquo s strong performance from an operational perspective over the period, as all expired leases were successfully renewed.

 

The occupancy rate as at end-2022 was maintained at 98.6 per cent, with an average rent increase of 3 per cent for leases that were entered into or renewed during the period.

 

In the manager&rsquo s view, the resilience of Daiwa House Logistics Trusts&rsquo portfolio, underpinned by the quality of its properties with long weighted average lease expiries, can mitigate the impact of challenges posed by the macro-environment.

 

The manager said it remains cautiously optimistic on the immediate outlook of the logistics sector in Japan, and believes demand for logistics facilities continues to be generally well-supported by third-party logistics and e-commerce sectors in the near term.