Daiwa House Logistics Trust - DBS Research 2023-08-04: Portfolio Operating At Full Capacity

• Daiwa House Logistics Trust (SGX:DHLU)'s 1H23 revenues and NPI were 4.8% and 5.2% higher y-o-y in JPY terms, respectively. This was mainly driven by DPL Iwakuni 1& 2, and D Project Matsuyama S acquired on 8 December 2022. It was also driven by the higher occupancy at DPL Sapporo Higashi Kariki.
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• There has been some inflation of operating costs, but it is still manageable; some slight increments in rent should be more than able to offset any rising costs.
• Daiwa House Logistics Trust 1H23 distribution Income (DI) of S$18.1m was 3.2% higher y-o-y. Despite the weaker JPY, the higher DI was mainly driven by the full income contribution from acquisitions for 1H23. Lower financing costs and other JPY-denominated expenses also contributed to the higher DI
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Portfolio occupancy is now 100%

• As at 30 June 2023, Daiwa House Logistics Trust's portfolio occupancies remained stable q-o-q at 98.6%. The only vacancy in the portfolio (DPL Koriyama) has since been leased out as of end-July 2023. The existing tenants at the property have expanded and will take up the remaining space.
• Overall portfolio achieved 100% occupancy as at end-July 2023. Only 9.1% of portfolio leases will be due to expire in 2H23. This is made up of three leases with a total NLA of ~45,000sqm. Discussions with tenants on renewals are progressing well and Daiwa House Logistics Trust is aiming to renew all three leases and maintain full portfolio occupancy.
• Daiwa House Logistics Trust also aims to achieve some positive rental reversions from multi-tenanted properties; it may be harder to achieve positive rental reversions for built-to-suit properties.
• ~22.5% of portfolio leases will be due to expire in FY24. Only one master lease at D Project Kuki S will be expiring in FY24 (~3.7% of portfolio). Daiwa House Logistics Trust is already in the advanced stage of negotiations with the tenant.

Slight improvement in gearing to 35.7%

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Dale LAI DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-08-04 SGinvestors.io

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