Daiwa House Logistics Trust - Weaker yen to impact distributions

Weaker Japanese Yen

Sanae Takaichi, the pro-stimulus leader of the ruling Liberal Democratic Party, is on course to become Japan’s first female prime minister. 

This saw Singapore dollar hitting a 52-week high against Japanese Yen, reaching S$1 to JPY117.8. 

With 97.2% of its assets in Japan, we expect the weak yen to impact the DPU of Daiwa House Logistics Trust.

Lower DPU

DHLT distributable income fell by 8.2% year-on-year to S$15.7 million in 1H25, mainly due to lower realised exchange gains and increased interest expenses from loan refinancing and restructuring. 

DHLT also raised new borrowings to fund the acquisitions. DPU fell by 8.6% year-on-year to 2.24 cents, consistent with DHLT’s policy to distribute at least 90% of its annual distributable income. 

Higher Net Property Income 

DHLT reported a 6.1% year-on-year increase in Net Property Income (NPI) to S$22.5 million for 1H25. 

This growth was primarily driven by contributions from new acquisitions - D Project Tan Duc 2 in Vietnam and DPL Gunma Fujioka in Japan. 

The positive impact from the new acquisition was partially offset by translation losses from weaker Japanese Yen (JPY) and reduced NPI from its Japan portfolio. 

The Japan segment saw a 0.5% year-on-year decline in NPI, as full six-month contribution from DPL Ibaraki Yuki and higher contribution from DPL Kawasaki Yako were offset by vacancies and higher property-related expenses. 

Portfolio occupancy improves

Portfolio occupancy improved to 93.2% up from 92.1% as of March 2025. DHLT managed to backfilled space vacated in FY2024, with 2 leases signed in 1H25.  In Japan, occupancy rate of DPL Koriyama improved to 92.3% as at 30 June 2025, from 66.6% as at 31 Dec 2024. 

Of the 6 leases which expired in 1H25, DHLT renewed 2 leases and secured new tenants for 3 leases. In 1H25, DHLT achieved weighted average rent uplift of approximately 10%, for all leases renewed or new leases signed. 

For the one vacant premise, DHLT is actively seeking new tenants, particularly among major third-party logistics (3PL) providers and local logistics companies. 

Rental uplift for renewals

Rental uplift for renewals. During 1H25, five of the six expired leases were successfully re-tenanted with three- to five-year lease terms, achieving a 10% rental uplift. 

In 2H25, DHLT there are four leases expiring, accounting for 6% of total NLA of the portfolio.  

For one of the leases, DHLT has received the letter of intent with a potential tenant. For the remaining leases, DHLT continues to source for tenants.  

The trust’s weighted average lease expiry (WALE) improved to 6.5 years, with 54.7% of leases set to expire in 2030 or later. 

Acquisition of logistics asset in Tokyo

Acquisition of logistics asset in Tokyo. In March 2025, DHLT acquired DPL Gunma Fujioka, a logistics property in Greater Tokyo, for JPY4.0 billion. 

The property is leased to a blue-chip multinational corporation under a six-year lease commencing in April 2025. 

The acquisition was made at a 23.4% discount to valuation and is expected to be yield accretive, increasing the trust's DPU by 3.3%. 

Lower gearing ratio

Aggregate leverage improved to 40.7%, from 41.1% at the end of March 2025.  The interest coverage ratio (ICR) remains healthy at 6.6x, comfortably above the regulatory minimum of 1.5x. 

DHLT continues to manage its capital prudently, with 99.3% of its debt at fixed rates and all properties unencumbered. 

The weighted average debt tenure remains steady at 2.3 years, while the average borrowing cost was stable at 1.69%, unchanged from end-March 2025.   

Management has started discussions with banks for the refinancing of JPY10.0 billion maturing in November 2025.   

Outlook

Management expects minimal direct impact from global trade tariffs, given that less than 10% of its tenants in Japan are export-oriented. However, trade tensions may introduce short-term economic uncertainty. 

The large supply of logistics space in Japan has presented near-term challenges, although the supply pipeline is projected to peak in Greater Tokyo by the end of 2026. 

Growth in 3PL and e-commerce is expected to drive demand for logistics space moving forward. DHLT expected a more balanced supply-demand equilibrium going forward.

In Vietnam, economic growth remains supportive of logistics sector expansion. 

DHLT's D Project Tan Duc 2 is fully leased to a single tenant under a long-term lease expiring in 2043, underscoring the stability and income visibility of its Vietnamese operations. 

Maintain NEUTRAL

We maintain our Neutral rating and revise target price down slightly to S$0.57. 

At S$0.58, the closing price on 16 Oct 2025, DHLT trades at FY2025 dividend yield of 7.8%. and a price-to-book valuation of 0.84x.

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• Daiwa House Logistics Trust share price and share price target
• Daiwa House Logistics Trust dividend history and forecast

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