One of Japan’s biggest developers is set to close the S$575.5 million ($423 million) public offering of Daiwa House Logistics Trust on Wednesday, with trading of the REIT to begin Friday afternoon on the Singapore Exchange.
DHLT, sponsored by Tokyo-listed Daiwa House Industry Co Ltd, is offering 244,438,000 units in the IPO at a price of S$0.80 per unit. The proceeds will include S$540 million raised from the public offering and the issuance of Daiwa House’s subscription units and the cornerstone investors’ units, plus S$35.5 million from the issuance of perpetual securities.
The trust’s seed portfolio comprises 14 warehouse assets across Japan with an appraised value of S$952.9 million and a net lettable area of 423,920 square metres (4,563,037 square feet), according to a final prospectus released last Friday.
While DHLT is the first Singapore-listed REIT to concentrate on Japanese industrial properties, the acquisition pipeline also includes 11 assets in Indonesia, Vietnam and Malaysia, “with the ASEAN region being a key area of focus given the demand for overseas logistics and manufacturing bases, particularly from Japanese-based tenants”, said the trust’s manager, Daiwa House Asset Management Asia.
The REIT portfolio’s acquisition cost is S$840.5 million, representing an 11.8 percent discount to its value as appraised by Savills and CBRE. The 14 seed assets have a weighted average lease expiry by occupied NLA of 7.2 years, an average age of 3.7 years and an occupancy rate of 96.3 percent.
The DHLT collection features six properties in Greater Tokyo, including the largest and highest-valued asset, DPL Kawasaki Yako, a 93,159 square metre facility appraised at JPY 20.75 billion ($180 million).
Other large holdings include the 60,347 square metre DPL Sapporo Higashi Kariki on the island of Hokkaido, valued at JPY 12.25 billion, and the 63,119 square metre DPL Sendai Port northeast of Tokyo, valued at JPY 12.6 billion.
Some 84.8 percent of the portfolio consists of freehold assets or leasehold assets with expiry dates exceeding 40 years, while the sheds are 79 percent occupied by “high quality” 3PL and e-commerce players, said the trust’s manager, which is capitalising on what it calls an “undersupply of modern logistics facilities” in Japan.
When factoring in the pipeline Southeast Asian assets and other Japanese projects for which DHLT has right of first refusal, the portfolio’s potential size is 42 assets and 1,536,000 square metres.
Logistics properties developed by Daiwa House in Indonesia, Vietnam and Malaysia are viewed as particularly attractive for potential investment by the REIT.
“Southeast Asia’s growth is fuelled by its strategic location, its large population base, a booming middle class, a significant and increasingly well-educated labour force, a wealth of natural resources, rapid urbanisation and rising infrastructure spending,” the trust’s manager said.
Founded in 1955, Daiwa House has developed 1.9 million residential units and completed 54,900 commercial facility projects. A Nikkei survey conducted in June found the Osaka-based group to be the most recognisable logistics asset brand and developer in Japan.
As the REIT’s sponsor, Daiwa House is subscribed for 94,500,000 DHLT units. The trust’s cornerstone investors include Credit Suisse, DBS Bank, Nomura and Bangkok Life Assurance, among others, with a commitment of 336,062,000 units.