Daiwa House Logistics Trust (DHLT) has reported net property income (NPI) of $11.1 million for the 1QFY2025 ended March 31, 2.7% higher y-o-y. This was mainly due to the contribution from D Project Tan Duc 2 that was acquired in July 2024 but partly offset by the weaker Japanese yen (JPY) and slightly lower contributions from the Japanese portfolio.
In JPY terms, NPI fell by 1% y-o-y to 1.19 billion yen ($10.59 million) as the REIT’s contribution from DPL Ibaraki Yuki, which was acquired on March 15, was offset by vacancies in the Japanese portfolio and higher property-related expenses. Gross rental income inched up by 0.1% y-o-y to 1.39 billion yen.
Distributable income for the quarter fell to 9.9% y-o-y to $8.2 million mainly due to lower realised exchange rate gains and higher interest expenses from additional borrowings and higher interest rates from the refinancing and restructuring of loans.
As at March 31, DHLT’s aggregate leverage stood at 41.1%, up from 38.5% last December, mainly due to the additional loan drawn in March to acquire DPL Gunma Fujioka. The leverage also factors in the cash distribution payment in March. Its interest coverage ratio (ICR) stood at 7.4 times, which includes the coupon for perpetual securities. Excluding that coupon, DHLT’s ICR stood at 8.7 times. The proportion of DHLT’s fixed-rate loans stood at 99.3%.
Portfolio occupancy fell to 92.1% as at March, from 97.6% as at December 2024. Weighted average lease expiry (WALE) by gross rental income (GRI) inched up to 6.7 years as at March, from 6.6 years in December.
“We are pleased to add another high-quality property in Japan, DPL Gunma Fujioka, to the growing portfolio of DHLT. DPL Gunma Fujioka is a relatively new logistics facility and strategically located close to a highway junction and ramp, therefore providing easy accessibility to the northern part of Greater Tokyo,” says Jun Yamamura, CEO of the manager.
“While there was a higher level of vacancy, we are encouraged by healthy rent uplift that was achieved for the vacated spaces that were re-leased. The manager will continue to work closely with the property manager and third-party agents to fill up the remaining vacant spaces,” he adds.
Looking ahead, the manager believes Japan’s logistics sector, despite its near-term challenges, is expected to be stable in the long term due to factors like the growth of e-commerce, the continued expansion of the third-party logistics (3PL) sector and increased demand for distribution bases.
The REIT manager also sees positive long-term prospects in the Vietnam logistics sector, supported by economic expansion of the country, growth of e-commerce sector and further investments in infrastructure.
Units in DHLT closed 1 cent higher or 1.77% up at 57.5 cents on May 8.
