- Daiwa House Logistics Trust reported a DPU of 4.79 cents for FY24. Although it was an 8.2% decline y-o-y, primarily impacted by foreign exchange movements and higher financing costs, it is in line with our projections.
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- In JPY terms, both revenues and net property income (NPI) would have been 1.8% and 2.1% higher y-o-y, respectively. However, the weaker FX rate eroded the improvements. The higher revenues were mainly due to the additional contribution from DPL Ibaraki Yuki, which was acquired in March 2024, but was partially offset by a dip in portfolio occupancy.
Portfolio occupancy rate of 97.6% was a slight improvement q-o-q.
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- Of the 12 leases that expired in FY24, ~90% of the space was renewed or backfilled. This led to a weighted average rental uplift of ~5% for new and renewed leases signed in FY24. Most notable was the extension of the master lease at D Project Kuki S for 10 years at higher rents, with annual rental escalations for the first five years.
- Six leases are due to expire in 1H25, which accounts for ~14% of portfolio net lettable area (NLA). We understand that approximately half of these expiries are likely to be renewed or are in advanced negotiations with new tenants, where rents could potentially be 5%-10% higher. The remaining half of these expiries, or ~7% of NLA, is mainly a result of a major tenant’s non-renewal in the Sendai Port property. Given the size of this space, finding a suitable tenant to backfill it could take a while.
Property valuations increased marginally y-o-y.
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