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Thursday, August 17, 2023

Daiwa House Logistics Trust Review @ 17 August 2023

Basic Profile & Key Statistics
  • Main Sector(s): Logistics & Retail
  • Country(s) with Assets: Japan
  • No. of Properties (exclude associate/fund): 16

Key Indicators

Performance Highlight
Gross revenue and NPI have declined YoY due to the weaker JPY against SGD. However, distributable income and DPU increased slightly resulting from a realized foreign exchange gain due to forward and lower finance costs.

Related Parties Shareholding

  • REIT Sponsor's Shareholding: Below median by 20% or more
  • REIT Manager's Shareholding: Below median by 20% or more
  • Directors of REIT Manager's Shareholding: Below median by 10% or more

Lease Profile

  • Committed Occupancy: ± 5% from median
  • WALE: Above median by 20% or more
  • Highest Lease Expiry within 5 Years: ± 10% from median; Falls in 2024
  • Weighted Average Land Lease Expiry: ± 10% from median

Debt Profile

  • Gearing Ratio: ± 10% from median
  • Gearing Ratio including Perps: ± 10% from median
  • Cost of Debt: Below median for more than 20%
  • Fixed Rate Debt %: 100%
  • Unsecured Debt %: 0%
  • WADM: Below median by 10% or more 
  • Highest Debt Maturity within 5 Years: ± 10% from median; Falls in 2026
  • Interest Coverage Ratio: Above median for more than 20%

Diversification Profile

  • Top Geographical Contribution: Below median by 10% or more
  • Top Property Contribution: Above median by 20% or more
  • Top 5 Properties' Contribution: ± 10% from median
  • Top Tenant Contribution: Above median by 20% or more
  • Top 10 Tenants' Contribution: Above median by 20% or more

Key Financial Metrics

  • Property Yield: Below median by 10% or more
  • Management Fees over Operating Distributable Income: Below median by 20% or more; $13.11 distribution for every dollar paid 
  • Operating Distributable Income on Capital: Above median by 20% or more
  • Operating Distributable Income Margin: Above median by 20% or more
  • Operating Distribution Proportion: Above median by 5% or more

DPU Breakdown
  • TTM DPU Breakdown:
    • 96.4% from Operation
    • 3.6% from Management Fees Paid in Units


* DPU in 4Q 2021 is annualized to 3 months DPU. 
** The interest coverage ratio are estimated to reflect a closer figure in accordance with the Property Funds Appendix of the Code on Collective Investment Schemes.
  • Uptrend: Interest Coverage Ratio, Operating Distributable Income on Capital, Operating Distributable Income Margin
  • Flat: DPU from Operation, Committed Occupancy
  • Downtrend: NAV per Unit, Property Yield

Relative Valuation

  • Dividend Yield: Average for 1y, Above average for 3y
  • P/NAV: Average for 1y & 3y

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow REIT Sponsor's Shareholding
High Committed OccupancyLow REIT Manager's Shareholding
Long WALEHigh Perpetual Securities %
Low Cost of Debt0% Unsecured Debt
100% Fixed Rate DebtShort WADM
High Interest Coverage RatioHigh Top Property Contribution
Low Top Geographical ContributionHigh Top Tenant % Top 10 Tenants' Contributions
Competitive Management FeesLow Property Yield
High Operating Distributable Income on CapitalNAV per Unit Downtrend
High Operating Distributable Income MarginProperty Yield Downtrend
High Operating Distribution Proportion 
Interest Coverage Ratio Uptrend 
Operating Distributable Income on Capital Uptrend 
Operating Distributable Income Margin Uptrend

Performance has improved as compared to the previous half-yearly despite JPY continuing to weaken against SGD. Regarding debts, 100% of it is fixed and there is no refinancing requirement until Nov 2024. As a result, the performance would not be affected by rising interest costs.

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REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.

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